SALE AND PURCHASE AGREEMENT
Between
XXXXXXX X. XXXXXX
as Seller
And
ADDVANTAGE TECHNOLOGIES GROUP, INC.
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I 1
1.01 Defined Terms 1
1.02 Other Definitional Provisions 5
ARTICLE II 5
2.01 Purchase and Sale 5
2.02 Purchase Price 5
2.03 Closing Deliveries 5
ARTICLE III 6
3.01 Closing 6
3.02 Closing Obligations 6
ARTICLE IV 7
4.01 Organization, Good Standing, Power 7
4.02 Capitalization 7
4.03 Subsidiaries 7
4.04 Authorization of Agreement 7
4.05 Contracts and Agreements 9
4.06 Trade Names, Trademarks, Copyrights, Etc. 9
4.07 Proprietary Rights 9
4.08 Title to Properties: Absence of Liens and 10
Encumbrances: Leases
4.09 Financial Statements; No Adverse Changes 10
4.10 Inventories 11
4.11 Labor Matters 11
4.12 Taxes 11
4.13 Litigation 13
4.14 Insurance 13
4.15 Brokers and Finders 13
4.16 Compliance with Laws 14
4.17 Bills and Invoices 14
4.18 Customers and Suppliers 15
4.19 Accounts Receivable 15
4.20 Books and Records 15
4.21 Untrue Statements 15
4.22 Actions Since December 31, 2000 15
4.23 Seller Investment Representations 15
4.24 Employee Matters 16
ARTICLE V 18
5.01 Organization, Good Standing, Power 18
5.02 Brokers and Finders 19
5.03 Disclosure Materials 19
ARTICLE VI 19
6.01 Approvals 20
6.02 Investigation by Buyer 20
6.03 Conduct of the Business 20
6.04 No Disposal of Property 21
6.05 No Acquisitions 21
6.06 No Breach or Default 21
6.07 No Indebtedness 22
6.08 Payment of Liabilities 22
6.09 Notice and Cure 22
6.10 Cooperation of Management Pending Transaction 22
6.11 Certificates of Good Standing 22
6.12 Employee Benefit Plans 23
6.13 Name 23
6.14 Further Action 23
6.15 Tax Matters 23
ARTICLE VII 24
7.01 Approvals 24
7.02 Obligation of Buyer to Make Transaction Effective 25
7.03 Notice and Cure 25
ARTICLE VIII 25
8.01 Consents and Approvals 25
8.02 Certain Actions, Etc. 25
ARTICLE IX 25
9.01 Accuracy of Representations and Warranties 26
9.02 Performance of Covenants, Agreements and Conditions 26
9.03 Officers' Certificate, Etc. 26
9.04 Employment Agreement 26
9.05 Non-Competition and Other Agreements 26
9.06 Legal Opinion 26
9.07 Delivery of Assignments 26
9.08 Working Capital 26
ARTICLE X 27
10.01 Accuracy of Representations and Warranties 27
10.02 Performance of Covenants, Agreements and 27
Conditions
10.03 Officers' Certificates, Etc. 27
10.04 Consulting Agreement 27
ARTICLE XI 28
11.01 Termination 28
11.02 Effect of Termination 28
11.03 Waiver 28
ARTICLE XII 28
12.01 Confidentiality 28
12.02 Public Announcements 29
12.03 Additional Agreements 29
12.04 Forwarding Payments and Property 29
12.05 Available Remedies 29
12.06 Survival of Representations and Warranties; 29
Indemnification
12.07 Actions of the Parties after the Closing Date 31
ARTICLE XIII 32
13.01 Expenses 32
13.02 Notices 32
13.03 Time 33
13.04 Entire Agreement; Amendment 33
13.05 Binding Effect; Benefits 33
13.06 Assignment 33
13.07 Applicable Law 33
13.08 Counterparts 34
Exhibit A - Note
Exhibit B - Letter of Credit
Exhibit C - Employment Agreement
Exhibit D - Non-Competition Agreement
Exhibit E - Opinion of Seller's Legal Counsel
Exhibit F - Consulting Agreement
Schedule 2.02 - Retained Assets
Schedule 2.03 - Assumed Obligations
Schedule 4.05 - Contracts
Schedule 4.06 - Trade Names, Fictitious Names
Schedule 4.08 - Leases and Other Agreements
Schedule 4.09 - Financial Statements
Schedule 4.12 - Tax Representations
Schedule 4.13 - Litigation
Schedule 4.14 - Insurance
Schedule 4.24 - Employee Matters
Schedule 4.18 - Customers and Suppliers
Schedule 9.08 - Working Capital
SALE AND PURCHASE AGREEMENT
This Agreement is entered into as of March 2, 2001 (this
"Agreement"), by and among ADDvantage Technologies Group, Inc.,
an Oklahoma corporation ("Buyer"), and Xxxxxxx X. Xxxxxx (the
"Seller"). NCS Industries, Inc., a Pennsylvania corporation (the
"Company"), joins in the execution of this Agreement for purposes
of making the representations and warranties set forth in
Article IV and the other purposes specifically described herein.
