EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT DATED MARCH 1, 2007
BETWEEN TOWER TECH HOLDINGS INC. AND THE
BUYERS NAMED THEREIN
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
TONTINE CAPITAL PARTNERS, L.P.,
TONTINE CAPITAL OVERSEAS MASTER FUND, L.P.
AND
TOWER TECH HOLDINGS INC.
MARCH 1, 2007
TABLE OF CONTENTS
PAGE
ARTICLE 1 Definitions.........................................................1
ARTICLE 2 Purchase and Sale of Shares.........................................3
2.1 Purchase of Shares.....................................................3
2.2 Purchase Price and Form of Payment; Delivery...........................3
2.3 Closing Date...........................................................3
ARTICLE 3 Buyers' Representations and Warranties..............................3
3.1 Organization and Qualification.........................................3
3.2 Authorization; Enforcement.............................................3
3.3 Securities Matters.....................................................4
3.4 Information............................................................4
3.5 Restrictions on Transfer...............................................4
ARTICLE 4 Representations and Warranties of the Company.......................5
4.1 Organization and Qualification.........................................5
4.2 Authorization; Enforcement.............................................5
4.3 Capitalization; Valid Issuance of Shares...............................5
4.4 No Conflicts...........................................................6
4.5 SEC Documents; Financial Statements....................................7
4.6 Absence of Certain Changes.............................................7
4.7 Absence of Litigation..................................................8
4.8 Patents, Copyrights....................................................8
4.9 Tax Status.............................................................8
4.10 Permits; Compliance....................................................8
4.11 Environmental Matters..................................................9
4.12 Title to Property.....................................................10
4.13 No Investment Company or Real Property Holding Company................10
4.14 No Brokers............................................................10
4.15 Registration Rights...................................................10
4.16 Exchange Act Registration.............................................10
4.17 Labor Relations.......................................................10
4.18 Transactions with Affiliates and Employees............................10
4.19 Insurance.............................................................11
4.20 Approved Acquisitions of Shares; No Anti-Takeover Provisions..........11
4.21 ERISA.................................................................11
4.22 Intentionally Omitted.................................................11
4.23 Disclosure............................................................11
ARTICLE 5 Covenants..........................................................12
5.1 Form D; Blue Sky Laws.................................................12
5.2 Use of Proceeds.......................................................12
5.3 Expenses..............................................................12
5.4 No Integration........................................................12
5.5 Board Designee(s).....................................................12
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5.6 Observation Rights....................................................12
5.7 Participation in Future Issuances.....................................13
5.8 Future Acquisitions...................................................13
ARTICLE 6 Conditions To The Company's Obligation.............................13
6.1 Delivery of Transaction Documents.....................................14
6.2 Payment of Purchase Price.............................................14
6.3 Representations and Warranties........................................14
6.4 Litigation............................................................14
ARTICLE 7 Conditions to The Buyers' Obligation...............................14
7.1 Delivery of Transaction Documents; Issuance of Shares.................14
7.2 Representations and Warranties........................................14
7.3 Consents..............................................................14
7.4 Litigation............................................................14
7.5 Opinion...............................................................15
7.6 No Material Adverse Change............................................15
7.7 Intentionally Omitted.................................................15
7.8 Irrevocable Proxy.....................................................15
7.9 Additional Buyer Agreements...........................................15
7.10 Brickner Employment Agreement.........................................15
7.11 Conversion of Debt....................................................15
ARTICLE 8 Indemnification....................................................15
8.1 Indemnification by the Company........................................15
8.2 Notification..........................................................15
ARTICLE 9 Governing Law; Miscellaneous.......................................16
9.1 Governing Law.........................................................16
9.2 Counterparts; Electronic Signatures...................................16
9.3 Headings..............................................................16
9.4 Severability..........................................................16
9.5 Entire Agreement; Amendments..........................................17
9.6 Notices...............................................................17
9.7 Successors and Assigns................................................18
9.8 Third Party Beneficiaries.............................................18
9.9 Publicity.............................................................18
9.10 Further Assurances....................................................18
9.11 No Strict Construction................................................18
9.12 Rights Cumulative.....................................................19
9.13 Survival..............................................................19
9.14 Knowledge.............................................................19
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of March 1, 2007, is
entered into by and among TOWER TECH HOLDINGS INC., a Nevada corporation (the
"COMPANY"), and the investors identified on the signature page hereto (each a
"BUYER" and collectively, the "BUYERS").
RECITALS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemptions from securities registration afforded
by Section 4(2) of the 1933 Act and Rule 506;
B. The Buyers desire to purchase and the Company desires to issue
and sell, upon the terms and conditions set forth in this Agreement, 10,266,667
shares of common stock, $0.001 par value per share of the Company; and
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT A, pursuant to which the
Company has agreed under certain circumstances to register the resale of the
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
AGREEMENT
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
ARTICLE 1
DEFINITIONS
"1933 ACT" means the Securities Act of 1933, as amended.
"1934 ACT" means the Securities Exchange Act of 1934, as amended.
"2006 SEC DOCUMENTS" has the meaning set forth in SECTION 3.4.
"ACTION" means any action, suit claim, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation against or affecting the Company, any of its Subsidiaries or any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency, regulatory authority (federal, state, county, local or
foreign), public board, stock market, stock exchange or trading facility.
"AGREEMENT" means this Securities Purchase Agreement.
"BUYER" and "BUYERS" have the meaning set forth in the preamble.
"CLOSING" has the meaning set forth in SECTION 2.3.
"CLOSING DATE" has the meaning set forth in SECTION 2.3.
"COMMON STOCK" means the Company's common stock, $0.001 par value per
share.
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"COMPANY" has the meaning set forth in the preamble.
"ENVIRONMENTAL LAWS" has the meaning set forth in SECTION 4.11.
