SALE AND PURCHASE AGREEMENT
Between
XXXX XXXXXXXX and XXXXXXX XXXXX
as Sellers
And
ADDVANTAGE TECHNOLOGIES GROUP, INC.
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I 2
1.01 Defined Terms. 2
1.02 Other Definitional Provisions. 5
ARTICLE II 6
2.01 Purchase and Sale 6
2.02 Excluded Assets 6
2.03 Purchase Price 6
2.04 Instruments of Conveyance and Transfer 6
ARTICLE III 7
3.01 Closing 7
3.02 Closing Obligations 7
ARTICLE IV 8
4.01 Organization, Good Standing, Power. 8
4.02 Capitalization 8
4.03 Subsidiaries 8
4.04 Authorization of Agreement. 8
4.05 Contracts and Agreements. 10
4.06 Trade Names, Trademarks, Copyrights, Etc. 10
4.07 Proprietary Rights. 10
4.08 Title to Properties: Absence of Liens and
Encumbrances: Leases 11
4.09 Financial Statements; No Adverse Changes. 11
4.10 Labor Matters. 12
4.11 Taxes. 12
4.12 Litigation 13
4.13 Insurance. 13
4.14 Brokers and Finders. 13
4.15 Compliance with Laws. 13
4.16 Bills and Invoices 14
4.17 Customers and Suppliers 14
4.18 Accounts Receivable. 15
4.19 Books and Records 15
4.20 Untrue Statements. 15
4.21 Actions Since April 30, 2001. 15
4.22 Sellers Investment Representations 15
ARTICLE V 16
5.01 Organization, Good Standing, Power. 16
5.02 Brokers and Finders. 17
ARTICLE VI 17
6.01 Approvals. 17
6.02 Investigation by Buyer. 18
6.03 Conduct of Business. 18
6.04 No Disposal of Property. 19
6.05 No Acquisitions 19
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6.06 No Breach or Default 19
6.07 No Indebtedness 19
6.08 Payment of Liabilities. 20
6.09 Notice and Cure. 20
6.10 Cooperation of Management Pending Transaction. 20
6.11 Certificates of Good Standing. 20
6.12 Employee Benefit Plans 20
6.13 Name Change. 21
ARTICLE VII 21
7.01 Approvals. 21
7.02 Obligation of Buyer to Make Transaction Effective. 21
7.03 Notice and Cure. 21
ARTICLE VIII 22
8.01 Consents and Approvals. 22
8.02 Certain Actions, Etc.. 22
ARTICLE IX 22
9.01 Accuracy of Representations and Warranties. 23
9.02 Performance of Covenants, Agreements and Conditions.23
9.03 Officers' Certificate, Etc. 23
9.04 Real Estate Purchase Agreement 23
9.05 Non-Compete and Other Agreements 23
9.06 Employment Agreements. 23
9.07 Delivery of Assignments 23
ARTICLE X 23
10.01 Accuracy of Representations and Warranties. 24
10.02 Performance of Covenants, Agreements and
Conditions. 24
10.03 Officers' Certificates, Etc 24
10.04 Employment Agreements 24
10.05 Real Estate Purchase Agreement 24
10.06 Payment of Shareholder Loans 24
ARTICLE XI 24
11.01 Termination. 24
11.02 Effect of Termination. 25
11.03 Waiver. 25
ARTICLE XII 25
12.01 Confidentiality. 25
12.02 Public Announcements. 26
12.03 Additional Agreements. 26
12.04 Forwarding Payments and Property 26
12.05 Available Remedies. 26
12.06 Indemnification. 26
12.07 Actions of the Parties after the Closing Date 28
ARTICLE XIII 29
13.01 Expenses. 29
13.02 Notices. 29
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13.03 Time. 30
13.04 Entire Agreement; Amendment 30
13.05 Binding Effect; Benefits. 30
13.06 Assignment. 31
13.07 Applicable Law. 31
13.08 Counterparts. 31
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The following exhibits and schedules to the Sale and Purchase Agreement
have been omitted:
Exhibit A -Escrow Agreement
Exhibit B - Red Thor Real Estate Purchase Agreement
Exhibit C - Xxxxxxxx Real Estate Purchase Agreement
Exhibit D - Non-Compete Agreement
Exhibit E - Employment Agreement
Schedule 2.02 - Excluded Receivables
Schedule 4.04 - Permits
Schedule 4.05 - Contracts
Schedule 4.06 - Trade Names, Fictitious Names
Schedule 4.09 - Financial Statements
Schedule 4.13 - Litigation
Schedule 4.14 - Insurance
Schedule 4.18 - Customers and Suppliers
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SALE AND PURCHASE AGREEMENT
This Agreement is entered into as of May 31, 2001 (this
"Agreement"), by and among ADDvantage Technologies Group, Inc.,
an Oklahoma corporation ("Buyer"), and Xxxx Xxxxxxxx, Xxxxxxx
Xxxxx (the "Sellers").
RECITALS:
WHEREAS, Sellers own all of the issued and outstanding
shares of common stock of Xxxx-Midwest, Inc., d/b/a Comtech
Services, Inc. (the "Company");
WHEREAS, Buyer desires to purchase and Sellers desire to
sell, on the terms, in the manner and subject to the conditions
reflected below, all the issued and outstanding shares of common
stock of the Company.
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in
connection with such purchase and sale of stock provided for in
this Agreement and also to prescribe various conditions to such
purchase and sale of stock.
NOW THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements
herein set forth, the Parties have agreed, and hereby agree
subject to the terms and conditions hereinafter set forth, as
follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. Capitalized terms used herein shall
have the meanings ascribed to them in this Article I, unless such
terms are defined elsewhere in this Agreement.
Affiliates: shall mean any persons who control, are
controlled by or are in common control with any person.
Business: shall mean the business currently conducted by
the Company.
Buyer: shall mean ADDvantage Technologies Group, Inc., an
Oklahoma corporation. It is agreed that ADDvantage Technologies
Group, Inc. may direct that the Purchased Assets be acquired by a
wholly owned subsidiary of ADDvantage Technologies Group, Inc.,
provided, however, that in such event, ADDvantage Technologies
Group, Inc. will continue to be subject to all of the
liabilities, obligations, commitments and covenants of the Buyer
hereunder.
COBRA: shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations
promulgated thereunder.
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COBRA Liabilities: shall mean any and all liabilities and
obligations associated with, or related to, providing COBRA
continuation coverage to Seller=s employees and former employees,
and such employees= and former employees= beneficiaries, who are
entitled to receive such continuation coverage.
Company: shall have the meaning set forth in the Recitals.
Contracts: shall mean those contracts, agreements,
instruments, and other obligations described in Section 4.05(a).
Claims: shall have the meaning set forth in Section
12.06(a).
Closing: shall mean the consummation of the purchase and
sale of the stock hereunder which shall occur on the Closing
Date.
Closing Date: shall have the meaning set forth in
Section 3.01.
Code: shall mean the Internal Revenue Code of 1986, as
amended.
Disclosure Materials: shall have the meaning set forth in
Section 4.22.
ERISA: shall have the meaning Employee Retirement Income
Security Act of 1974, as amended.
Employee Benefit Plans: shall mean (i) each "employee
benefit plan," as such term is defined in Section 3(3) of ERISA;
and (ii) each personnel policy, stock option plan, bonus plan or
arrangement, incentive award plan or arrangement, vacation
policy, severance pay plan, policy, program or agreement,
deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, retiree benefit
plan or arrangement, fringe benefit program or practice (whether
or not taxable), employee loan, consulting agreement, employment
agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding; which is or has
been sponsored, maintained or contributed to by the Company or
any trade or business, whether or not incorporated, that together
with the Company would be considered affiliated with the Company
under Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA.
Environmental Laws: means Laws relating to pollution, clean-
up, health and safety of persons or property, Hazardous
Substances or the Release of materials into the Environment.
Excluded Assets: shall mean any of those assets of the
Company described in Section 2.02.
Financial Statements: shall mean those financial statements
of the Company described in Section 4.09.
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Governmental Entity: shall mean any court, government,
governmental agency, commission or instrumentality, domestic or
foreign.
Hazardous Substances: means any substance which is a
"hazardous substance", "hazardous waste", "toxic substance",
"toxic waste", "pollutant", "contaminant," "solid wastes" or
words of similar import under any Environmental Law, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C.
1801 et seq.) and the Clean Air Act (42 U.S.C. 7401 et seq.),
and including without limitation, which contains polychlorinated
biphenyl or gasoline, diesel fuel or other petroleum hydrocarbons
or volatile organic compounds or asbestos.
Indemnified Party: shall have the meaning set forth in
Section 12.06(c).