RECITALS:
WHEREAS, the Company is engaged in the business of in the
refurbishment, repair and sale of previously owned cable
television ("CATV") equipment and the distribution of new and
surplus equipment to CATV operators and related services (the
"Business").
WHEREAS, Seller owns all of the issued and outstanding
shares of common stock of the Company.
WHEREAS, Buyer desires to purchase and Seller desires 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 have the meaning set forth in the Recitals
to this Agreement.
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.
Buyer Basket: shall have the meaning set forth in
Section 12.06(a).
COBRA: shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations
promulgated thereunder.
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 mean NCS Industries, Inc., a Pennsylvania
corporation.
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 4.23.
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.
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Excluded Assets: shall mean any of the assets of the
Company not necessary to own and operate the Business in the
manner heretofore owned and operated which are to be assigned to
Seller and which are described more specifically on Schedule 2.02
hereto.
Financial Statements: shall mean those financial statements
of the Company described in Section 4.09.
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. S9601 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. S6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. S1251
et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
S1801 et seq.) and the Clean Air Act (42 U.S.C. S7401 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 of a fact by Seller or
any responsible officer of the Company.
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.
Note: shall mean the three year convertible note as
provided in Section 2.02(b).
Oklahoma Law: shall mean the Oklahoma General Corporation
Act, as amended.
Parties: shall have the meaning set forth in the Recitals
to this Agreement.
Pennsylvania Law: shall mean the Pennsylvania Business
Corporation Law of 1988.
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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.
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 Seller, or used by Seller 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 "NCS Industries, Inc."), service marks,
and copyrights claimed or used by Seller whether or not they have
been registered, and (c) all customer lists of Seller.
Purchase Price: shall mean the consideration to be paid by
Buyer to Seller for the shares of stock as provided in
Section 2.02.
SEC: shall mean the Securities and Exchange Commission.
Securities: shall have the meaning set forth in
Section 4.23.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Seller: shall mean Xxxxxxx X. Xxxxxx, the sole shareholder
of the Company.
Seller Basket: shall have the meaning set forth in
Section 12.06(b).
Shares: shall mean the shares of common stock, par value
$5.00 per share, of Buyer.
Survival Period: shall have the meaning set forth in
Section 12.06(d).
Tax or Taxes: shall mean any and all federal, state, local,
foreign and other taxes, levies, fees, imposts, duties and
charges of whatever kind (including any interest, penalties or
additions to the tax imposed in connection therewith or with
respect thereto), whether or not imposed on the Company or the
Seller, including, without limitation, taxes imposed on, or
measured by, income, franchise, profits, or gross receipts, and
also ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment
compensation, utility, excise, stamp, occupation, premium,
transfer, and gains taxes, and customs duties.
Tax Return: shall mean returns, reports, information
statements, and other documentation (including any additional or
supporting material) filed or maintained, or required to be filed
or maintained, in connection with the calculation, determination,
assessment or collection of any Tax.
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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."
(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.
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, Seller
shall sell to Buyer, and Buyer shall purchase from Seller, all of
the shares of common stock of the Company owned by Seller.
2.02 Purchase Price. The Purchase Price shall consist of
the following:
(a) Buyer shall pay the sum of $800,000 in cash, to be
paid at Closing; and
(b) Buyer shall deliver to Seller at the Closing its
Note payable to Seller in the amount of $200,000 at 7% interest
payable quarterly due and payable on the third anniversary date
of the Note, in the form of Exhibit A attached hereto, such Note
to be convertible into shares of Buyer's common stock as provided
therein and secured by that certain letter of credit in the form
of Exhibit B (which letter of credit shall also secure Buyer's
obligations under the Consulting Agreement required by
Section 10.04);
2.03 Closing Deliveries. At the Closing, Seller shall
execute and deliver to Buyer all of the certificates representing
the Shares duly endorsed for transfer to Buyer or accompanied by
stock powers and any other documents or instruments which may be
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necessary or appropriate to vest title to the Shares in Buyer,
free and clear of any and all Liens, and (b) to carry out the
transactions contemplated by this Agreement. Seller shall assist
Buyer, as reasonably required after the Closing, at Buyer's
expense, in registering and recording with appropriate
Governmental Entities the assignment documents. In addition, at
Closing, Buyer shall cause the Company to make the following
payments:
(i) $350,000 to Xxxxxxx Xxxxxx in full and
complete payment of the promissory note issued to her by the
Company;
(ii) $167,000 to Xxx Xxxxxxxxxxx in full and
complete payment due under the terms of his consulting
agreement with the Company, which consulting agreement shall
thereby be terminated; and
(iii) $132,000 to Xxx Xxxxxxxxxxx in full and
complete payment of that certain note issued to him by the
Seller.