"ERISA" has the meaning set forth in SECTION 4.21.
"FOUNDERS" has the meaning set forth in SECTION 7.8.
"FOUNDERS SPA" has the meaning set forth in SECTION 7.9.
"FUTURE OFFERING" has the meaning set forth in SECTION 5.7.
"HAZARDOUS MATERIALS" has the meaning set forth in SECTION 4.11.
"INTELLECTUAL PROPERTY" has the meaning set forth in SECTION 4.8.
"INVESTMENT COMPANY" has the meaning set forth in SECTION 4.13.
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other law, rule, regulation, order,
judgment, decree, ordinance, policy or directive, including those entered,
issued, made, rendered or required by any court, administrative or other
governmental body, agency or authority, or any arbitrator.
"LETTER AGREEMENT" has the meaning set forth in SECTION 7.9.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, operations, assets, financial condition or prospects of the Company.
"NRS" has the meaning set forth in SECTION 4.20.
"OBSERVATION RIGHTS" has the meaning set forth in SECTION 5.6.
"OBSERVER" has the meaning set forth in SECTION 5.6.
"OFFERING NOTICE" has the meaning set forth in SECTION 5.7.
"PERMITS" has the meaning set forth in SECTION 4.10.
"PURCHASE PRICE" means a price of $1.50 per share for the Shares to be
issued and sold to the Buyers at the Closing.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
executed and delivered contemporaneously with this Agreement pursuant to which
the Company has agreed under certain circumstances to register the resale of the
Shares under the 1933 Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
"RULE 506" means Rule 506 of Regulation D promulgated under the 1933
Act.
"SEC" means the United States Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in SECTION 4.5.
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"SHARES" means the 10,266,667 shares of Common Stock being issued and
sold under this Agreement.
"SUBSIDIARIES" means with respect to the Company, Tower Tech Systems,
Inc, a Wisconsin corporation.
"TRANSACTION DOCUMENTS" means this Agreement, the Registration Rights
Agreement, and any other documents contemplated by this Agreement.
"TRANSFER INSTRUCTIONS" has the meaning set forth in SECTION 2.2.
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 PURCHASE OF SHARES. Subject to the terms and conditions of this
Agreement, on the Closing Date, the Company shall issue and sell the Shares and
each Buyer shall purchase from the Company the number of Shares as is set forth
below such Buyer's name on the signature page hereto.
2.2 PURCHASE PRICE AND FORM OF PAYMENT; DELIVERY. On the Closing
Date each Buyer shall pay $1.50 per share for the Shares to be issued and sold
to it at the Closing, for a total price of $15,400,000. The Purchase Price shall
be paid by wire transfer of immediately available funds in accordance with the
Company's written instructions. At the Closing, upon payment of the Purchase
Price therefore by the Buyers, the Company will deliver irrevocable written
instructions ("TRANSFER INSTRUCTIONS") to the transfer agent for the Company's
Common Stock to issue certificates representing the Shares registered in the
name of each Buyer and to deliver such certificates to or at the direction of
each Buyer. The Company shall not have the power to revoke or amend the Transfer
Instructions without the written consent of the Buyers.
2.3 CLOSING DATE. Subject to the satisfaction (or written waiver)
of the conditions set forth in ARTICLE 6 and ARTICLE 7 below, the closing of the
transactions contemplated by this Agreement shall be held on March 1, 2007, or
such other time as may be mutually agreed upon by the parties to this Agreement
(the "CLOSING DATE"), at the offices of Barack Ferrazzano Kirschbaum Perlman &
Nagelberg LLP, 333 West Wacker Drive, Suite 2700, Chicago, Illinois 60606 or at
such other location or by such other method (including exchange of signed
documents) as may be mutually agreed upon by the parties to this Agreement
("CLOSING").
ARTICLE 3
BUYERS' REPRESENTATIONS AND WARRANTIES
Each Buyer represents and warrants to the Company that:
3.1 ORGANIZATION AND QUALIFICATION. Each of the Buyers is an entity
of the type identified on the signature page hereto, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, with full power and authority to purchase the Shares and otherwise
perform its obligations under this Agreement and the other Transaction
Documents.
3.2 AUTHORIZATION; ENFORCEMENT. This Agreement and each of the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by, and duly executed
and delivered on behalf of, such Buyer. This Agreement and each of the other
Transaction Documents constitutes the valid and binding agreement of such Buyer
enforceable in accordance with its terms, except as such enforceability may be
limited by: (i) applicable
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bankruptcy, insolvency, reorganization, moratorium or other similar laws in
effect that limit creditors' rights generally; (ii) equitable limitations on the
availability of specific remedies; and (iii) principles of equity.
3.3 SECURITIES MATTERS. In connection with the Company's
compliance with applicable securities laws:
a. Such Buyer understands that the Shares are being offered
and sold to it in reliance upon specific exemptions from the
registration requirements of United States and state securities laws
and that the Company is relying upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth
herein in order to determine the availability of such exemption and the
eligibility of such Buyer to acquire the Shares.
b. Such Buyer is purchasing the Shares for its own account,
not as a nominee or agent, for investment purposes and not with a
present view towards resale, except pursuant to sales exempted from
registration under the 1933 Act, or registered under the 1933 Act as
contemplated by the Registration Rights Agreement.
c. Such Buyer is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D under the 1933 Act, and has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the
Shares. Such Buyer understands that its investment in the Shares
involves a significant degree of risk. Such Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or
endorsement of the Shares.