Indemnifying Party: shall have the meaning set forth in
Section 12.06(c).
Knowledge: means actual knowledge without independent
investigation.
Legal Requirements: shall mean any law, statute, ordinance,
decree, requirement, order, judgment, rule or regulation of,
including the terms of any license, certificate, franchise or
permit issued by, the United States, any state, commonwealth,
territory or possession thereof and any political or judicial
subdivision or instrumentality of the foregoing, including,
without limitation, courts, departments, commissions, boards,
bureaus or agencies.
Lien: shall mean any lien, mortgage, security interest,
pledge, deposit, product payment, restriction, burden,
encumbrance, rights of a vendor under any title retention or
conditional sale agreement, or lease or other arrangement
substantially equivalent thereto.
Missouri Law: shall mean the current statutes and case law
regarding corporations enacted and in effect in the State of
Missouri.
Oklahoma Law: shall mean the Oklahoma General Corporation
Act, as amended.
Parties: shall have the meaning set forth in the Recitals
to this Agreement.
Permits: shall mean all franchises, permits, licenses,
qualifications, rights-of-way, easements, municipal and other
approvals, authorizations, orders, consents and other rights
from, and filings with, any Governmental Entity of any
jurisdiction that are necessary for the lawful conduct of the
Business.
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Proprietary Rights: shall mean trade secrets, copyrights,
patents, trademarks, service marks, customer lists, and all
similar types of intangible property developed, created, or owned
by the Compnay, or used by the Company in connection with the
Business, whether or not the same are entitled to legal
protection, including without limitation: (a) all designs,
methods, inventions and know-how related thereto, (b) all
trademarks, trade names (including "Comtech Services, Inc." and
"Xxxx-Midwest, Inc."), service marks, and copyrights claimed or
used by the Company whether or not they have been registered, and
(c) all customer lists of the Company.
Purchase Price: shall mean the consideration to be paid by
Buyer to Sellers for the shares of stock as provided in
Section 2.03.
SEC: shall mean the Securities and Exchange Commission.
Securities: shall have the meaning set forth in
Section 4.22.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Sellers: shall mean Xxxx Xxxxxxxx and Xxxxxxx Xxxxx.
Shares: shall mean the shares of common stock, par value
$0.01, of Buyer.
Survival Period: shall have the meaning set forth in
Section 12.06(d).
Taxes: shall mean all net income, gross income, gross
receipts, sales and use, ad valorem, franchise, profits,
licenses, withholding, payroll, excise, severance, stamp,
occupation, property, customs duties or other taxes, fees or
charges of any kind whatsoever imposed by a foreign, federal,
state, county or local taxing authority together with any
interest or penalty thereon.
1.02 Other Definitional Provisions.
(a) Titles appearing at the beginning of any Articles,
Sections, subsections or other subdivisions of this Agreement are
for convenience only, do not constitute any part of this
Agreement, and shall be disregarded in construing the language
hereof.
(b) Exhibits and Schedules to this Agreement are
attached hereto and by this reference incorporated herein for all
purposes.
(c) The words "this Agreement," "herein," "hereby,"
"hereunder" and "hereof," and words of similar import, refer to
this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The words "this Article," "this
Section" and "this subsection," and words of similar import,
refer only to the Article, Section or subsection hereof in which
such words occur. The word "or" is not exclusive, and the word
"including" (in its various forms) means "including without
limitation."
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(d) Pronouns in masculine, feminine or neuter genders
shall be construed to state and include any other gender, and
words, terms and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires.
(e) References herein to "Sellers" shall mean either
or both of the Sellers unless the context specifically requires
otherwise.
ARTICLE II
STOCK PURCHASE AND SALE
2.01 Purchase and Sale. At the Closing, upon the terms and
subject to the conditions contained in this Agreement, Sellers
shall sell to Buyer, and Buyer shall purchase from Sellers, all
of the shares of common stock of the Company.
2.02 Excluded Assets. The Company shall convey to Sellers
the following assets on the Closing Date:
1999 GMC Vehicle
1998 Acura 3.5RL
Receivables in the amount
of $57,000 from the creditors of the
Company listed in Schedule 2.02.
2.03 Purchase Price. The Purchase Price shall consist
of the following:
(a) Buyer shall pay the sum of $250,000 in cash, to be paid at
Closing as follows:
(i) $125,000 to be paid to Xx. Xxxxxxxx;
(ii)$125,000 to be paid to Xx. Xxxxx.
(b) Buyer will deliver into the escrow, to be
established pursuant to the terms of the separate Escrow
Agreement attached as Exhibit A (the "Escrow"), a stock
certificate for 14,358 shares of the Company's common stock
naming Xxxx Xxxxxxxx as the owner of such shares (the "Xxxxxxxx
Shares"), and a stock certificate for 14,358 shares of the
Company's common stock naming Xxxxxxx Xxxxx as the owner of such
shares (the "Xxxxx Shares"). The Xxxxx Shares and the Xxxxxxxx
Shares shall be held and distributed pursuant to the terms and
conditions of the Escrow.
2.04 Instruments of Conveyance and Transfer. At the
Closing, Sellers shall execute and deliver to Buyer, as
appropriate, one or more instruments of assignment and other
documents as may be reasonably necessary or appropriate (a) to
vest in Buyer title to or ownership of all of the shares of stock
of the Company, free and clear of any and all Liens, and (b) to
carry out the transactions contemplated by this Agreement.
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Sellers shall assist Buyer, as reasonably required after the
Closing, at Buyer's expense, in registering and recording with
appropriate Governmental Entities the assignment documents.
ARTICLE III
CLOSING
3.01 Closing. The Closing will take place at the offices of the
Company, on May 17, 2001, or, if the conditions to Closing set
forth in this Agreement have not been satisfied by such date, on
the third business day following the day on which all such
conditions have been satisfied or waived, provided, however, that
the Closing Date will not be extended beyond May 31, 2001 without
written consent of all of the parties("Closing Date").
3.02Closing Obligations. At the Closing:
(a) Sellers shall deliver to Buyer:
(i) the instruments of assignment described in
Section 2.04;
(ii)the certificates required by Section 9.03; and
(iii) such other certificates and documents as
may be required under this Agreement or as Buyer shall
reasonably request.
(b)Buyer shall deliver to or on behalf of Sellers Red
Thor, L.L.C. and Xxxx Xxxxxxxx:
(i) payments to Sellers of the cash Purchase Price
by check or other available funds as provided in
Section 2.03(a);
(ii)payments to Red Thor, L.L.C. or Xxxx Xxxxxxxx of
the amount set forth in Section 2 of the agreement to
purchase real estate between Xxxx Xxxxxxxx ("Xxxxxxxx Real
Estate Agreement") and the agreement to purchase real estate
between Buyer and between Red Thor, L.L.C. and Buyer ("Red
Thor Real Estate Agreement"). Buyer shall also assume
indebtedness encumbering the real estate purchased under the
Xxxxxxxx Real Estate Agreement and deliver agreement to
assume indebtedness secured by Trust Deed in Section 2 of
the Red Thor Real Estate Agreement or satisfy the
indebtedness;
(iii) deposit with the escrow agent the stock
in consideration payable as set forth in Section 2.03(b);
(iv) payment of the shareholder loans to
Sellers as set forth in Section 10.06;
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(v) the certificate required by Section 10.03; and
(vi)such other certificates and documents as may be
required under this Agreement or as Sellers shall reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE COMPANY
Sellers, jointly and severally, hereby represent and warrant
to Buyer as follows:
4.01 Organization, Good Standing, Power. The Company is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri and has all
requisite corporate power and authority to carry on the Business
as it is now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in
Texas and in each other jurisdiction where the character of the
properties owned or leased by it, or the nature of its
activities, is such that qualification as a foreign corporation
in that jurisdiction is required by law.
4.02 Capitalization. All of the shares of stock of the
Company that are outstanding as of the date hereof, or will be
outstanding immediately prior to Closing, are or will be duly
authorized, validly issued, fully paid and nonassessable, are not
or will not be subject to, or issued in violation of, any
preemptive rights. Except as set forth above, there are no other
shares of stock authorized or outstanding, and there are no other
agreements, claims or commitments of any nature whatsoever
(whether firm or conditional) obligating the Company to issue,
transfer, deliver to sell, or cause to be issued, transferred,
delivered or sold, additional shares of stock of the Company or
obligating the Company to grant, extend or enter into any such
agreement or commitment.
4.03 Subsidiaries. The Company does not own, directly
or indirectly, any shares of stock or any other equity or long-
term debt securities of any corporation or have any material
equity interest in any firm, partnership, joint venture,
association or other entity.