If necessary, Buyer shall make such contributions or advances of
cash to the Company to enable it to make the payments referred to
above.
ARTICLE III
CLOSING
3.01 Closing. The Closing will take place at the offices of
Xxxxxxxx X. Xxxxxx & Associates, 0000 Xxxxx Xxxx, Xxxxx 000,
Xxxxx, Xxxxxxxxxxxx , xx March 2, 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, or at such
other time and place as the Parties may mutually agree (the
"Closing Date").
3.02 Closing Obligations. At the Closing:
(a) Seller shall deliver to Buyer:
(i) the certificates evidencing the Shares with
the appropriate endorsement or assignment described in
Section 2.03;
(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 Seller:
(i) payments of the cash Purchase Price as
provided in Section 2.02(a);
(ii) the Note;
(iii) the certificate required by
Section 10.03; and
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(iv) such other certificates and documents as may
be required under this Agreement or as Seller shall
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE COMPANY
Seller and the Company 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 Pennsylvania 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 each
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 are duly authorized,
validly issued, fully paid and nonassessable, are not subject
to, or issued in violation of, any preemptive rights and
represent all of the issued and outstanding shares of the capital
stock of the Company. Except as set forth above, there are no
other shares of stock authorized or outstanding, and there are no
other agreements, options, warrants, 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 other than its ownership of 40% of the outstanding
capital stock of [Philippine Company], which company is inactive
and the Company has no liabilities and is subject to no claims,
obligations or commitments with respect to such company or the
stock of it owned by the Company.
4.04 Authorization of Agreement. (a) 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 Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all
necessary action on the part of Seller. This Agreement has been
duly executed and delivered by Seller and constitutes the legal,
valid and binding obligation of Seller, enforceable against
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 Seller nor the consummation of the transactions
contemplated hereby to be performed by Seller will (i) violate or
conflict with any provision of the articles of incorporation or
bylaws of Seller, 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 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 Seller 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 Seller will result in a breach of or
constitute a 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 the
Company is a party or by which it or any of its
properties is bound or affected, or pursuant to which
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 Seller of
this Agreement nor the consummation of the transactions
contemplated hereby to be performed by Seller 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 Seller
or the Company in connection with the execution and delivery of
this Agreement by Seller or the consummation by Seller 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 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
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registrations, filing or submissions. All the Permits are in
full force and effect. Schedule 4.04 contains a full and
complete list of all such Permits.
4.05 Contracts and Agreements. (a) Before the Closing,
Seller 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.
(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
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
Seller's knowledge, no third person is in violation of or is
infringing upon any Proprietary Rights.
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4.08 Title to Properties: Absence of Liens and Encumbrances:
Leases.
(a) The Company has good and marketable title to the
material 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.
(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) Except as disclosed in Schedule 4.08, 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 statements of
financial condition as at December 31, 2000 and, statements of
income and shareholder's undistributed net income and statements
of cash flows for the six months ended December 31, 1999 (the
"Financial Statements"). The Financial Statements are 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 accordance with generally accepted accounting
principles applied on a consistent basis (but without footnotes),
except as noted therein. The Financial Statements do 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 Statements materially misleading. The
Company has no material 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 Statements except
liabilities incurred since such date in the ordinary course of
business and consistent with past practice. Since December 31,
2000, other than as contemplated or caused by 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
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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 material 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
December 31, 2000, the Company has conducted the Business only in
the ordinary and usual course and, without limiting the
foregoing, no material 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; or (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.
Furthermore, during such period there has been no default or
breach by the Company in any material respect under any contract,
license or permit.
4.10 Inventories. All inventories of the Company are of a
quality and quantity usable and salable in the ordinary course of
business, except for obsolete items and items of below-standard
quality, all of which, in the aggregate, are immaterial in
amount.
4.11 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.