3.4 INFORMATION. Such Buyer has conducted its own due diligence
examination of the Company's business, financial condition, results of
operations, and prospects. In connection with such investigation, such Buyer and
its representatives (i) have reviewed the Company's Form 10-KSB for the fiscal
year ended December 31, 2005, the Company's quarterly reports on Form 10-QSB for
the three most recently concluded interim periods and the Company's Current
Reports on Form 8-K or Form 8-K/A filed in 2006 (and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein, being hereinafter
referred to herein as the "2006 SEC DOCUMENTS"), and (ii) have been given an
opportunity to ask questions, to the extent such Buyer considered necessary, and
have received answers from, officers of the Company concerning the business,
finances and operations of the Company and information relating to the offer and
sale of the Shares, and (iii) have received or had an opportunity to obtain such
additional information as they deem necessary to make an informed investment
decision with respect to the purchase of the Shares.
3.5 RESTRICTIONS ON TRANSFER. Such Buyer understands that except
as provided in the Registration Rights Agreement, the issuance of the Shares has
not been and is not being registered under the 1933 Act or any applicable state
securities laws. Such Buyer may be required to hold the Shares indefinitely and
the Shares may not be transferred unless (i) the Shares are sold pursuant to an
effective registration statement under the 1933 Act, or (ii) such Buyer shall
have delivered to the Company an opinion of counsel to the effect that the
Shares to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration, which opinion shall be reasonably acceptable
to the Company. Such Buyer understands that until such time as the resale of the
Shares has been registered under the 1933 Act as contemplated by the
Registration Rights Agreement or otherwise may be sold pursuant to an exemption
from registration, certificates evidencing the Shares may bear a restrictive
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legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates evidencing such Shares):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE CORPORATION."
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company's Disclosure Schedule attached
hereto, the Company represents and warrants to the Buyers that:
4.1 ORGANIZATION AND QUALIFICATION. The Company has no subsidiaries
other than the Subsidiaries. The Company and each of its Subsidiaries is a
corporation, limited partnership, limited liability company, or joint venture as
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated or organized, with corporate,
limited liability or limited partnership power and authority to own, lease, use
and operate its properties and to carry on its business as now operated and
conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation, limited liability company or limited partnership to do
business and is in good standing in each jurisdiction in which its ownership or
use of property or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Neither the Company nor any
Subsidiary is in violation of any provision of its respective certificate or
articles of incorporation, partnership agreement, bylaws or other organizational
or charter documents, as the same may have been amended.
4.2 AUTHORIZATION; ENFORCEMENT. The Company has all requisite
corporate power and authority to enter into and perform this Agreement and each
of the other Transaction Documents and to consummate the transactions
contemplated hereby and thereby and to issue the Shares, in accordance with the
terms hereof and thereof. The execution and delivery of this Agreement and each
of the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Shares) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders is required. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the Company. This
Agreement and each of the other Transaction Documents will constitute upon
execution and delivery by the Company, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by: (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect that limit creditors'
rights generally; (ii) equitable limitations on the availability of specific
remedies; (iii) principles of equity (regardless of whether such enforcement is
considered in a proceeding in law or in equity); and (iv) to the extent rights
to indemnification and contribution may be limited by federal securities laws or
the public policy underlying such laws.
4.3 CAPITALIZATION; VALID ISSUANCE OF SHARES. As of the date hereof,
the authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, of which 37,457,797 shares are issued and outstanding, and no
shares are held by the Company as treasury shares, and 10,000,000 shares of
preferred stock, of which no shares are issued and outstanding. All of such
outstanding shares of
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Common Stock are duly authorized, validly issued, fully paid and nonassessable.
The Shares have been duly authorized and when issued pursuant to the terms
hereof will be validly issued, fully paid and nonassessable and will not be
subject to any encumbrances, preemptive rights or any other similar contractual
rights of the stockholders of the Company or any other person. No shares of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. As of the date of
this Agreement, except to the extent described in the preceding sentence and
SCHEDULE 4.3 attached hereto, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock, (ii) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their securities under the
1933 Act (except the Registration Rights Agreement) and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) that will
be triggered by the issuance of the Shares. Except as may be described in any
documents which have been publicly filed by any of the Company's stockholders,
to the Company's knowledge, there are no agreements between the Company's
stockholders with respect to the voting or transfer of the Company's capital
stock or with respect to any other aspect of the Company's affairs.
4.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement and each of the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of Shares) will not (i) conflict
with or result in a violation of any provision of the Articles of Incorporation,
as amended, of the Company or the Bylaws, as amended, of the Company, (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
patent, patent license or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any Legal Requirement
(including federal and state securities laws and regulations and regulations of
any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate or Articles of Incorporation, bylaws or other
organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time would
result in a default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any property or assets of the Company or any of its Subsidiaries is bound
or affected, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. Except with respect to any filings or
notices related to the issuance of the Shares to be filed with the OTC Bulletin
Board, if any, and as required under the 1933 Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency, regulatory agency, self regulatory organization or stock
market or any third party in order for it to execute, deliver or perform any of
its obligations under the Transaction Documents. All consents, authorizations,
orders, filings and registrations that the Company is required to effect or
obtain pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof.
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4.5 SEC DOCUMENTS; FINANCIAL STATEMENTS.
a. Except as set forth on SCHEDULE 4.5, since December 31,
2004, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the 1933 Act and the 1934 Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"), or has timely filed for a valid extension of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
b. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes, year end adjustments or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to September 30, 2006, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or taken in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
c. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the
1934 Act). Such disclosure controls and procedures: (A) are designed to ensure
that material information relating to the Company and its Subsidiaries is made
known to the Company's chief executive officer, president, chief operating
officer and its chief financial officer by others within those entities,
particularly during the periods in which the Company's reports and filings under
the 1934 Act are being prepared, (B) have been evaluated for effectiveness as of
the end of the most recent annual period reported to the SEC, and (C) are
effective to perform the functions for which they were established. Neither the
auditors of the Company nor the Board of Directors of the Company has been
advised of: (x) any significant deficiencies or material weaknesses in the
design or operation of the internal controls over financial reporting (as such
term is defined in Rule 13a-15(f) under the 1934 Act) of the Company that have
materially affected the Company's internal control over financial reporting; or
(y) any fraud, whether or not material, that involves management or other
employees who have a role in the internal controls over financial reporting of
the Company
4.6 ABSENCE OF CERTAIN CHANGES. Except with respect to the
transactions contemplated hereby and by each of the other Transaction Documents,
since December 31, 2005, (i) the Company and each of its Subsidiaries has
conducted its business only in the ordinary course, consistent with past
practice, and since that date, no changes have occurred which would reasonably
be expected to have a
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10.2-Securities Purchase Agreement (Tower Tech) (2).DOC
Material Adverse Effect; and (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected on the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC.