4.04 Authorization of Agreement. (a) Each Seller has
all requisite power and authority to enter into and perform all
of his obligations under this Agreement. The execution and
delivery of this Agreement by each Seller and the consummation by
each Seller of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such
Seller. This Agreement has been duly executed and delivered by
each Seller and constitutes the legal, valid and binding
obligation of such Seller, enforceable against such Seller in
accordance with its terms except as enforceability may be subject
to (i) any applicable bankruptcy, insolvency, reorganization or
other law relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
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(b) Neither the execution and delivery of this
Agreement by Sellers nor the consummation of the transactions
contemplated hereby to be performed by Sellers will
(i) materially violate or conflict with any provision of the
articles of incorporation or bylaws of the Company, as currently
in effect, or (ii) materially violate or conflict with any
provision of any law, rule, regulation, order, permit,
certificate, writ, judgment, injunction, decree, determination,
award or other decision of any Governmental Entity, other
regulatory or self-regulatory body or association or arbitrator
binding upon the Company or the Business, except where such
violations or conflicts would not in the aggregate have a
material adverse effect on the Business, properties, financial
condition or results of operations of the Company or on the
ability of Sellers to consummate the transactions contemplated
hereby.
(c) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby to be performed by Sellers will result in a material
breach of or constitute a material default (or with notice or
lapse of time or both result in a breach of or constitute a
default) under, or give rise to a right of termination,
cancellation, acceleration or repurchase of any obligation or a
right of first refusal with respect to any material property or
asset or a loss of a material benefit or the imposition of a
material penalty under, any of the terms, conditions or
provisions of:
(i) any mortgage, indenture, loan, or credit
agreement or any other agreement or instrument
evidencing indebtedness for money borrowed to which
either Seller or the Company is a party or by which it
or any of its properties is bound or affected, or
pursuant to which either Seller or the Company has
guaranteed the indebtedness or preferred stock of any
person or entity, or
(ii)any contract, lease, license, tariff, or other
agreement or instrument to which the Company is a party
or by which it or any of its properties is bound or
affected.
(d) Neither the execution and delivery by Sellers of
this Agreement nor the consummation of the transactions
contemplated hereby to be performed by Sellers will result in, or
require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the
properties or other assets now or hereafter owned by the Company.
(e) No consent, approval, order, certificate or
authorization of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to either
Seller or the Company in connection with the execution and
delivery of this Agreement by either Seller or the consummation
by Sellers of the transactions contemplated hereby.
(f) The Company has made or obtained each registration,
filing, submission, license, Permit, certificate, determination
or governmental approval necessary to enable it to carry on the
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Business. All such registrations, filings and submissions with
any Governmental Entity relating to the operations of the Company
were in material compliance with applicable law when filed, and
no material deficiencies have been asserted by any such authority
with respect to such registrations, filing or submissions. All
the Permits are in full force and effect. Schedule 4.04 contains
a full and complete list of Permits.
4.05 Contracts and Agreements. (a) Before the Closing,
Sellers will or will cause the Company to provide Buyer access to
and the right to copy all contracts, agreements, commitments and
instruments, including any and all amendments thereto (the
"Contracts") to which the Company is a party or by which the
Company or any of its assets are bound, including, but not
limited to, purchase orders and agreements, maintenance
agreements, bulk purchase contracts commission agreements and any
contracts, agreements or written arrangements pursuant to which
any affiliate of the Company receives any payments from or
provide services, supplies, equipment or other materials to, the
Company. Schedule 4.05 contains a full and complete list of all
Contracts to which the Company is a party, the performance of
which is in excess of $5,000.
(b) The Company has complied in all material respects
with the provisions of all the Contracts; the Company is not in
material breach or default under, and there is no valid basis for
any claim of breach or default under, and there has been no
waiver of any breach or default under, any term or provision of
any Contract; all the Contracts are in full force and effect and
constitute legal, valid and binding obligations of the respective
parties thereto in accordance with their terms. There has been
no amendment or modification of any of the Contracts, except such
amendments that have been delivered to Buyer. The Company is not
participating in any discussions or negotiations regarding
modification of any of the Contracts. Contracts will not be
impaired by the consummation of the transactions contemplated in
this Agreement.
4.06 Trade Names, Trademarks, Copyrights, Etc.
Schedule 4.06 is a list that identifies each trade name,
fictitious business name, or other similar name under which the
Company has conducted any part of the Business or in which the
Company has utilized any of its assets preceding the date of this
Agreement. There have not been asserted against the Company any
claims that any product, activity or operation of the Company
infringes upon or involves, or had resulted in the infringement
of, any proprietary right of any other person, corporation or
other entity; and no proceedings have been instituted, are
pending or are threatened which challenge the rights of the
Company with respect thereto, in each case, which would have a
material adverse effect on the business, properties, financial
condition or results of operations of the Company.
4.07 Proprietary Rights. The Company possesses full
ownership of, or adequate and enforceable long-term licenses or
other rights to use (without payment), all Proprietary Rights
owned by or registered in the name of and of the Company or used
in the Business without any known conflict with the rights of
others. The Company has in all material respects performed all
of the obligations required to be performed by it, and is not in
default in any material respect, under any agreement relating to
any Proprietary Right. Proprietary Rights constitute trade
secrets of the Company within the meaning of all applicable laws,
and, to Seller's knowledge, the Company has taken all reasonable
necessary steps required by law to protect these trade secrets as
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such. The Company owns or has valid rights to use all
Proprietary Rights. The operation of the Business is not in
violation of and does not infringe any Proprietary Rights or any
other proprietary or trade rights of any third person. To either
Seller's knowledge, no third person is in violation of or is
infringing upon any Proprietary Rights.
4.08 Title to Properties: Absence of Liens and
Encumbrances: Leases.
(a) The Company has good and marketable title to the
material assets (other than Excluded Assets), tangible and
intangible free and clear of all mortgages, liens, pledges,
charges and encumbrances of any nature whatsoever except for
those liabilities which are recorded on the Financial Statements
as such and except for Permitted Encumbrances.
(b) Schedule 4.08 sets forth all leases or agreements
under which the Company is lessee of, or holds or operates, any
property owned by any third party and which are to be assumed by
the Buyer, including in each case, the expiration date of such
lease or agreement, the payments to be made thereunder, the
details of any option to renew or to purchase thereunder, the
name or names of the lessor of each such lease and a brief
description of the property covered thereby. Each such lease and
agreement is in good standing and is valid and binding in
accordance with its terms. The Company and each lessor have in
all material respects performed all the obligations required to
be performed by them to date and are not in default in any
material respect under any such lease or agreement. None of the
rights of the Company in such property under any such lease or
agreement is subject to termination as the result of the
transactions contemplated by this Agreement.
(c) All of the tangible personal property of the
Company is in good operating condition and repair, subject to
ordinary wear and tear. The Company is not in violation of any
applicable regulation, ordinance or other similar law, order,
regulation or requirement relating to the Business or properties
(including the placement, installation, operation, configuration,
design or maintenance of emissions from such properties) which,
if enforced, would materially and adversely affect the Business,
properties, financial conditions or results of operations.
4.09 Financial Statements; No Adverse Changes.
Schedule 4.09 contains a copy of the Company's unaudited balance
sheet as at April 30, 2001 (the "Financial Statement"). The
Financial Statement is complete in all material respects, present
fairly the financial condition of the Company as at the date
indicated, and the results of operations for the respective
periods indicated, and have been prepared in the usual manner and
in accordance with the Company's past practice and custom. The
Financial Statement does not include or omit an asset or a
liability or obligation of any kind or nature (whether known or
unknown and whether absolute, accrued, contingent or other), the
inclusion or omission of which would render such Financial
Statement materially misleading. The Company has no liabilities
(of any kind or nature, whether known or unknown and whether
absolute, accrued, contingent or other) that are not adequately
reflected or reserved against on the face of the Financial
Statement except liabilities incurred since such date in the
ordinary course of business and consistent with past practice.