4.12 Taxes.
(a) Seller has filed (or received an appropriate
extension of time to file) all Tax Returns of federal income
Taxes required to be filed by him, and Company has filed (or
received an appropriate extension of time to file) all Tax
Returns required to be filed by it, and in each case, Seller or
Company has paid all taxes shown to be due on such Tax Returns or
otherwise due, and all such Tax Returns were, are and will be
true, correct and complete; (2) None of the Tax Returns described
in the preceding clause, or otherwise filed by or on behalf of
the Company, contains or will contain a disclosure statement
under Section 6661 of the Code or any similar provision of state,
local, foreign or other law; and (3) Seller has delivered to
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Buyer (i) copies of any written tax sharing agreements or
arrangements between the Company and Seller, any affiliate, or
any third party, (ii) true and complete descriptions of any such
agreement, arrangement or practice not reduced to writing, and
(iii) a written statement setting forth (A) the amount, if any,
owed by or to the Company (and the party or parties to or by
which any such amounts are owed) under any such agreement,
arrangement or practice as of the date such statement was given,
(B) a good-faith calculation, which shall be materially correct,
of the estimated amounts, if any, that the Company will pay (and
the party to which or by which such payment will be made)
thereunder between the date of the statement described in
clause (A) and the Closing Date.
(b) Except as otherwise disclosed in Schedule 4.12,
(1) All tax deficiencies asserted or assessed against Seller and
the Company have been paid or finally settled; (2) Seller and the
Company have made all payments of estimated Taxes required to be
made under the Code and any comparable provisions of state,
local, foreign or other law; (3) All amounts that are required to
be collected or withheld by the Company or any Subsidiary have
been duly collected or withheld, and have been duly remitted or
deposited in accordance with law; (4) All Tax Returns filed or
required to be filed by Seller and the Company have been
examined by the Internal Revenue Service or other appropriate
taxing authority or closed by the applicable statutes of
limitation, and all liabilities asserted by the Internal Revenue
Service or any such taxing authority have been satisfied, and any
Tax liabilities for years which have not been so examined or
closed will not have a material adverse effect on the Company or
the Seller; (5) There is no outstanding request for any extension
of time within which to pay any Taxes or file any Tax Returns;
(6) There has been no waiver or extension of any applicable
statute of limitations for the assessment or collection of any
Taxes; (7) There is no pending or threatened action, audit,
proceeding or investigation for the assessment or collection of
any Taxes; (8) There are no requests for rulings, subpoenas or
requests for information pending with respect to any taxing
authority; (9) Any adjustment of Taxes made by the Internal
Revenue Service in any examination which is required to be
reported to state, local, foreign or other taxing authorities has
been so reported, and any additional Taxes due with respect
thereto have been paid; and (10) No power of attorney has been
granted by the Company , and is currently in force, with respect
to any matter relating to Taxes.
(c) Except as otherwise disclosed in Schedule 4.12,
(1) no taxing authority has raised any issue with respect to the
liability of Seller or the Company for any Tax that, by the
application of similar principles, might result in the issuance
of a Notice of Deficiency or similar notice of intention to
assess Taxes by any taxing authority; (2) neither Seller nor the
Company has taken any action that would have the effect of
deferring any liability for Taxes for the Company from any
taxable period ending on or before the Closing Date to any
taxable period ending thereafter; (3) none of the income
recognized for federal, state, local, foreign or other income tax
purposes by the Company during the period beginning on
December 31, 2000 and ending on the Closing Date will (i) be
derived other than in the ordinary course of business, or
(ii) arise from transactions of a type not reflected in the
relevant Tax Returns for the last taxable period ending prior to
December 31, 2000 (4) no payment which will or may be made by the
Company will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code; (5) the
Company is not required to include in income any adjustment
pursuant to Section 481(a) of the Code (or any similar provision
of law or regulations) by reason of a change in accounting
method, nor is the Internal Revenue Service or any other taxing
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authority considering any such change in accounting method;
(6) the Company has not disposed of any property which has been
accounted for Tax purposes under the installment method; and
(7) As of the Closing Date, the Company will not have any
"non-recapture net section 1231 losses," within the meaning of
Section 1231(c) of the Code.
4.13 Litigation. Except as disclosed in Schedule 4.13
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 Seller 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.
4.14 Insurance. Schedule 4.14 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 Seller adequate in scope and
amount in view of the properties owned and operations carried on
by it. The Company has complied in all material respects with
the provisions of all such policies. All of the policies listed
on Schedule 4.14 will remain in full force and effect following
the Closing in favor of the Company and/or Buyer.
4.15 Brokers and Finders. No person has acted on behalf of
Seller 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, Seller or the
Company based upon any arrangement or agreement or other action
taken, made by or on behalf of Seller or the Company.
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4.16 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
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 Seller
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.
4.17 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 prior to Closing, 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 prior to Closing.
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4.18 Customers and Suppliers. The Schedule 4.18 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 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.
4.19 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).
4.20 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.
4.21 Untrue Statements. This Agreement and the exhibits,
schedules and appendices hereto, the Financial Statements and all
other documents and information furnished by Seller 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.
4.22 Actions Since December 31, 2000. Since December 31,
2000, 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.