4.7 ABSENCE OF LITIGATION. Except as set forth in SCHEDULE 4.7,
there is no Action pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries that (i) adversely affects or challenges the legality, validity or
enforceability of this Agreement, or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending any investigation by the
SEC involving the Company or any current or former director or officer of the
Company (in his or her capacity as such). The SEC has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company under the 1934 Act or the 1933 Act.
4.8 PATENTS, COPYRIGHTS. The Company and each of its Subsidiaries
owns or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, copyrights,
trademarks, trademark applications, service marks, service names, trade names
and copyrights ("INTELLECTUAL PROPERTY") necessary to enable it to conduct its
business as now operated (and, to the Company's knowledge, as presently
contemplated to be operated in the future); there is no claim or Action by any
person pertaining to, or proceeding pending, or to the Company's knowledge
threatened, which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to conduct its
business as now operated and to the Company's knowledge, the Company's or its
Subsidiaries' current products and processes do not infringe on any Intellectual
Property or other rights held by any person, except where any such infringement
would not reasonably be expected to have a Material Adverse Effect.
4.9 TAX STATUS. The Company and each of its Subsidiaries has made
or filed all federal, state and foreign income and all other material tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
state or local tax.
4.10 PERMITS; COMPLIANCE.
a. The Company and each of its Subsidiaries is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to
own, lease and operate its properties and to carry on its business as it is now
being conducted (collectively, "PERMITS"), and there is no Action pending or, to
the knowledge of the Company, threatened regarding suspension or cancellation of
any of the Permits. Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, any of the Permits, except for any
such
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conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
b. Since December 31, 2005, no event has occurred or, to the
knowledge of the Company, circumstance exists that (with or without notice or
lapse of time): (a) would reasonably be expected to constitute or result in a
violation by the Company or any of its Subsidiaries, or a failure on the part of
the Company or its Subsidiaries to comply with, any Legal Requirement; or (b)
would reasonably be expected to give rise to any obligation on the part of the
Company or any of its Subsidiaries to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature in connection with a failure
to comply with any Legal Requirement, except in either case that would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received any notice or other communication from
any regulatory authority or any other person, nor does the Company have any
knowledge regarding: (x) any actual, alleged, possible or potential violation
of, or failure to comply with, any Legal Requirement, or (y) any actual,
alleged, possible or potential obligation on the part of the Company or any of
its Subsidiaries to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to comply with any
Legal Requirement, except in either case that would not reasonably be expected
to have a Material Adverse Effect.
c. The Company is in compliance in all material respects with
the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder that are applicable to it and has taken reasonable steps
such that the Company expects to be in a position to comply with the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder at such time as Section 404 becomes
applicable to the Company.
d. The Company is, and has reason to believe that for the
foreseeable future it will continue to be, in compliance with all applicable
rules of the OTC Bulletin Board. The Company has not received notice from the
OTC Bulletin Board that the Company is not in compliance with the rules or
requirements thereof. The issuance and sale of the Shares under this Agreement
does not contravene the rules and regulations of the OTC Bulletin Board, and no
approval of the stockholders of the Company is required for the Company to issue
the Shares as contemplated by this Agreement.
4.11 ENVIRONMENTAL MATTERS. "ENVIRONMENTAL LAWS" shall mean,
collectively, all Legal Requirements, including any federal, state, local or
foreign statute, laws, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "HAZARDOUS MATERIALS") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. Except for such matters as could not, singly or
in the aggregate, reasonably be expected to result in a Material Adverse Effect
or as set forth on SCHEDULE 4.11: (i) the Company and its Subsidiaries have
complied and are in compliance with all applicable Environmental Laws; (ii)
without limiting the generality of the foregoing, the Company and its
Subsidiaries have obtained, have complied, and are in compliance with all
Permits that are required pursuant to Environmental Laws for the occupation of
their respective facilities and the operation of their respective businesses;
(iii) none of the Company or its Subsidiaries has received any written notice,
report or other information regarding any actual or alleged violation of
Environmental Laws, or any liabilities or potential liabilities (including
fines, penalties, costs and expenses), including any investigatory, remedial or
corrective obligations, relating to any of them or their respective facilities
arising under Environmental Laws, nor, to the knowledge of the Company is there
any factual basis therefore; (iv) there are no underground storage
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tanks, polychlorinated biphenyls, urea formaldehyde or other hazardous
substances (other than small quantities of hazardous substances for use in the
ordinary course of the operation of the Company's and its Subsidiaries'
respective businesses, which are stored and maintained in accordance and in
compliance with all applicable Environmental Laws), in, on, over, under or at
any real property owned or operated by the Company and/or its Subsidiaries; (v)
there are no conditions existing at any real property or with respect to the
Company or any of its Subsidiaries that require remedial or corrective action,
removal, monitoring or closure pursuant to the Environmental Laws and (vi) to
the knowledge of the Company, neither the Company nor any of its Subsidiaries
has contractually, by operation of law, or otherwise amended or succeeded to any
liabilities arising under any Environmental Laws of any predecessors or any
other Person.