Since April 30, 2001, other than as contemplated or caused by
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this Agreement, there has not been (a) any material adverse
change in the Business, condition (financial or otherwise),
operations, or prospects of the Company; (b) any damage,
destruction, or loss, whether covered by insurance or not, having
a material adverse effect on the Business, condition (financial
or otherwise), operations, or prospects of the Company; (c) any
entry into or termination of any material commitment, contract,
agreement, or transaction (including any material borrowing or
capital expenditure or sale or other disposition of any material
asset or assets) of or involving or related to any of the
Contracts or the Business other than this Agreement and
agreements executed in the ordinary course of business; (d) any
redemption, repurchase, or other acquisition for value of its
capital stock by the Company, or any issuance of capital stock of
the Company or of securities convertible into or rights to
acquire any such capital stock or any dividend or distribution
declared, set aside, or paid on capital stock of the Company;
(e) any transfer of or right granted under any material lease,
license, agreement, patent, trademark, trade name, or copyright
of the Company; (f) any sale or other disposition of any asset of
the Company, or any mortgage, pledge, or imposition of any lien
or other encumbrance on any asset of the Company, or any
agreement relating to any of the foregoing; or (g) any default or
breach by the Company in any material respect under any Contract,
or license or permit related thereto or required in the
performance thereof. Since April 30, 2001, the Company has
conducted the Business only in the ordinary and usual course and,
without limiting the foregoing, no changes have been made in
(a) executive compensation levels; (b) the manner in which other
employees of the Company are compensated; (c) supplemental
benefits provided to any such executives or other employees;
(d) inventory levels in relation to sales levels, except, in any
such case, in the ordinary course of business and, in any event,
without material adverse effect on the Business, condition
(financial or otherwise), operations, or prospects of the
Company, or any mortgage, pledge, or imposition of any lien or
other encumbrance on any asset of the Company, other than in the
ordinary course of business, or any agreement relating to any of
the foregoing or (e) any default or breach by the Company in any
material respect under any contract, license or permit.
4.101 Labor Matters. There are no activities or
controversies, including, without limitation, any labor
organizing activities, election petitions or proceedings,
proceedings preparatory thereto, unfair labor practice
complaints, labor strikes, disputes, slowdowns, or work
stoppages, pending or, to the best of the knowledge of the
Company, threatened, between the Company and any of its
employees.
4.11 Taxes. All Taxes due and payable by the Company
for all periods ending on or before the Closing Date have been
paid by the Company in full, or have been reserved against in the
Financial Statements. There are no federal, state or local tax
liens upon any assets of the Company. All returns and reports of
Taxes required to be filed by or with respect to the Company or
Seller, on or before the date of the Closing, have been filed by
the Company or by Seller, and all Taxes due as shown thereon have
been paid by the Company or by Seller. No issues have been
raised (or are currently pending) by any Governmental Entity in
connection with any of such returns or reports.
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4.12 Litigation. Except as disclosed in Schedule 4.12
hereto:
(a) There is no claim, action, suit, proceeding,
arbitration, investigation or inquiry now pending or, to the
knowledge of Seller, threatened against, relating to or affecting
the Company or the assets, properties, or the Business of the
Company or that questions the validity of this Agreement or
affects the transactions contemplated herein; nor, is there any
basis for any such claim, action, suit, proceeding, arbitration,
investigation or inquiry.
(b) Neither the Company nor any of its officers or
employees has been permanently or temporarily enjoined or
prohibited by order, judgment or decree of any Governmental
Entity, other regulatory or self-regulatory body or association,
or arbitrator from engaging in or continuing any conduct or
practice in connection with the Business engaged in by the
Company.
(c) There is not in existence any order, judgment or
decree of any Governmental Entity, other regulatory or self-
regulatory body or association or arbitrator enjoining or
prohibiting the Company from taking, or requiring Sellers or the
Company to take, any action of any kind or to which the Company
or any of the Business, or any of the properties or assets
material to the operation of the Business, are subject or bound.
(d) The Company is not in default in any respect under
any order, writ, injunction or decree of any Governmental Entity,
other regulatory or self-regulatory body or association or
arbitrator.
4.13 Insurance. Schedule 4.13 lists each insurance
policy maintained by the Company on any of its properties
including the coverage and deductible amounts and expiration
dates. The insurance coverage maintained by the Company at the
date of this Agreement is in the judgment of Sellers adequate in
scope and amount in view of the properties owned and operations
carried on by it. The Company has substantially complied in all
material respects with the provisions of all such policies. All
of the policies listed on Schedule 4.13 will remain in full force
and effect following the Closing in favor of the Company and/or
Buyer.
4.14 Brokers and Finders. No person has acted on behalf
of Sellers or the Company in connection with any negotiations
relative to this Agreement and the transactions contemplated
hereby. No person has a valid claim for a brokerage commission,
finder's fee or other like payment against Buyer, Sellers or the
Company based upon any arrangement or agreement or other action
taken, made by or on behalf of Sellers or the Company.
4.15 Compliance with Laws.
(a) The Company is in compliance in all material
respects with all Legal Requirements applicable to any of its
properties or assets and/or the ownership, operation and use
thereof, and neither Seller or the Company has received notice of
any noncompliance or alleged noncompliance with any Legal
Requirement relating or applicable to any of its properties or
assets or to the operation of the Business, the existence or
enforcement of which would have a material adverse effect on the
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Buyer's ability to operate them on the same basis as currently
conducted and operated or which would require the payment of
refunds, fines, penalties or restitution in respect of matters
occurring prior to the Closing, including, without limitation,
any Legal Requirement relating to (i) wages, hours, hiring, non-
discrimination, promotion, retirement, benefits, pensions or
working conditions, (ii) air, water, noise, odor or solid or
liquid waste (including the generation, treatment, storage,
disposal or transportation thereof), (iii) health and safety,
(iv) zoning, (v) the production, processing, advertising, sales
or warranty of products or services of the Business or (vi) trade
or antitrust regulations.
(b) All properties now or previously owned or leased
by the Company are in compliance with Environmental Laws, and
neither Seller nor the Company has any liability under any
Environmental Laws. The Company has obtained all Permits
required under applicable Environmental Laws, and the Business is
in compliance with the terms and conditions of any required
Permits.
(c) The Business does not involve (and has not
historically involved) the use, handling, manufacture, treatment,
processing, storage, generation, release, threatened release,
discharge, dumping or disposal (collectively, a "Release") of any
Hazardous Substances, except in compliance with all applicable
Environmental Laws.
(d) There is no pending or, to the Knowledge of
Sellers or the Company, threatened claim against the Company
under any Environmental Laws which relates to the Business and/or
any property now or previously owned or operated by the Company.
(e) There has been no Release by the Company of any
Hazardous Substances at, on or under any property now or
previously owned or operated or leased by the Company which would
individually or in the aggregate have a material adverse effect
on the Business or any assets or property of the Company.
(f) The Company has delivered to Buyer copies of all
environmental audits and other studies and reports in the
Seller's or the Company's possession relating to the Business or
any of its assets now or previously owned or operated.
4.16 Bills and Invoices. All bills and other payments
due and payable by the Company with respect to the Company's
assets and the Business have been or will be paid in full in the
ordinary course of business, and no labor, material or services
have been provided or performed with respect to the Business and
the assets that have not been or will not be paid in full.
4.17 Customers and Suppliers. The Schedule 4.17
contains a complete and accurate list of (a) the 25 largest
customers of the Company (based on 2000 sales), together with the
volume of the sales made to such customers during 2000, and
(b) the 25 largest suppliers to the Company (based on 2000
purchases), together with the volume of the purchases made from
such suppliers during 2000. To Seller's knowledge, none of such
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customers or suppliers intends to cease purchasing from, or
selling to, the Company or to materially alter the amount of such
purchases or sales as a result of the transactions contemplated
hereby or otherwise.
4.18 Accounts Receivable. All accounts receivable of the
Company represent transactions in the ordinary course of
business, and are current and collectible net of any reserves, if
any, shown on such the Financial Statements (which reserves are
adequate and were calculated consistent with past practice).
4.19 Books and Records. All books, records and files of
the Company relating to its assets (a) have been prepared,
assembled and maintained in accordance with usual and customary
policies and procedures; and (b) fairly and accurately reflect
the ownership, use, enjoyment and operation by the Company of the
assets and the Business.
4.20 Untrue Statements. This Agreement and the
exhibits, schedules and appendices hereto, the Financial
Statements and all other documents and information furnished by
Sellers or the Company or any of its affiliates or
representatives to Buyer or its representatives pursuant hereto
or in connection herewith do not include and will not include any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements made herein and therein not
misleading. There are no facts specific to the Company (and not
relating to the industry, governmental regulation, the economy or
market conditions, weather or other such matters which would
affect the Business and all other similar or competitive
businesses generally) which materially and adversely affect or,
so far as Sellers can now reasonably foresee, will materially and
adversely affect the Business or prospects, operations or
principal properties of the Company or the ability of any party
to perform its obligations under this Agreement.
4.21 Actions Since December 31, 2000. Since April 30,
2001, neither Seller nor the Company has taken any actions that
would be prohibited under the provisions of this Agreement
(without the prior consent of Buyer) after the date of this
Agreement.