4.23 Seller Investment Representations. In connection with
its acquisition of the Note and any Shares of ADDvantage
Technologies Group, Inc. to be issued upon conversion of the Note
(the "Securities"), Seller represents, warrants and covenants
that:
(a) Seller is, and upon conversion of the Note (if
that occurs), will be acquiring the Securities for investment
purposes only and not with a view to the distribution thereof.
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. 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.
(b) 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 December 31, 2000, and copies of the Proxy Statement
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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." 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. 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) Seller further agrees that the Note and 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.
4.24 Employee Matters.
(a) Schedule 4.24 sets forth a complete and accurate
list of each of the following which is or has been sponsored,
maintained or contributed to by the Company or any trade or
business, whether or not incorporated (a "Company ERISA
Affiliate"), or in which any employee or co-employee of any of
the Company ERISA Affiliates participates or is covered, 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 for the benefit of any person who, as
of the Closing, is a current or former employee or subcontractor
of the Company or any Company Affiliate: (i) each "employee
benefit plan," as such term is defined in Section 3(3) of ERISA
(each, a "Company Plan"); 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 not described in Section 3.17(a)(i) (each, a "Company
Benefit Program or Agreement") (such Company Plans and Company
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Benefit Programs or Agreements are sometimes collectively
referred to in this Agreement as the "Company Employee Benefit
Plans").
(b) True, correct and complete copies of each of the
Company Plans and related trusts, if applicable, including all
amendments thereto, have been furnished or made available to
Buyer. There has also been furnished or made available to Buyer,
with respect to each Company Plan required to file such report
and description, the report on Form 5500 for the past three
years, to the extent applicable, and the most recent summary plan
description. True, correct and complete copies or descriptions
of all Company Benefit Programs or Agreements have also been
furnished or made available to Buyer.
(c) Except as otherwise set forth on the
Schedule 4.24: (i) neither the Company nor any Company ERISA
Affiliate contributes to or has an obligation to contribute to,
nor has at any time contributed to or had an obligation to
contribute to, a multi-employer plan within the meaning of
Section 3(37) of ERISA or any other plan subject to Title IV of
ERISA; (ii) each of the Company and the Company ERISA Affiliates
has performed all obligations, whether arising by operation of
law or by contract, including ERISA and the Code, required to be
performed by it in connection with the Company Employee Benefit
Plans, and, to the knowledge of Sellers, there have been no
defaults or violations by any other party to the Company Employee
Benefit Plans; (iii) all reports, returns, notices, disclosures
and other documents relating to the Company Plans required to be
filed with or furnished to governmental entities, plan
participants or plan beneficiaries have been timely filed or
furnished in accordance with applicable law, and each Company
Employee Benefit Plan has been administered in compliance with
its governing written documents; (iv) each of the Company Plans
intended to be qualified under Section 401 of the Code satisfies
the requirements of such Section and has received a favorable
determination letter from the Internal Revenue Service (the
"IRS") regarding such qualified status and has not been amended,
operated or administered in a way which would adversely affect
such qualified status; (v) there are no actions, suits or claims
pending (other than routine claims for benefits) or, to the
knowledge of Sellers, contemplated or threatened against, or with
respect to, any of the Company Employee Benefit Plans or their
assets; (vi) each trust maintained in connection with each
Company Plan, which is qualified under Section 401 of the Code,
is tax exempt under Section 501 of the Code; (vii) all
contributions required to be made to the Company Employee Benefit
Plans have been made timely; (viii) no accumulated funding
deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been
incurred, and there has been no termination or partial
termination of any Company Plan within the meaning of
Section 411(d)(3) of the Code; (ix) no act, omission or
transaction has occurred which could result in imposition on the
Company or any Company Affiliate of (A) breach of fiduciary duty
liability damages under Section 409 of ERISA, (B) a civil penalty
assessed pursuant to subsections (c), (i) or (1) of Section 502
of ERISA or (C) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code; (x) to the knowledge of Sellers, there is
no matter pending with respect to any of the Company Plans before
the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation (the "PBGC"); (xi) each of the Company Employee
Benefit Plans complies, in form and operation, with the
applicable provisions of the Code and ERISA; (xii) each Company
Employee Benefit Plan may be unilaterally amended or terminated
in its entirety without any liability or other obligation;
(xiii) the Company and the Company Affiliates have no liabilities
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or other obligations, whether actual or contingent, under any
Company Employee Benefit Plan for post-employment benefits of any
nature (other than COBRA continuation coverage); and
(xiv) neither the Company nor any of the Company Affiliates or
any present or former director, officer, employee or other agent
of the Company or any of the Company Affiliates has made any
written or oral representations or promises to any present or
former director, officer, employee or other agent concerning his
or her terms, conditions or benefits of employment, including the
tenure of any such employment or the conditions under which such
employment may be terminated by the Company, any of the Company
Affiliates or Buyer which will be binding upon or enforceable
against Buyer or the Company after the Effective Time.