4.12 TITLE TO PROPERTY. Except for any lien for current taxes not yet
delinquent or which are being contested in good faith and by appropriate
proceedings, the Company and its Subsidiaries have good and marketable title to
all real property and all personal property owned by them which is material to
the business of the Company and its Subsidiaries. Any leases of real property
and facilities of the Company and its Subsidiaries are valid and effective in
accordance with their respective terms, except as would not have a Material
Adverse Effect.
4.13 NO INVESTMENT COMPANY OR REAL PROPERTY HOLDING COMPANY. The
Company is not, and upon the issuance and sale of the Shares as contemplated by
this Agreement will not be, an "investment company" as defined under the
Investment Company Act of 1940 ("INVESTMENT COMPANY"). The Company is not
controlled by an Investment Company. The Company is not a United States real
property holding company, as defined under the Internal Revenue Code of 1986, as
amended.
4.14 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.
4.15 REGISTRATION RIGHTS. Except pursuant to the Registration Rights
Agreement, and as otherwise set forth in SCHEDULE 4.15 effective upon the
Closing, neither the Company nor any Subsidiary is currently subject to any
agreement providing any person or entity any rights (including piggyback
registration rights) to have any securities of the Company or any Subsidiary
registered with the SEC or registered or qualified with any other governmental
authority.
4.16 EXCHANGE ACT REGISTRATION. The Common Stock is registered
pursuant the 1934 Act, and the Company has taken no action designed to, or
which, to the knowledge of the Company, is likely to have the effect of,
terminating the registration of the Common Stock.
4.17 LABOR RELATIONS. No labor or employment dispute exists or, to
the knowledge of the Company, is imminent or threatened, with respect to any of
the employees of the Company that has, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.18 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth
in the SEC Documents, and SCHEDULE 4.18, none of the officers or directors of
the Company, and to the knowledge of the Company, none of the employees of the
Company, is presently a party to any transaction or agreement with the Company
(other than for services as employees, officers and directors) exceeding
$60,000, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
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4.19 INSURANCE. The Company and its Subsidiaries have insurance
policies in full force and effect of a type, covering such risks and in such
amounts, and having such deductibles and exclusions as are customary for
conducting businesses and owning assets similar in nature and scope to those of
the Company and its Subsidiaries. The amounts of all such insurance policies and
the risks covered thereby are in accordance in all material respects with all
material contracts and agreements to which the Company and/or its Subsidiaries
is a party and with all applicable Legal Requirements. With respect to each such
insurance policy: (i) the policy is valid, outstanding and enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws in effect that limit creditors' rights generally, equitable limitations on
the availability of specific remedies and principles of equity (regardless of
whether such enforcement is considered in a proceeding in law or in equity);
(ii) neither the Company nor any of its Subsidiaries is in breach or default
with respect to its obligations thereunder in any material respect; and (iii) no
party to the policy has repudiated, or given notice of an intent to repudiate,
any provision thereof.
4.20 APPROVED ACQUISITIONS OF SHARES; NO ANTI-TAKEOVER PROVISIONS.
Subject to and contingent on the Buyer's covenant in SECTION 5.8, the Company
has taken all necessary action, if any, required under the laws of the State of
Nevada or otherwise to allow the Buyer to acquire the Shares pursuant to this
Agreement and further to allow the Buyer to, without further approval of the
Company's Board of Directors, acquire in the future additional shares of Common
Stock, until such time as the Buyer owns 35% of the then-outstanding Common
Stock. The Company has no control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Articles of Incorporation or
Bylaws, each as amended (or similar charter documents), that is or could become
applicable to the Buyers as a result of the Buyers and the Company fulfilling
their obligations or exercising their rights under this Agreement, including
without limitation the Company's issuance of the Shares and the Buyers'
ownership of the Shares and Buyers' acquisition in the future of additional
shares of Common Stock until such time as the Buyers own 35% of the
then-outstanding Common Stock. In addition, the Company has opted out of the
provisions of the Nevada Revised Statutes ("NRS") pertaining to the acquisition
of a controlling interest (NRS 78.378 through 78.3793). As of the date hereof,
the Company had less than 200 "stockholders of record" and is not considered a
"resident domestic corporation" for purposes of ss.78.411 through ss.78.444 of
the NRS.
4.21 ERISA. Based upon the Employee Retirement Income Security Act
of 1974 ("ERISA"), and the regulations and published interpretations thereunder:
(i) neither the Company nor any of its Subsidiaries has engaged in any
Prohibited Transactions (as defined in Section 406 of ERISA and Section 4975 of
the Code); (ii) the Company and each of its Subsidiaries has met all applicable
minimum funding requirements under Section 302 of ERISA in respect to its plans;
(iii) neither the Company nor any of its Subsidiaries has any knowledge of any
event or occurrence which would cause the Pension Benefit Guaranty Corporation
to institute proceedings under Title IV of ERISA to terminate any employee
benefit plan(s); neither the Company nor any of its Subsidiaries has any
fiduciary responsibility for investments with respect to any plan existing for
the benefit of persons other than its or such Subsidiary's employees; and (v)
neither the Company nor any of its Subsidiaries has withdrawn, completely or
partially, from any multi-employer pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.
4.22 INTENTIONALLY OMITTED.
4.23 DISCLOSURE. The Company understands and confirms that the Buyers
will rely on the representations and covenants contained herein in effecting the
transactions contemplated by this Agreement and the other Transaction Documents.
All representations and warranties provided to the Buyers including the
disclosures in the Company's disclosure schedules attached hereto furnished by
or on behalf of the Company, taken as a whole are true and correct and do not
contain any untrue statement
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of material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or its Subsidiaries or its or their
businesses, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
ARTICLE 5
COVENANTS
5.1 FORM D; BLUE SKY LAWS. Upon completion of the Closing, the
Company shall file with the SEC a Form D with respect to the Shares as required
under Regulation D and each applicable state securities commission and will
provide a copy thereof to the Buyers promptly after such filing.