4.22 Sellers Investment Representations. In connection
with their acquisition of the shares of ADDvantage Technologies
Group, Inc. to be issued pursuant hereto (the "Securities"), each
Seller represents, warrants and covenants that:
(a) Such Seller is acquiring the Securities for
investment purposes only and not with a view to the distribution
thereof. Each Seller acknowledges that the issuance of the
Securities has not been registered with the SEC under the
Securities Act or with any state securities agencies or
commission under any state securities or blue sky laws. Such
Seller will not sell, assign or otherwise transfer the Securities
or any portion thereof or interest therein except pursuant to a
registration statement that has been filed with and declared
effective by the SEC and any relevant state securities agencies
or commissions or such transaction is made in strict compliance
with the requirements and conditions of applicable exemptions
from the registration requirements of such acts.
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(b) Each Seller has received and reviewed copies of the
Buyer's Annual Report on Form 10-KSB for year ended September 30,
2000; Buyer's Quarterly Report on Form 10-QSB for the period
ended March 31, 2001, and copies of the Proxy Statement prepared
for use in connection with management's solicitation of proxies
for its annual meeting of shareholders to be held March 5, 2001.
The said materials are referred to herein collectively as the
"Disclosure Materials." Each Seller has had the opportunity to
discuss Buyer=s business, management and financial affairs with
its Chairman of the Board and Chief Executive Officer or other
executive officers of Buyer and has had the opportunity to review
Buyer=s plan of operation. Each Seller understands that such
discussions, as well as the Disclosure Materials and any other
written information issued by Buyer were intended to describe
certain aspects of Buyer=s business and prospects which it
believes to be material but were not necessarily a thorough or
exhaustive description.
(c) Each Seller further agrees that each certificate
representing the Securities shall be endorsed with a legend which
shall provide substantially as follows:
(i) THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
ACT. NEITHER THE RECORD NOR THE BENEFICIAL OWNERSHIP OF
SAID SECURITIES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR SAID SECURITIES
UNDER SAID ACTS AND ANY OTHER APPLICABLE STATE SECURITIES
LAWS OR RULES UNLESS IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SAID ACTS ARE AVAILABLE WITH RESPECT TO SUCH
SALE OR TRANSFER AND SAID SALE OR TRANSFER IS MADE PURSUANT
TO AND IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF
SAID EXEMPTIONS.
(ii) Any other legend required by any state
securities laws.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as
follows:
5.01 Organization, Good Standing, Power.
(a) Buyer is a corporation duly organized, validly
existing and in good standing under Oklahoma Law and has all
requisite corporate power and authority to enter into and perform
all of its obligations under this Agreement. The execution and
delivery of this Agreement by Buyer and the consummation by Buyer
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Buyer. This
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Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms except as
enforceability may be subject to (i) any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) Neither the execution and delivery of this
Agreement by Buyer nor the consummation of the transactions
contemplated hereby to be performed by Buyer will (i) violate or
conflict with any provision of the articles of incorporation or
bylaws of Buyer, as currently in effect, or (ii) violate or
conflict with any provision of any law, rule, regulation, order,
permit, certificate, writ, judgment, injunction, decree,
determination, award or other decision of any Governmental
Entity, other regulatory or self-regulatory body or association
or arbitrator binding upon Buyer or any of its properties, except
where such violations or conflicts would not in the aggregate
have a material adverse effect on the business, financial
condition or properties of Buyer or on the ability of Buyer to
consummate the transactions contemplated hereby and except for
violations that will be cured, waived or terminated prior to the
Closing Date.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity
is required by or with respect to Buyer in connection with the
execution and delivery of this Agreement by Buyer or the
consummation by Buyer of the transactions contemplated hereby
such filings or registrations which, if not made, and such
authorizations, consents or approvals which, if not received,
would not have any material adverse effect on the Business,
financial condition, or properties of Buyer or on the ability of
Buyer to consummate the transactions contemplated hereby.
5.02 Brokers and Finders. No person has acted on behalf
of Buyer in connection with any negotiations relative to this
Agreement and the transactions contemplated hereby. No person
has a valid claim for a brokerage commission, finder's fee or
other like payment against Buyer.
ARTICLE VI
COVENANTS OF SELLER
Sellers, jointly and severally, covenant and agree with
Buyer that, at all times prior to the Closing, each Seller will
comply, and will cause the Company to comply, with all covenants
and provisions of this Article VI, except to the extent Buyer may
otherwise consent in writing or to the extent otherwise expressly
required or permitted by this Agreement.
6.01 Approvals. Sellers will (a) take all reasonable
steps and use all reasonable efforts necessary or desirable to
recommend the granting of and to obtain, as promptly as
practicable, all approvals, authorizations, certificates,
franchises, licenses, consents and clearances of Governmental
Entities and of third parties, required of Sellers or the Company
to consummate the transactions contemplated hereby, (b) provide
such other information and communications to such Governmental
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Entities as Buyer or such authorities may reasonably request, and
(c) cooperate with Buyer in obtaining, as promptly as
practicable, all approvals, authorizations, certificates,
franchises, licenses, consents and clearances of Governmental
Entities required of Buyer to consummate the transactions
contemplated hereby.
6.02 Investigation by Buyer. Sellers will provide
Buyer, its counsel, accountants, actuaries and other
representatives with reasonable access, upon prior notice and
during normal business hours at Buyer's expense, to all
facilities managers, employees, agents, accountants, actuaries,
assets, properties, books and records of the Company relating to
the Business and its assets, and will furnish Buyer and such
other persons during such period with all such other information
and data concerning the assets or the Business, operations and
affairs of the Company or the transactions contemplated hereby as
Buyer or any of such other persons reasonably may request.
6.03 Conduct of the Business. The Company will conduct
the Business only in the ordinary course and consistent with past
practice and custom. Without limiting the generality of the
foregoing:
(a) The Company will use its reasonable efforts to
(i) preserve intact the Company's present business organization,
reputation and customer relations, (ii) keep available the
services of the Company's present managers, employees, agents,
consultants and other similar representatives, (iii) maintain all
licenses, Permits, qualifications and authorizations of the
Company to do business in each jurisdiction in which it is so
licensed, qualified or authorized, (iv) maintain all the tangible
assets of the Company in good working order and condition,
ordinary wear and tear excepted, (v) continue all current
marketing, selling and manufacturing activities relating to the
Business, operations or affairs of such Seller, and (vi) not
modify, extend, terminate, amend or otherwise change any
Contract, or any purchase order, contract or other material
contract related to or comprising the Contracts, in any material
respect.
(b) The Company will cause its books and records to be
maintained in the usual manner and consistent with past practice
and custom and will not permit a material change in any
operational, financial reporting or accounting practice or policy
of the Company or in any assumption underlying such a practice or
policy, or in any method of calculating any bad debt, contingency
or other reserve for financial reporting purposes or for other
accounting purposes.
(c) The Company will (i) prepare properly and file
timely all reports and all tax returns required to be filed with
any Governmental Entities with respect to the Business, and
(ii) pay or cause to be paid duly and fully all Taxes indicated
by such tax returns or otherwise levied or assessed upon the
Company or its assets, and withhold or collect and pay to the
proper taxing authorities or hold in separate bank accounts for
such payment all taxes that such corporation is required to so
withhold or collect and pay, unless such taxes are being
contested in good faith and, if appropriate, reasonable reserves
therefor have been established and reflected in the books and
records of the Company and in accordance with generally accepted
accounting principles consistently applied.
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(d) The Company will use all reasonable efforts to
maintain in full force and effect until the Closing Date
substantially the same levels of coverage as the insurance
afforded under the contracts in force as of the date of this
Agreement.
(e) The Company will comply, in all material respects,
with all Legal Requirements applicable to the Business and its
assets.
(f) The Company will not, without the prior written
consent of Buyer, (i) enter into or execute any contract,
agreement, lease, indenture, note or other commitment not in the
ordinary course of business or which would involve a commitment
to be assumed or borne by Buyer with a value of more than
$10,000.00 or a period of more than one year; (ii) hire,
terminate, promote, transfer, change the salary or other form of
compensation of, grant any leave of absence to or change any
policies of the Company or employment arrangements or agreements
the Company may have with respect to any employees of the Company
or increase the annual level of compensation of any employee of
the Company; (iii) amend, cancel, modify, alter or otherwise
change the terms of any of its leases or other material
agreements, arrangements, commitments, or other rights or
obligations to which it may be entitled or subject; or (iv) waive
or relinquish any of its rights, claims or authority, or give any
material consents to action or inaction, under any of the
agreements, arrangements, commitments, leases or other bases of
its rights or obligations.
6.04 No Disposal of Property. The Company will not
(a) dispose of or assign any of the assets or permit any of its
assets to be subjected to any Liens, except to the extent any
such disposition does not exceed $1,000.00 in value or any such
Lien is made or incurred in the ordinary course of the business
consistent with past practice and custom, or (b) sell any part of
its operations or the Business to any third party.