(d) Except as otherwise set forth on Schedule 4.24, no
employee is currently on a leave of absence due to sickness or
disability and no claim is pending or expected to be made by an
employee, former employee or independent contractor for workers'
compensation benefits.
(e) With respect to the Company Employee Benefit
Plans, there exists no condition or set of circumstances in
connection with any of the Company or any of the Company
Affiliates that could be expected to result in liability
reasonably likely to have a Material Adverse Effect on the
Company under ERISA, the Code or any other applicable law. With
respect to the Company Employee Benefit Plans, individually and
in the aggregate, there are no unfunded benefit obligations which
have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting
principles, on the financial statements of the Company, which
obligations are reasonably likely to have a material adverse
effect on the Company.
(f) Except as set forth in the Schedule 4.24, neither
the execution or delivery of this Agreement nor the consummation
of the transactions contemplated hereby will result in any
payment becoming due to any employee or group of employees of any
of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller 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
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,
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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.
5.03 Disclosure Materials. Purchaser has made available to
Sellers a true and complete copy of each report, schedule,
registration statement and definitive proxy statement comprising
the Disclosure. As of their respective dates, the Disclosure
Materials complied in material respects with the requirements of
the Securities Act or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Disclosure Materials, and each
of the Disclosure Materials is materially and reasonably correct.
Since the date of the most recent of the Disclosure Materials,
there has been no material adverse change in the business,
operations, affairs or assets of Buyer.
ARTICLE VI
COVENANTS OF SELLER
Seller covenants and agrees with Buyer that, at all times
prior to the Closing, Seller will 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.
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6.01 Approvals. Seller 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 Seller to consummate
the transactions contemplated hereby, (b) provide such other
information and communications to such Governmental 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. Seller 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, and Seller
will cause the Company to, 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, and Seller will cause the
Company to, 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 Permits 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, and Seller will cause the
Company to, maintain its books and records 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, and Seller will cause the
Company to, (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
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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 Seller and in
accordance with generally accepted accounting principles
consistently applied.
(d) The Company will, and Seller will cause the
Company to, 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, and Seller will cause the
Company to, 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.
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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
(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, Seller
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. The Company will notify Buyer
promptly in writing as soon as the Company 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
Seller or the Company under this Agreement, or that renders or
will render untrue any representation or warranty of 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.
The Company 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 Seller 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. Seller
and Owner covenant and agree that between the date hereof and the
Closing Date, 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. The Company shall
obtain and provide to Buyer at Closing, a certificate of good
standing of the Company from the State of Pennsylvania, each
state in which the Company is authorized to do business, and from
each state in which the Company is doing business.
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6.12 Employee Benefit Plans. Except as noted in the next
sentence, the Company will not amend or terminate any Employee
Benefit Plans and will fund any deficiency in any Employee
Benefit Plan which would otherwise exist at the date of Closing.
It is contemplated that on or prior to Closing the Company's
401(k) plan and its comparability profit-sharing plan will be
terminated; provided, however, that the Company will incur no
liability or payment obligation with respect thereto. Buyer
shall cause the Company to honor all accrued vacation time of the
Company's employees, provided that any liability of the Company
with respect thereto shall be reflected as a current liability on
the Company's balance sheet as of the Closing Date prepared
pursuant to Section 9.08.
6.13 Name. From and after the Closing Date, Seller agrees
not to use the name "NCS Industries, Inc." 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.
6.14 Further Action. Each of the parties hereto shall use
their reasonable efforts to fulfillment their respective
commitments, covenants and agreements set forth herein, to
execute and deliver such documents and other papers and to take
such further actions as may be reasonably required to carry out
the provisions hereof and give effect to the transactions
contemplated hereby.
6.15 Tax Matters
(a) The Buyer shall promptly notify the Seller in
writing upon receipt by the Company, the Buyer or its Affiliates
of notice of any pending or threatened Tax audits of or
assessments against the Company, the Buyer or any of their
respective subsidiaries or Affiliates for taxable periods of the
Company ending on, prior to or including the Closing date or
which may affect the determination of Taxes for which Seller
shall indemnify the Company, the Buyer or their subsidiaries or
affiliates hereunder. The Seller shall promptly notify the Buyer
in writing upon receipt by the Seller or the Company of notice of
any pending or threatened Tax audits of or assessments against
the Company for all taxable periods of the Company or such
subsidiaries.