5.2 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Shares to repay the Company's outstanding indebtedness as set forth
in SCHEDULE 5.2. Any remaining proceeds from the sale of the Shares may be used
by the Company to purchase equipment, as working capital and for general
corporate purposes.
5.3 EXPENSES. At the Closing, the Company shall reimburse the Buyers
for all reasonable expenses incurred by them in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
Transaction Documents and its due diligence review of the Company, including,
without limitation, reasonable attorneys' fees and expenses, and out-of-pocket
travel costs and expenses.
5.4 NO INTEGRATION. The Company shall not make any offers or sales
of any security (other than the Shares) under circumstances that would require
registration of the Shares being offered or sold hereunder under the 1933 Act or
cause the offering of the Shares to be integrated with any other offering of
securities by the Company in such a manner as would require the Company to seek
the approval of its stockholders for the issuance of the Shares under any
stockholder approval provision applicable to the Company or its securities.
5.5 BOARD DESIGNEE(S). For as long as the Buyers or their affiliates
hold at least 10% of the then issued and outstanding Common Stock, the Buyers
shall have the right to appoint two members of the Company's Board of Directors.
Notwithstanding anything to the contrary contained in this Agreement, the
Articles of Incorporation, as amended, of the Company, or the Bylaws of the
Company, as amended, for as long as the Buyers have the right to appoint
directors pursuant to this SECTION 5.5, the Company's Board of Directors shall
be comprised of no more than seven directors.
5.6 OBSERVATION RIGHTS. In addition to the rights to nominate two
directors provided in SECTION 5.5, for such time as the Buyers or their
affiliates continue to hold at least 10% of the total issued and outstanding
Common Stock, the Company and its Subsidiaries shall extend Observation Rights
(as defined below) to Buyers or their affiliates. For purposes of this Section,
the term "OBSERVATION RIGHTS" shall mean the right of Buyers or their affiliates
to have a representative (an "OBSERVER") attend as an observer all meetings
(including telephonic meetings) of the Boards of Directors of the Company and
its Subsidiaries and their respective committees. The Observer shall receive
prior written notice of all meetings of the Boards of Directors of the Company
and its Subsidiaries and their respective committees at the same time that
notice of such meetings is given to the directors and shall receive all
materials and information provided from time to time to the members of the
Boards of Directors of the Company and its Subsidiaries and their respective
committees. Subject to ordinary and reasonable procedural rules, the Observer
may participate in a meaningful manner in discussions of matters brought to the
Board of
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Directors, and shall be permitted to pose questions and the Board of Directors
shall provide complete responses to the questions posed. For the avoidance of
doubt, the Observer shall not be deemed to be a member of the Board of Directors
or any committee of the Company and its Subsidiaries. The Company shall
reimburse the Observer for the out-of-pocket expenses of the Observer in
attending such meetings on the same basis that the directors are reimbursed for
their out-of-pocket expenses. Notwithstanding anything to the contrary contained
herein, the Observation Rights shall be conditioned on the Observer maintaining
the confidentiality of all material non-public material and information provided
to the Observer and the Boards of Directors and committees of the Company and
its Subsidiaries in accordance with procedures and policies established from
time to time in writing by the Company and its Subsidiaries and provided to the
Observer; however, notwithstanding any such procedures, the Observer shall be
permitted to (A) provide, on a confidential basis, such material and information
to the Buyers and their affiliates and their respective managers, partners,
directors, officers, representatives, advisers, auditors, examiners and counsel
who have agreed in writing to observe the confidentiality provisions of this
SECTION 5.6, and (B) provided the Observer gives prior written notice to the
Company, disclose such material and information in accordance with applicable
laws or legal process, in any litigation or other proceedings under this
Agreement or in accordance with regulatory requirements.
5.7 PARTICIPATION IN FUTURE ISSUANCES. The Buyers shall have the
right to participate in any future offerings, sales or exchanges by the Company
of Common Stock or securities convertible into or exercisable for Common Stock
(each, a "FUTURE OFFERING") so as to maintain each Buyer's percentage ownership,
on a fully diluted basis, of the Common Stock immediately prior to such
offerings. For purposes of this SECTION 5.7, however, a Future Offering shall
not include the issuance of options, restricted stock or similar securities by
the Company in accordance with the terms of any employee benefit or compensation
plan adopted by the Company's Board of Directors. Each Buyer shall be entitled
to receive written notice of any Future Offering (an "OFFERING NOTICE") at least
15 days prior to the proposed closing date of such Future Offering, which
Offering Notice must include a description of the securities to be offered, sold
or exchanged, including the price and other terms upon which they are to be
issued, sold or exchanged, the parties to whom such securities are being
offered, sold or exchanged and the number or amount of the offered securities to
be issued, sold or exchanged. If either or both of the Buyers elect to
participate in a Future Offering, such Buyer or Buyers must give written notice
of such election to the Company within 7 days following the receipt by such
Buyer or Buyers of the Offering Notice. Such participation by such Buyer or
Buyers in any Future Offering shall be at the same price and otherwise on the
same terms as those described in the Offering Notice.
5.8 FUTURE ACQUISITIONS. The Company shall not revoke its approval
of the acquisition of up to 35% of the Common Stock on a fully diluted basis by
the Buyers. The Company shall use its best efforts to ensure that any future
acquisitions of the Common Stock by the Buyers (up to 35% of the of the
outstanding Common Stock on a fully diluted basis) shall not be made subject to
the provisions of any anti-takeover laws and regulations of any governmental
authority, including without limitation, the applicable provisions of the Nevada
Revised Statutes, and any provisions of an anti-takeover nature adopted by the
Company or any of its Subsidiaries or contained in the Company's Articles of
Incorporation, Bylaws, or the organizational documents of any of its
Subsidiaries, each as amended.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION
The obligation of the Company hereunder to issue and sell the Shares to
the Buyers at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions thereto,
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provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion:
6.1 DELIVERY OF TRANSACTION DOCUMENTS. The Buyers shall have
executed and delivered the Transaction Documents to the Company.