6.05 No Acquisitions. The Company will not (a) merge,
consolidate or otherwise combine or agree to merge, consolidate
or otherwise combine with any other person, (b) acquire all or
substantially all, or a material portion of all, the assets,
capital stock or other equity securities of any other person, or
any business division of any other person or (c) otherwise
acquire control or ownership of any other person.
6.06 No Breach or Default. The Company will not
violate, breach or default, or take or fail to take any action
that (with or without notice or lapse of time or both) would
constitute a violation, breach or default under, any term or
provision of any Contract to which the Company is a party or by
which any of its assets are or may be bound.
6.07 No Indebtedness.
(a) The Company will not create, incur, assume,
guarantee or otherwise become liable for (i) any debt, obligation
or other liability for money borrowed, or (ii) any other debt,
obligation or other liability; and
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(b) The Company will not cancel, pay, agree to cancel
or pay, or otherwise provide for a complete or partial discharge
in advance of a scheduled payment date with respect to, any debt,
obligation or other liability, or waive, cancel or compromise any
right to receive any direct or indirect payment or other benefit
under any debt, obligation or other liability owing to such
corporation, except in the ordinary course of business consistent
with past practice and custom.
6.08 Payment of Liabilities. Except to the extent any
such action would not affect in any material adverse manner or
respect the Company's assets, the Business or the Company's
ability to comply with its commitments, obligations and covenants
hereunder and to consummate the transactions contemplated hereby,
the Company will not delay or postpone beyond normal past
practice and custom the payment of any material account payable
or other debt, obligation or other liability.
6.09 Notice and Cure. Sellers will notify Buyer
promptly in writing as soon as either Seller has knowledge of the
same, and contemporaneously will provide Buyer with true,
complete and correct copies of any information or documents
relating to, and will use all reasonable efforts to cure before
the Closing, any event, transaction or circumstance that results
in or will result in the breach of any covenant or agreement of
either Seller or the Company under this Agreement, or that
renders or will render untrue any representation or warranty of
either Seller or the Company contained in this Agreement as if
the same were made on or as of the date of such event,
transaction or circumstance. Sellers will use all reasonable
efforts to cure, at the earliest practicable date and prior to
the Closing Date, any violation or breach of any representation,
warranty, covenant or agreement made by Sellers or the Company in
this Agreement, whether occurring or arising before or after the
date of this Agreement.
6.10 Cooperation of Management Pending Transaction.
Sellers covenant and agree that between the date hereof and the
Closing Date, Sellers and the Company's management will cooperate
with Buyer and endeavor to help persons designated by Buyer to
become familiar with the Company's assets, the Business,
operations, properties, business prospects, needs, employees and
any other matters pertaining to its assets, the Business and
operations and to begin implementation of any transitional plan
to be developed by Buyer and the Company.
6.11 Certificates of Good Standing. Sellers shall
obtain and provide to Buyer at Closing, a certificate of good
standing of the Company from the State of Missouri, each state in
which the Company is authorized to do business, and from each
state in which the Company is doing business.
6.12 Employee Benefit Plans. The Company will not amend
or terminate any Employee Benefit Plans and will fund any
deficiency in any Employee Benefit Plan. Each Employee Benefit
Plan substantially complies in all material respects with the
provisions of and has been administered in compliance with the
applicable provisions of ERISA, if applicable, and all other
applicable Laws. Each Employee Benefit Plan that is an "employee
pension benefit plan" as defined in Section 3(2) of ERISA which
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is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter that such plan
satisfied the requirements of the Tax Reform Act of 1986.
Without limiting the generality of the foregoing, no "prohibited
transaction" (as such term is defined in Section 4975 of the
Code, or in Part 4 of Subtitle B of Title I of ERISA) has
occurred with respect to any Employee Benefit Plan that could
result in the imposition of material Taxes or penalties on the
Company, and the Company has not failed to make any contribution
to, or to make any payment after such payment was due under, any
Employee Benefit Plan that it was required to make (when such
payment was required) pursuant to the terms of such Employee
Benefit Plan or pursuant to applicable law that could result in
any material liability to the Company. The Company has filed
each annual report on Form 5500 that is required to be filed for
each Employee Benefit Plan that is an "employee benefit plan" as
defined under ERISA. There is no pending or, to the Knowledge of
Sellers or the Company, threatened action, suit, claim,
proceeding, investigation or governmental inquiry against or
involving any Employee Benefit Plan (other than routine claims
for benefits) that could result in the imposition of any material
liability on the Company.
6.13 Name. From and after the Closing Date, Sellers agree
not to use the name "Xxxx-Midwest, Inc." or "Comtech" or any
deceptively similar name or related Proprietary Rights and shall
provide to or at the request of Buyer any consent, waiver or
approval that may be required or advisable in connection with
Buyer's use of such name.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Sellers that, at all times
prior to the Closing, Buyer at its expense will comply with all
covenants and provisions of this Article VII, except to the
extent Sellers may otherwise consent in writing or to the extent
otherwise expressly required or permitted by this Agreement.
7.01 Approvals. Buyer will (a) take all reasonable
steps and use all reasonable efforts necessary or desirable to
recommend the granting of and to obtain, as promptly as
practicable, all approvals, authorizations and clearances of
Governmental Entities and of third parties, required of Buyer to
consummate the transactions contemplated hereby, (b) provide such
other information and communications to such Governmental
Entities as Sellers or such authorities may reasonably request,
and (c) cooperate with Sellers in obtaining, as promptly as
practicable, all approvals, authorizations and clearances of
Governmental Entities required of the Company to consummate the
transactions contemplated hereby.
7.02 Obligation of Buyer to Make Transaction Effective.
Buyer shall take all actions necessary on its part to carry out
the transactions contemplated hereby.
7.03 Notice and Cure. Buyer will notify Sellers
promptly in writing of, and contemporaneously will provide
Sellers with true, complete and correct copies of any and all
information or documents relating to, and will use all reasonable
-21-
efforts to cure prior to the Closing, any event, transaction or
circumstance occurring after the date of this Agreement that
results in or will result in any covenant or agreement of Buyer
under this Agreement to be breached, or that renders or will
render untrue any representation or warranty of Buyer contained
in this Agreement as if the same were made on or as of the date
of such event, transaction or circumstance. Buyer also will use
all reasonable efforts to cure, at the earliest practicable date
and before the Closing, any violation or breach of any
representation, warranty, covenant or agreement made by it in
this Agreement, whether occurring or arising before or after the
date of this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF BUYER AND SELLERS
Notwithstanding any other provision of this Agreement, the
obligation of each of Buyer and Sellers to consummate the
transactions contemplated hereby shall be subject to the
fulfillment, prior to or at the Closing, of each of the following
conditions precedent, any one of which may be waived by such
party:
8.01 Consents and Approvals. All approvals of, and
consents by all Governmental Entities and other persons, and all
permits by and all filings with and submissions to all such
Governmental Entities and other persons as may be required for
the consummation of the transactions contemplated by this
Agreement (including, without limitation, approval by Buyer's
primary lending bank), shall have been obtained or made and
reasonably satisfactory evidence thereof shall have been
received.
8.02 Certain Actions, Etc. There shall not have been
instituted and be continuing or threatened against Buyer, either
Seller, the Company or any of their respective directors or
officers, any action, suit or proceeding by or before any
Governmental Entity that would (a) restrain, prohibit or
invalidate, or result in the payment of substantial damages in
respect of, the transaction or any other transaction contemplated
by this Agreement or (b) impose or confirm material limitations
on the ability of Buyer effectively to exercise full rights of
ownership of the Company's assets.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Notwithstanding any other provision of this Agreement, the
obligation of Buyer to consummate the transactions contemplated
hereby shall be subject to the fulfillment, prior to or at the
Closing, of each of the following conditions precedent, any one
of which may be waived by Buyer:
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9.01 Accuracy of Representations and Warranties. The
representations and warranties of Sellers and the Company set
forth in Article IV shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing
with the same effect as though such representations and
warranties had been made at and as of the Closing except for such
changes with respect thereto which are contemplated by this
Agreement or the passage of time.
9.02 Performance of Covenants, Agreements and
Conditions. Sellers and the Company shall have duly performed,
complied with and satisfied in all material respects all
covenants, agreements and conditions required by this Agreement
to be performed, complied with or satisfied by them at or prior
to the Closing.
9.03 Officers' Certificate, Etc. Buyer shall have
received (a) a certificate, dated the date of the Closing Date
and signed by each Seller and the Company, to the effect set
forth in Sections 9.01 and 9.02 and (b) such other certificates,
instruments and documents as shall be reasonably requested by
Buyer for the purpose of verifying the accuracy of such
representations and warranties and the performance and
satisfaction of such covenants and conditions.