(b) Each party shall have the right, at its own
expense, to control any audit or determination by any authority,
initiate any claim for refund or amended return, and contest,
resolve and defend against any assessment, notice of deficiency,
or other adjustment or proposed adjustment of Taxes for any
taxable period for which that party (or any of its subsidiaries
or affiliates) is charged with responsibility for filing a Tax
Return under this Agreement, provided, however, that such party
shall (A) consult with the other parties with respect to the
resolution of any issue that would affect such other parties in
that or any other taxable year, and (B) not settle any such
issue, or file any amended return relating to such issue, without
the consent of the other parties, which consent shall not
unreasonably be withheld. Where consent to a settlement is
withheld by another party pursuant to clause (B) of the preceding
sentence, such other party may continue or initiate any further
proceedings at its own expense, provided, that the liability of
the first party, after giving effect to this Agreement, shall not
exceed the liability that would have resulted from the settlement
or amended return. In the event that a party to this Agreement is
paid a refund to which, under the principles of this Agreement,
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another party to this Agreement is entitled, the party receiving
such refund shall pay such refund to the party so entitled within
seven days of receipt of such refund by the first party.
(c) Buyer and Seller shall furnish or cause to be
furnished to each other (at reasonable times) upon request as
promptly as practicable such information (including access to
personnel and books and records pertinent solely to the Company)
and assistance relating to the Company as is reasonably necessary
for the preparation, review, audit and filing of any Tax Return,
the preparation for any Tax audit or the defense of any
assessment or other similar claim, provided, that access shall be
limited to those items pertaining solely to the Company. A party
retaining such information shall not dispose of such information
and shall transfer such information to the other party.
(d) With respect to the acquisition of the Shares
hereunder, Buyer shall make a timely election under
Section 338(g) of the Code and Seller and Buyer shall jointly
make an election under Section 338(h)(10) of the Code (and any
corresponding elections under state or local tax law)
(collectively, a "Section 338(h)(10) Election"). Seller and Buyer
shall (i) take, and cooperate with each other to take, all
actions necessary and appropriate (including filing such forms,
returns, elections, schedules and other documents as may be
required) to effect and preserve a timely Section 338(h)(10)
Election in accordance with Section 338 of the Code and the
Temporary Regulation thereunder, or any successor provisions as
promptly as practicable following the Closing Date, but not later
than the date which is the latest date for making such
Section 338(h)(10) Election, and from time to time thereafter,
and (ii) Seller and Buyer shall report the sale of the Shares
pursuant to this Agreement consistent with the Section 338(h)(10)
Election and shall take no position contrary thereto or
inconsistent therewith in any Tax Return, any discussion with or
proceeding before any taxing authority, or otherwise.
(e) If the Company is subject to 1374 built-in gains
tax on the deemed asset sale, Seller is liable for such tax
arising out of the deemed asset.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller 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 Seller 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 Seller or such authorities may reasonably request,
and (c) cooperate with Seller in obtaining, as promptly as
practicable, all approvals, authorizations and clearances of
Governmental Entities required of the Company to consummate the
transactions contemplated hereby.
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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 Seller promptly in
writing of, and contemporaneously will provide Seller with true,
complete and correct copies of any and all information or
documents relating to, and will use all reasonable 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 SELLER
Notwithstanding any other provision of this Agreement, the
obligation of each of Buyer and Seller 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, 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
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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:
9.01 Accuracy of Representations and Warranties. The
representations and warranties of Seller 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.
Seller 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 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 Employment Agreement. At or prior to the Closing, each
of Xxxxxxx X. Xxxxxx and Xxxxxxx Xxxxxx shall have entered into
an Employment Agreement with the Company substantially in the
form of Exhibit C hereto
9.05 Non-Competition and Other Agreements. At or prior to
the Closing, Seller shall have entered into a Non-Competition
Agreement with the Company and Buyer substantially in the form of
Exhibit D hereto. Seller agrees to enter into such
Non-Competition Agreement.
9.06 Legal Opinion. Buyer shall have received from counsel
to the Company, an opinion, dated the Closing Date, in form and
substance satisfactory to Buyer and its counsel substantially in
the form attached hereto as Exhibit E.
9.07 Delivery of Assignments. Seller shall have executed,
acknowledged (if appropriate) and delivered to Buyer all
assignments as Buyer and its counsel may reasonably request.
9.08 Working Capital. The working capital and the
shareholder's equity of the Company as of the Closing Date shall
each not be less than $1,000,000, as determined using the
accounting principles and methods which are consistent with those
used in connection with the preparation of the Financial
Statements. In this regard, the individual line items of the
current assets and current liabilities of the Company as of the
Closing Date shall not be less than the respective amounts
reflected on Schedule 9.08 hereof. Within three (3) business days
prior to the Closing Date, Seller will submit to Buyer the
projected balance sheet of the Company as of the Closing Date.