6.2 PAYMENT OF PURCHASE PRICE. The Buyers shall have delivered the
Purchase Price in accordance with SECTION 2.2 above.
6.3 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyers shall be true and correct in all material respects
(provided, however, that such qualification shall only apply to representations
or warranties not otherwise qualified by materiality) as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and the
applicable Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the applicable Buyer at
or prior to the Closing Date.
6.4 LITIGATION. No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO THE BUYERS' OBLIGATION
The obligation of the Buyers hereunder to purchase the Shares at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the Buyers'
sole benefit and may be waived by the Buyers at any time in its sole discretion:
7.1 DELIVERY OF TRANSACTION DOCUMENTS; ISSUANCE OF SHARES. The
Company shall have executed and delivered the Transaction Documents to the
Buyers, and shall deliver the Transfer Instructions to the transfer agent for
the Company's Common Stock to issue certificates in the name of each Buyer
representing the Shares being purchased by such Buyer. The Company shall deliver
a copy of the Transfer Instructions to the Buyers at the Closing.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company shall be true and correct in all material respects
(provided, however, that such qualification shall only apply to representations
or warranties not otherwise qualified by materiality) as of the date when made
and as of the Closing Date as though made at such time (except for
representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date.
7.3 CONSENTS. Any consents or approvals required to be secured by
the Company for the consummation of the transactions contemplated by the
Transaction Documents shall have been obtained and shall be reasonably
satisfactory to the Buyers.
7.4 LITIGATION. No Action shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having
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authority over the matters contemplated hereby which prohibits the consummation
of any of the transactions contemplated by this Agreement.
7.5 OPINION. The Buyers shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyers with respect to the matters set forth in
EXHIBIT B attached hereto.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the assets, liabilities (contingent or otherwise), affairs,
business, operations, prospects or condition (financial or otherwise) of the
Company prior to the Closing Date.
7.7 INTENTIONALLY OMITTED.
7.8 IRREVOCABLE PROXY. The Buyers shall receive an irrevocable proxy
from each of Christopher C. Allie, Raymond L. Brickner, III, Terence P. Fox and
Daniel P. Wergin (collectively, the "FOUNDERS") in the form attached hereto as
EXHIBIT C.
7.9 ADDITIONAL BUYER AGREEMENTS. The Buyers having entered into
(i) a right of first offer/refusal letter agreement with each of Christopher C.
Allie, Raymond L. Brickner, III, Terence P. Fox, Samuel W. Fairchild, Daniel P.
Wergin, Integritas, Inc. and certain of the Founders' related trusts in the form
attached hereto as EXHIBIT D (the "LETTER AGREEMENT"); and (ii) a securities
purchase agreement with each of the Founders for the aggregate purchase by the
Buyers of 2,400,000 shares of Common Stock from the Founders at $1.50 per share,
in the form attached hereto as EXHIBIT E (the "FOUNDERS SPA").
7.10 BRICKNER EMPLOYMENT AGREEMENT. The Company having entered into
an employment agreement with Raymond L. Brickner, III to serve in the capacity
of President and Chief Operating Officer of the Company in a form reasonably
acceptable to the Buyer.
7.11 CONVERSION OF DEBT. The conversion of the Company's debt
payable to the Founders as set forth in SCHEDULE 7.11 into Common Stock at a
ratio of $1.50 per share at or prior to the Closing.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
each Buyer and its affiliates and hold each Buyer and its affiliates harmless
from and against any and all liabilities, losses, damages, costs and expenses of
any kind (including, without limitation, the reasonable fees and disbursements
of such Buyer's counsel in connection with any investigative, administrative or
judicial proceeding), which may be incurred by such Buyer or such affiliates as
a result of any claims made against such Buyer or such affiliates by any person
that relate to or arise out of (i) any breach by the Company of any of its
representations, warranties or covenants contained in this Agreement or in the
Transaction Documents (other than the Registration Rights Agreement, which
contains separate indemnification provisions), or (ii) any litigation,
investigation or proceeding instituted by any person with respect to this
Agreement or the Shares (excluding, however, any such litigation, investigation
or proceeding which arises solely from the acts or omissions of such Buyer or
its affiliates).
8.2 NOTIFICATION. Any person entitled to indemnification hereunder
("INDEMNIFIED PARTY") will (i) give prompt notice to the Company, of any third
party claim, action or suit with respect to which it seeks indemnification (the
"CLAIM") (but omission of such notice shall not relieve the Company from
liability hereunder except to the extent it is actually prejudiced by such
failure to give notice), specifying
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in reasonable detail the factual basis for the Claim, the amount thereof,
estimated in good faith, and the method of computation of the Claim, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such indemnification is sought with respect to the
Claim, and (ii) unless in such Indemnified Party's reasonable judgment a
conflict of interest may exist between such Indemnified Party and the Company
with respect to such claim, permit the Company to assume the defense of the
Claim with counsel reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall cooperate fully with the Company with respect to the
defense of the Claim and, if the Company elects to assume control of the defense
of the Claim, the Indemnified Party shall have the right to participate in the
defense of the Claim at its own expense. If the Company does not elect to assume
control or otherwise participate in the defense of the Claim, then the
Indemnified Party may defend through counsel of its own choosing. If such
defense is not assumed by the Company, the Company will not be subject to any
liability under this Agreement or otherwise for any settlement made without its
consent (but such consent will not be unreasonably withheld or delayed). If the
Company elects not to or is not entitled to assume the defense of a Claim, it
will not be obligated to pay the fees and expenses of more than one counsel for
all Indemnified Parties with respect to the Claim, unless an actual conflict of
interest exists between such Indemnified Party and any other of such Indemnified
Parties with respect to the Claim, in which event the Company will be obligated
to pay the fees and expenses of such additional counsel or counsels.