9.04 Real Estate Purchase Agreement At or prior to the
Closing, (i) Buyer and Red Thor L.L.C. shall have entered into
the Red Thor Real Estate Purchase Agreement in the form of
Exhibit B hereto covering the purchase of a facility in the state
of Texas and (ii) Buyer and Xxxxxxxx. shall have entered into the
Xxxxxxxx Real Estate Purchase Agreement in the form of
Exhibit C.
.
9.05 Non-Compete and Other Agreements. At or prior to
the Closing, Sellers shall have entered into a Non-Compete
Agreement with the Company substantially in the form of Exhibit D
hereto. Each Seller agrees to enter into such Non-Compete
Agreement.
9.06 Employment Agreements. Each of the Sellers shall
have entered into an Employment Agreement with the Company
substantially in the form of Exhibit E hereto.
9.07 Delivery of Assignments . Sellers shall have
executed, acknowledged (if appropriate) and delivered to Buyer
all assignments as Buyer and its counsel may reasonably request.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
Notwithstanding any other provision of this Agreement, the
obligations of Sellers to consummate the transactions
contemplated hereunder shall be subject to the fulfillment, prior
to or at the Closing, of each of the following conditions
precedent, any one of which may be waived by Sellers.
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10.01 Accuracy of Representations and Warranties. The
representations and warranties of Buyer set forth in Article V
shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing with the same effect as
though such representations and warranties had been made at and
as of the Closing except for such changes with respect thereto
which are contemplated by this Agreement or the passage of time.
10.02 Performance of Covenants, Agreements and
Conditions. Buyer shall have duly performed, complied with and
satisfied all covenants, agreements and conditions required by
this Agreement to be performed, complied with or satisfied by it,
at or prior to the Closing.
10.03 Officers' Certificates, Etc. Sellers shall have
received (a) a certificate, dated the Closing Date and signed by
an authorized representative of Buyer, to the effect set forth in
Sections 10.01 and 10.02, and (b) such other certificates,
instruments and documents as shall be reasonably requested by
Sellers for the purpose of verifying the accuracy of such
representations and warranties and the performance and
satisfaction of such covenants and conditions.
10.04 Employment Agreements. The Company and each Seller
shall have executed the Employment Agreement in the form of
Exhibit E attached hereto.
10.05 Real Estate Purchase Agreement Prior to the
Closing, Buyer and Red Thor L.L.C. shall have entered into the
Red Thor Real Estate Purchase Agreement in the form of Exhibit B
hereto covering the purchase of a facility in the state of Texas
and (ii) Buyer and Xxxxxxxx shall have entered into the Xxxxxxxx
Real Estate Purchase Agreement in the form of Exhibit C and
Buyer is ready, willing and able to tender the payments and
documents set forth in Section 3.02
10.06 Payment of Shareholder Loans. At Closing, the
Buyer will contribute cash equal to the outstanding amount of the
Shareholder Loans referenced below. The Company shall pay to
Sellers the amounts owed them under the outstanding shareholder
loans to the Company. At the date of this Agreement, the amounts
owed to the Sellers are as follows:
Xxxx Xxxxxxxx $33,306
Xxxxxxx Xxxxx $36,481
ARTICLE XI
TERMINATION AND WAIVER
11.01 Termination. This Agreement may be terminated at
any time prior to the Closing:
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(a) by mutual consent of Buyer and Sellers;
(b) by either Buyer or Sellers if the transaction shall
not have been consummated on or before June 1, 2001;
(c) at Buyer's election, upon written notice from Buyer
to Sellers, if any one or more of the following events shall
occur and shall not have been remedied to the satisfaction of
Buyer within 15 days after written notice is delivered to Seller:
(i) there shall have been any material breach of any of the
obligations, covenants, or warranties of Sellers hereunder; or
(ii) there shall have been any written representation or
statement furnished by Sellers hereunder which at the time
furnished is false or misleading; or
(d) at Sellers' election, upon written notice from
Sellers to Buyer, if any one or more of the following events
shall occur and shall not have been remedied to Seller's
satisfaction within 15 days after written notice is delivered to
Buyer: (i) there shall have been any material breach of any of
the obligations, covenants, or warranties of Buyer hereunder; or
(ii) there shall have been any written representation or
statement furnished by Buyer hereunder which at the time
furnished is false or misleading.
11.02 Effect of Termination. If either Buyer or Sellers
terminate this Agreement as provided in the foregoing section,
this Agreement will forthwith become void, and there will be no
liability or obligation on the part of Buyer or Sellers or the
Buyer's officers or directors except as set forth in
Sections 13.01 (relating to expenses) and 12.01 (relating to
confidentiality), and except for the liability of any party then
in breach of this Agreement.
11.03 Waiver. Any term or provision of this Agreement
may be waived in writing at any time by Buyer, if it is entitled
to the benefits thereof, or by Sellers, if they are entitled to
the benefits thereof.
ARTICLE XII
OTHER AGREEMENTS; SURVIVAL OF
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.01 Confidentiality. Except as may be required to
comply with applicable law and regulations or to obtain required
regulatory approvals to consummate this transaction, whether
state, federal or foreign, and except as required to comply with
express obligations under this Agreement, each of the parties
hereto will use its or his best efforts to keep confidential all
information relating to this transaction and will instruct its
officers, employees and other representatives having access to
such information of such obligation of confidentiality. In the
event the transactions contemplated herein are not consummated,
each of the parties hereto shall return all documents, including
any copies thereof, to the party which provided the same.
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12.02 Public Announcements. None of the Parties will
make any public announcement without prior approval of the other,
except as may otherwise be required by law, in which event, the
party required by law to make a public announcement shall provide
the other party with prior notice of the text thereof to the
extent reasonably practicable.
12.03 Additional Agreements. Subject to this Agreement,
each of the Parties agrees to use its best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing
Date any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors
of each of the Parties will take all such necessary action.
12.04 Forwarding Payments and Property. If any party
receives any payments or property after the Closing to which any
of the other parties hereto are entitled under the terms of this
Agreement, the recipient shall promptly forward the same to the
party entitled thereto.
12.05 Available Remedies. Each Party agrees that,
consistent with its intention and agreement to be bound by the
terms of this Agreement and to consummate the transactions
contemplated hereby, subject only to the performance or
satisfaction of conditions precedent, the remedy of specific
performance shall be available to a non-breaching and non-
defaulting party to enforce performance of this Agreement by a
breaching or defaulting party, including to require the
consummation of the Closing.
12.06 Indemnification.
(a) By Sellers and the Company. Sellers, jointly and
severally, agree to indemnify, defend and hold Buyer and its
Affiliates harmless from and against any and all losses,
liabilities, claims, demands, damages, costs and expenses
(including reasonable attorneys' fees and disbursements) of every
kind, nature and description (collectively, "Claims") sustained
by Buyer or any of its Affiliates based upon, arising out of or
otherwise in respect of (i) the breach of any representation or
warranty of Sellers contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant
to this Agreement, or (ii) the breach of any covenant or
agreement, of Sellers contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant
to this Agreement, or (iii) any Claim relating to the ownership,
operation, management or use of the stock of the Company or the
Company's assets or the Business to or on the Closing Date unless
and to the extent that such Claim arises solely from any action
of Buyer after the Closing or is expressly assumed by Buyer
hereunder. Amounts due from Sellers hereunder may be satisfied,
at the option the Buyer, by the reduction in the number of shares
of Buyer's stock to be issued to Sellers pursuant to Section
2.03(b). For these purposes, these shares shall be valued at
$2.00 per share. Sellers shall have no duty to satisfy any claim
for indemnification under this Section 12.06 except through a
transfer of stock to Seller pursuant to the Escrow Agreement.
Accordingly, Buyer's right to indemnification under this Section
12.06 shall lapse with respect to any Claim to the extent the
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amount of the Claim exceeds the fair market value of the stock
then held in escrow. In addition, Sellers shall be under no
obligation to indemnify Buyers for any Claims under item (i)
above until the total amount of all such Claims exceeds $5,000
and then only to the extent of the excess.
(b) By Buyer. Buyer agrees to indemnify, defend and hold
Sellers harmless from and against any and all Claims sustained by
Sellers caused by (i) the breach of any representation or
warranty of Buyer contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant
to this Agreement, or (ii) the breach of any covenant or
agreement, of Buyer contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant
to this Agreement, or (iii) the ownership, operation, management
or use of the Company's assets or the Business after the Closing,
unless and to the extent that such Claim arises solely from any
action of Sellers after the Closing.
