270 Legal [Sample Agreements]

MEMBERSHIP INTEREST PURCHASE AGREEMENT

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R E C I T A L S

A. The Company is engaged in the business of providing products and services to the North American wind energy industry including such products and services utilized or required in construction, operations and maintenance and component repairs, including control systems and gear boxes, retrofit programs and warranty service (the “Business”).

B. Sellers own all of the outstanding membership interests of the Company.

C. Sellers desire to sell, and Buyer desires to purchase, all of the issued and outstanding membership interests of the Company (the “Membership Interests”) for the consideration and on the terms set forth in this Agreement.

AGREEMENT

In consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer, the Company and Sellers agree as follows:

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ARTICLE 2

SALE AND TRANSFER OF MEMBERSHIP INTERESTS;
PURCHASE PRICE

2.1 Membership Interests. Subject to the terms and conditions of this Agreement, at the Closing, Sellers will sell and transfer the Membership Interests to Buyer, and Buyer will purchase the Membership Interests from Sellers.

2.2 Purchase Price. The aggregate purchase price for the Membership Interests (the “Purchase Price”) is equal to:

(a) The Base Purchase; minus

(b) the aggregate amount required at Closing, or paid by the Company prior to Closing, or authorized or contracted for by the Company prior to the Closing but payable after the Closing to discharge any and all (i) severance payments, termination payments or other amounts payable (including, without limitation, the estimated costs of benefits required to be provided) under the terms of any employment agreement, plan or other arrangement payable if the employee’s employment with the Company is terminated by the employee after the occurrence of a “change of control” or other similar event, (ii) stay bonuses, success bonuses or other similar payments under the terms of any employment agreement, plan or other arrangement and relating to the transactions contemplated by this Agreement, (iii) cash payments required to cancel and terminate all outstanding options to acquire membership interests in the Company, (iv) the employer’s portion of social security, Medicare, unemployment or other employment Taxes imposed with respect to the amounts described above, and (v) the aggregate amount of any distributions to Sellers from the Company after the date hereof to and including the Closing Date (other than the Tax Distribution and the payment of normal compensation and benefits in the Ordinary Course of Business pursuant to existing compensation and benefit arrangements in effect on the date hereof).

2.3 Payment of Purchase Price. The Purchase Price shall be paid by Buyer as follows:

(a) Cash Purchase Price. At the Closing, Buyer shall pay to Sellers in cash the sum of $2,250,000 plus fifty percent (50%) of the remaining balance of the Purchase Price after taking into account said $2,250,000 amount (the “Cash Purchase Price”), One Million Dollars ($1,000,000) of which Sellers authorize Buyer to deposit in the Escrow Account on behalf of Sellers pursuant to Section 2.3(c) below (the “Cash Escrow Deposit”).

(b) Stock Purchase Price. Subject to the provisions of Section 2.3(d) below, at the Closing Buyer shall deliver to Sellers a number of shares of Buyer Common Stock equal to the remaining balance of the Purchase Price (the Purchase Price minus the Cash Purchase Price) divided by the Price Per Share, which the parties acknowledge and agree is Eight and 48/100 Dollars ($8.48) per share, adjusted proportionately for any stock dividends, stock splits, combination of shares or other change in Buyer’s capital structure between the date hereof and the Closing Date. The aggregate value of such Buyer Common Stock delivered to the Sellers at Closing combined with the aggregate value of Buyer Common Stock deposited directly in the Escrow Account is referred to herein as the “Stock Purchase Price”, with such value being determined by multiplying the number of shares of Buyer Common Stock so delivered or deposited by the Per Share Price.

(c) Escrow Amount. To secure and to serve as a fund in respect of the indemnification obligations of Sellers under this Agreement, Buyer, Sellers and Wells Fargo Bank, as Escrow Agent, (the “Escrow Agent”), at Closing shall enter into an Escrow Agreement substantially in the form annexed hereto as Exhibit A (the “Escrow Agreement”). At the Closing, Buyer shall deposit (i) Two Million Dollars ($2,000,000) of Buyer Common Stock or, Two Hundred and Thirty-Five Thousand Eight Hundred and Forty-Nine (235,849) Shares (based upon the Price Per Share) (“Stock Escrow Deposit”), and (ii) the Cash Escrow Deposit (the “Escrow Amount”) with the Escrow Agent to be held in an account (collectively, the “Escrow Account”) pursuant to the terms of the Escrow Agreement. Except with respect to amounts that have been previously paid from the Escrow Account to Buyer pursuant to the joint written instruction of Sellers and Buyer, and except with respect to indemnity claims duly made in accordance with ARTICLE 11 on or before the third anniversary date of the Closing Date, all amounts in the Escrow Account (with any interest or other earnings paid thereon) shall be distributed to Sellers in accordance with the Escrow Agreement within ten (10) business days after the expiration of said three year escrow period (the “Escrow Period”).

(d) Issuance of Buyer Stock Options. In connection with the Closing on the Closing Date, by virtue of the Contemplated Transactions Buyer shall issue options to acquire Buyer Common Stock pursuant to the Tower Tech Holding, Inc. 2007 Equity Incentive Plan to those employees of the Company who are identified on Schedule 2.3(d) attached hereto in the amounts listed on such Schedule 2.3(d), subject to pro rata adjustment for any stock split, stock dividend, combination of shares, recapitalization or similar transaction. For the avoidance of doubt, the Buyer Common Stock issuable upon exercise of options granted hereunder shall not be a part of or be deducted from the Buyer Common Stock that is payable as part of the Base Purchase Price pursuant to Section 2.3(b) hereof. After the Closing Date, no Company options shall be deemed to be outstanding and all of the Company’s equity option or incentive plans or arrangements shall be terminated and of no further force or effect.

(e) Method of Cash Payment. All cash payments made under this Section 2.3 shall be made by wire transfer of immediately available funds to an account designated by the recipient in writing.

(f) Each Seller. As between Sellers, any Purchase Price payable to Sellers, or payments payable to Sellers from the Escrow Account, shall be paid pro rata among the Sellers based on such Seller’s equity ownership percentage of the Company immediately prior to the Closing. No fractional shares of Buyer Common Stock will be issued to the Sellers. Sellers shall receive cash in lieu of any fractional shares of Buyer Common Stock to which any such Seller would otherwise have been entitled pursuant to the Contemplated Transactions at the Price Per Share.
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