Seller shall certify that this balance sheet was prepared using
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the same accounting principles and methods used in the
preparation of the Financial Statements and that such principles
and methods were consistently applied in each case. Buyer shall
have the opportunity to review the Closing Date balance sheet and
determine if the working capital and shareholder's equity of the
Company it complies with the conditions to Closing set forth in
this Section 9.08. If subsequent to Closing, Buyer shall
determine that the Closing Date balance sheet was incorrect or
inaccurate to any extent and that the conditions to Closing set
forth in this Section were not in fact met, Buyer shall have a
claim against Seller under Section 12.06(a)(ii) of this
Agreement. Notwithstanding anything to the contrary in this
Section 9.08, prior to Closing, Buyer will conduct its own
review, examination and analysis of the inventory and accounts
receivable of the Company as reflected on the Seller's projected
balance sheet as of the date of Closing. If for any reason,
Buyer does not agree with the valuation of these items as
reflected on such balance sheet, it shall notify Seller prior to
Closing, in which event, Seller shall have the option to
terminate this Agreement and neither party shall have any further
obligation or liability to the other except as contemplated by
Section 11.02 of this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Notwithstanding any other provision of this Agreement, the
obligations of Seller 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 Seller.
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. Seller 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
Seller for the purpose of verifying the accuracy of such
representations and warranties and the performance and
satisfaction of such covenants and conditions.
10.04 Consulting Agreement. The Company and Seller
shall have executed the Consulting Agreement in the form of
Exhibit F attached hereto. The payment of such Consulting
Agreement shall be secured by the standby letter of credit from
Bank of Oklahoma in the form of Exhibit B attached hereto.
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ARTICLE XI
TERMINATION AND WAIVER
11.01 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if the transaction shall
not have been consummated on or before March 31, 2001;
(c) at Buyer's election, upon written notice from
Buyer to Seller, 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 Seller hereunder; or
(ii) there shall have been any written representation or
statement furnished by Seller hereunder which at the time
furnished is false or misleading; or
(d) at Seller's election, upon written notice from
Seller 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;
(ii) there shall have been any written representation or
statement furnished by Buyer hereunder which at the time
furnished is false or misleading, or (iii) Seller elects to
terminate this Agreement pursuant to the last sentence of
Section 9.08.
11.02 Effect of Termination. If either Buyer or Seller
terminates 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 Seller 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 to the extent that such termination
results from the breach by a party of any of its representations,
warranties or agreements in this Agreement. In addition, upon
any termination of this Agreement pursuant to this Article XI,
the terms and provisions of the non-disclosure agreement
previously signed by the parties shall remain in full force and
effect.
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 Seller, if he is 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
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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.
Notwithstanding anything to the contrary in this Agreement, the
confidentiality agreement dated November 6, 2000 executed by the
all or some of the parties hereto prior to the date of this
Agreement shall remain in full force and effect and the provisions
thereof are incorporated herein by reference.
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 Survival of Representations and Warranties;
Indemnification.
(a) By Seller and the Company. Seller agrees to
indemnify, defend and hold Buyer and its Affiliates (including
the Company) 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 Seller 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 Seller contained in this Agreement or in any
certificate, agreement, document or instrument delivered pursuant
to this Agreement, except, that Seller shall have no liability
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pursuant to Section 12.06(a)(i) for the first $5,000 of aggregate
Claims (the "Buyer Basket").
(b) By Buyer. Buyer agrees to indemnify, defend and
hold Seller harmless from and against any and all Claims
sustained by Seller 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; provided, however, that Buyer shall
have no liability pursuant to Section 12.06(b)(i) for the first
$5,000 of aggregate Claims (the "Seller Basket").
(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 for a period of three years following the Closing Date;
provided, that the representations and 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
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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
if the Closing has occurred.
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) Seller acknowledges and agrees that from and after
the Closing, Buyer will be entitled to originals of all title and
other documents, books, records (including tax records),
agreements, and financial data of any sort relating to the
Business and the Company's assets.
(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) Seller will not take any action that is designed
or intended to have the effect of discouraging any 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. Seller will refer all customer
inquiries relating to the Business to Buyer from and after the
Closing Date.
(d) Seller agrees 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 Seller to any party unless and until they shall
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become public knowledge (other than by disclosure by Seller or
the Company's employees or agents) or as required by law. 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
Seller, 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 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 Seller hereby waives any right,
claim, or cause of action, express or implied, which Seller 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, Seller 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.
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, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
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
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If to Seller: Xxxxxxx X. Xxxxxx
c/o NCS Industries, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxxxxx Xxxxx, XX00000
Facsimile: 000-000-0000
with a copy to: Xxxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx & Associates
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Facsimile: 000-000-0000
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.
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.
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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" "Seller"
ADDvantage Technologies Group, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
-------------------------------- -------------------
Xxxxxxx X. Xxxxxxx, President Xxxxxxx X. Xxxxxx
"The Company"
NCS Industries, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx, President
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