(c) Notification and Defense of Claims. Any party
seeking indemnification or reimbursement for Claims hereunder
(the "Indemnified Party") shall as promptly as practicable notify
the party from which such indemnification is sought (the
"Indemnifying Party") upon which the Indemnified Party intends to
base a claim for indemnification or reimbursement hereunder;
provided, however, that the failure of an Indemnified Party to so
notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability under this Agreement to the Indemnified
Party with respect to such Claim except to the extent the
Indemnifying Party is actually prejudiced or damaged by the
failure to receive timely notice. In the event of any claims for
indemnification or reimbursement, the Indemnifying Party, at its
option, may assume (with legal counsel reasonably acceptable to
the Indemnified Party) the defense of any claim, demand, lawsuit
or other Proceeding brought against the Indemnified Party, which
claim, demand, lawsuit or other Proceeding may give rise to the
indemnity or reimbursement obligation of the Indemnifying Party
hereunder, and may assert any defense of any party; provided,
however, that the Indemnified Party shall have the right at its
own expense to participate jointly with the Indemnifying Party in
the defense of any claim, demand, lawsuit or other Proceeding in
connection with which the Indemnified Party claims
indemnification or reimbursement hereunder. Notwithstanding the
right of an Indemnified Party so to participate, the Indemnifying
Party shall have the sole right to settle or otherwise dispose of
such claim, demand, lawsuit or other Proceeding on such terms as
the Indemnifying Party, in its sole discretion, shall deem
appropriate with respect to any issue involved in such claim,
demand, lawsuit or other Proceeding as to which (i) the
Indemnifying Party shall have acknowledged the obligation to
indemnify the Indemnified Party hereunder and the settlement is
solely for cash or (ii) the Indemnified Party shall have declined
so to participate and, in either case, the Indemnified Party is
provided a full and complete release of Claims.
(d) Survival of Representations and Warranties. The
representations and warranties of the parties to this Agreement
shall survive the Closing Date and shall remain in full force and
effect following the Closing Date for a period of one year from
the Closing Date; provided, that the representations and
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warranties related to Tax matters shall survive until the
applicable statute of limitations for any potential Tax liability
has expired and representations and warranties related to
environmental claims shall survive indefinitely (the period
during which the representations and warranties shall survive
being referred to herein with respect to such representations and
warranties as the "Survival Period"), and shall be effective with
respect to any inaccuracy therein or breach thereof (and a claim
for indemnification under Section 12.06 hereof may be made
thereon) if a written notice asserting the claim shall have been
duly given in accordance with Article XII hereof within the
Survival Period with respect to such matter. Any claim for
indemnification made during the Survival Period shall be valid
and the representations and warranties relating thereto shall
remain in effect for purposes of such indemnification
notwithstanding that such claim may not be resolved within the
Survival Period. All representations, warranties and covenants
and agreements made by the parties shall not be affected by any
investigation heretofore or hereafter made by and on behalf of
any of them and shall not be deemed merged into any instruments
or agreements delivered in connection with this Agreement or
otherwise in connection with the transactions contemplated
hereby.
(e) Exclusive Rights and Remedies. The rights and
remedies provided in this Section 12.06 shall be the exclusive
rights and remedies, contractual or otherwise, of the indemnified
Persons with respect to breaches of the representations,
warranties, covenants and agreements contained in this Agreement.
12.07 Actions of the Parties after the Closing Date. The
Parties agree that after the Closing, they will take the actions
described in this Section 12.07.
(a) Sellers acknowledge and agree that from and after
the Closing, Buyer will be entitled to originals of all title
documents and copies of all other documents, books, records
(including tax records), agreements, and financial data of any
sort relating to the Business and the Company's assets. Buyer
agrees to provide Sellers, at Sellers' cost, with copies of such
documents, books, records, agreements, and financial data as
reasonably needed and requested by Sellers.
(b) In the event and for so long as any party actively
is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing
Date involving the Business or the Company's assets, the other
party will to the extent reasonably practicable cooperate with
the contesting or defending party and its counsel in the contest
or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be
necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending party.
However, with respect to any such information as to which the
contesting or defending party may reasonably assert that the
disclosure pursuant hereto would waive a privilege, the parties
will use their reasonable efforts to develop procedures to
maintain such privilege.
(c) Neither Seller will take any action that is
designed or intended to have the effect of discouraging any
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lessor, licensor, customer, supplier, or other business associate
of the Business from maintaining the same business relationships
with Buyer after the Closing Date as it maintained with the
Company prior to the Closing Date. Sellers will refer all
customer inquiries relating to the Business to Buyer from and
after the Closing Date.
(d) Sellers agree that after the Closing Date any
facts, information, know-how, processes, trade secrets, customer
lists or confidential matters that relate in any way to the
Company's assets shall be maintained in confidence and shall not
be divulged by either Seller to any party unless and until they
shall become public knowledge (other than by disclosure by either
Seller or the Company's employees or agents) or as required by
law. Each Seller further agrees to use his best efforts to
ensure that none of the Company's employees or agents divulge any
such confidential information to a third party or use the same
for the benefit of Sellers, any such officer, employee or agent
or any other third party, unless and until it shall have become
public knowledge (other than by disclosure by either Seller or
the Company's officers, employees or agents). Buyer shall have
the right to interview the Company's employees for the purpose of
obtaining information concerning the Business and Sellers hereby
waive any right, claim, or cause of action, express or implied,
which Sellers or either of them may have against any of the
Company's employees or agents by reason of any such employee or
agent divulging to Buyer after the Closing Date any facts,
information, know-how, processes, trade secrets, customer lists
or similar confidential matters that relate to the Business or
the Company's Assets.
ARTICLE XIII
MISCELLANEOUS
13.01 Expenses. Except as otherwise provided herein,
each Party will pay its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby. In addition, Sellers will pay all of the costs and
expenses which the Company may incur in connection with the
Company's execution of this Agreement and its consummation of the
transactions contemplated hereby. Should any Party bring any
legal action or other proceedings to enforce the terms of this
Agreement, the prevailing Party shall be entitled to recover its
or his costs and expenses incurred in connection therewith,
including its or his reasonable attorneys fees and expenses.
13.02 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
given if delivered personally or sent by telex, facsimile
transmission, a nationally recognized overnight delivery service
or registered or certified mail (return receipt requested),
postage prepaid, to the parties to this Agreement at the
following addresses or at such other address for a party as shall
be specified by like notice:
If to Buyer:
ADDvantage Technologies Group, Inc.
0000 X. Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
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with a copy to:
Xxxxxx & Xxxxxxx, A Professional
Corporation
0000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Lynnwood X. Xxxxx, Xx.
Facsimile: (000) 000-0000
If to Sellers: Xxxx Xxxxxxxx
Xxxxxxx Xxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxx X. Xxxxx
Hagen, Dye, Xxxxxxx & XxXxxxxxx, P.C.
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Facsimile: 503-274-7979
All such notices and communications shall be deemed to have been
received on the date of delivery or on the third business day
after the mailing thereof. The Parties may change their
respective addresses by notice in writing given to the other
party to this Agreement.
13.03 Time. Time is of the essence of this Agreement.
13.04 Entire Agreement; Amendment. This Agreement
(including the schedules, documents and instruments referred to
herein) constitutes the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior
agreements and undertakings, written and oral. This Agreement
may not be amended except by an instrument in writing signed on
behalf of each of the Parties, and all attempted oral waivers,
notifications and amendments shall be ineffective.
13.05 Binding Effect; Benefits. This Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Nothing expressed
or implied in this Agreement is intended to or shall be construed
to give any person other than the Parties or their respective
successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement, it being
the intention of the Parties that this Agreement shall be for the
sole and exclusive benefit of such Parties or such successors or
assigns and for the benefit of no other person.
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13.06 Assignment. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by any Party without the prior written
consent of the other Parties.
13.07 Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Oklahoma applicable to contracts made and to be performed within
that State, without regard to the principles of conflicts of laws
thereof. The Parties each (a) agree that any litigation, action,
or proceeding arising out of this Agreement or the transactions
may be instituted in a state or federal court in the City of
Tulsa, Oklahoma, (b) waive any objection that such party might
have now or hereafter to such litigation, action, or proceeding
based upon improper venue or inconvenient forum, and
(c) irrevocably submit to the jurisdiction of such courts in any
such litigation, action, or proceeding.
13.08 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall be deemed to be a
single agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed by their duly authorized representatives as of the
date first above written.
"Buyer" "Sellers"
ADDvantage Technologies Group, Inc.
By: /S/ Xxxxxxx X. Xxxxxxx /S/ Xxxx Xxxxxxxx
----------------------------------- --------------------
Xxxxxxx X. Xxxxxxx, President Xxxx Xxxxxxxx
/S/ Xxxxxxx Xxxxx
--------------------
Xxxxxxx Xxxxx
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