ARTICLE 9
GOVERNING LAW; MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be enforced, governed by
and construed in accordance with the laws of the State of Wisconsin applicable
to agreements made and to be performed entirely within such state, without
regard to the principles of conflict of laws. The parties hereto hereby submit
to the exclusive jurisdiction of the United States Federal Courts located in the
State of Wisconsin with respect to any dispute arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby. All parties irrevocably waive the defense of an inconvenient
forum to the maintenance of such suit or proceeding. All parties further agree
that service of process upon a party mailed by first class mail shall be deemed
in every respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. All parties agree that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
The party which does not prevail in any dispute arising under this Agreement
shall be responsible for all reasonable fees and expenses, including reasonable
attorneys' fees, incurred by the prevailing party in connection with such
dispute.
9.2 COUNTERPARTS; ELECTRONIC SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be delivered to the
other party hereto by electronic transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
9.3 HEADINGS. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the interpretation of,
this Agreement.
9.4 SEVERABILITY. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute or
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10.2-Securities Purchase Agreement (Tower Tech) (2).DOC
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
9.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and supersede all previous
understandings or agreements between the parties with respect to such matters.
No provision of this Agreement may be waived other than by an instrument in
writing signed by the party to be charged with enforcement. The provisions of
this Agreement may be amended only by a written instrument signed by the Company
and the Buyers.
9.6 NOTICES. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
Tower Tech Holdings, Inc.
980 Maritime Drive, Suite 6
Manitowoc, Wisconsin 54220
Telephone: (920) 684-5531
Facsimile: (920) 682-0301
Attention: Mr. Raymond L. Brickner, III
With copy to:
Dill Dill Carr Stonbraker & Hutchings, P.C.
455 Sherman Street, Suite 300
Denver, Colorado 80203
Telephone: (303) 777-3737
Facsimile: (303) 777-3823
Attention: Fay M. Matsukage, Esq.
If to the Buyers:
Tontine Capital Partners, L.P.
55 Railroad Avenue, 1st Floor
Greenwich, Connecticut 06830
Attention: Mr. Jeffrey L. Gendell
Telephone: (203) 769-2000
Facsimile: (203) 769-2010
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10.2-Securities Purchase Agreement (Tower Tech) (2).DOC
With copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP
Until June 30, 2007:
333 W. Wacker Drive, Suite 2700
Chicago, Illinois 60606
After June 30, 2007:
200 W. Madison Street, Suite 3900
Chicago, Illinois 60606
Attention: John E. Freechack, Esq.
Telephone: (312) 984-3100
Facsimile: (312) 984-3150
Each party shall provide notice to the other party of any change in address.
9.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties
hereto.
9.8 THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
9.9 PUBLICITY. The Company and the Buyers shall have the right to
review a reasonable period of time before issuing any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Buyers, to make any press release with respect to such
transactions as is required by applicable law and regulations (although the
Buyers shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon). Notwithstanding the foregoing, the
Company shall file with the SEC a Form 8-K disclosing the transactions herein
within four (4) business days of the Closing Date and attach the relevant
agreements and instruments to either such Form 8-K or the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2006, and the Buyers may
make such filings as may be required under Section 13 and Section 16 of the 1934
Act.
9.10 FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.11 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
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10.2-Securities Purchase Agreement (Tower Tech) (2).DOC
9.12 RIGHTS CUMULATIVE. Each and all of the various rights, powers
and remedies of the parties shall be considered cumulative with and in addition
to any other rights, powers and remedies which such parties may have at law or
in equity in the event of the breach of any of the terms of this Agreement. The
exercise or partial exercise of any right, power or remedy shall neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party.
9.13 SURVIVAL. Any covenant or agreement in this Agreement required
to be performed following the Closing Date, shall survive the Closing Date.
Without limitation of the foregoing, the respective representations and
warranties given by the parties hereto shall survive the Closing Date and the
consummation of the transactions contemplated herein, but only for a period of
the earlier of (i) five years following the Closing Date and (ii) the applicable
statute of limitations with respect to each representation and warranty, and
thereafter shall expire and have no further force and effect..
9.14 KNOWLEDGE. The term "knowledge of the Company" or any similar
formulation of knowledge shall mean, the actual knowledge after due inquiry of
an executive officer of the Company.
[SIGNATURE PAGE FOLLOWS]
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10.2-Securities Purchase Agreement (Tower Tech) (2).DOC
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
COMPANY:
TOWER TECH HOLDINGS INC.
By: /s/ RAYMOND L. BRICKNER, III
---------------------------------------------
Name: RAYMOND L. BRICKNER, III
-------------------------------------------
Title: PRESIDENT
------------------------------------------
BUYERS:
TONTINE CAPITAL PARTNERS, L.P.
By: Tontine Capital Management, LLC, its
general partner
By: /s/ JEFFREY L. GENDELL
---------------------------------------
Jeffrey L. Gendell, as managing member
Total Number of Shares: 8,213,334
Total Purchase Price: $12,320,001.00
Form of Entity and Jurisdiction of Organization:
Delaware Limited Partnership
TONTINE CAPITAL OVERSEAS MASTER FUND, L.P.
By: Tontine Capital Overseas GP, L.L.C.,
its general partner
By: /s/ JEFFREY L. GENDELL
----------------------------------------
Jeffrey L. Gendell, as managing member
Total Number of Shares: 2,053,333
Total Purchase Price: $3,079,999.50
Form of Entity and Jurisdiction of Organization:
Cayman Islands Limited Partnership