ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") made as of November 22, 2004 by
and among NTG, Inc., a Kansas corporation ("Buyer"), Network Technologies Group,
LLC, a Missouri limited liability company ("Seller"), Elecsys Corporation, a
Kansas corporation ("Elecsys"), and each of the members of Seller listed on the
signature page hereto (the "Members").
Preliminary Statement
WHEREAS, Seller desires to sell, assign, transfer, convey and deliver to
Buyer and Buyer desires to purchase from Seller the Assets (as defined below),
subject to the terms and conditions of this Agreement; and
WHEREAS, Seller desires to assign, transfer, convey and deliver to Buyer
and Buyer desires to assume all of Seller's rights and obligations related to
(i) Seller's building lease (the "Lease") for its current facility located at
00000 Xxxx 00xx Xxxxxx, Xxxxxx, Xxxxxx (the "Location") and (ii) the Assumed
Liabilities (as defined below), subject to the terms and conditions of this
Agreement.
NOW THEREFORE, the parties, intending to be legally bound, and in reliance
upon the representations, warranties and other terms set forth herein, hereby
agree as follows:
1. Assets Purchased and Sold. Subject to the terms and conditions contained
in this Agreement, Seller hereby agrees to sell, assign, transfer, convey and
deliver to Buyer all of Seller's right, title and interest in and to the
following assets (collectively, the "Assets"):
(a) all raw material, work-in-progress and finished goods inventory
of the Seller existing on the Closing Date (as defined below);
(b) the fixed assets of the Seller listed on Schedule 1(b) hereto;
(c) all patents, patent applications, trade names, trademarks,
service names, service marks, software and other intellectual
property of the Seller listed on Schedule 1(c) hereto;
(d) all customer deposits of the Seller listed on Schedule 1(d)
hereto; and
(e) all cash and accounts receivable of the Seller listed on Schedule
1(e) hereto.
Any of the assets of Seller not listed above shall be retained by Seller and are
referred to herein as the excluded assets (the "Excluded Assets").
2. Assignment and Assumption of the Lease and the Assumed Liabilities.
Subject to the terms and conditions contained in this Agreement, Seller hereby
assigns, transfers, conveys and delivers to Buyer, all of Seller's right, title
and interest in and to (i) the Lease, (ii) all of Seller's trade accounts
payable existing on the Closing Date; provided such trade payables are also
listed on Schedule 2(ii) hereto, and (iii) all of Seller's orders and contracts
with vendors, customers and distributors existing on the Closing Date; provided,
however, that such orders and contracts are also listed on Schedule 2(iii)
hereto (the "Assumed Liabilities"), and Buyer does hereby assume sole
responsibility to perform, satisfy and discharge all duties, obligations, terms,
conditions and covenants arising after the Closing Date that the Seller is
otherwise bound to perform, discharge or otherwise satisfy, to the extent such
responsibilities, duties, obligations, terms, conditions and covenants arise
from or are related to the Lease or the Assumed Liabilities. Except as set forth
above, Buyer shall not assume, or in any way be liable or responsible for, any
of the liabilities, accounts payable, orders, contracts, agreements, or other
obligations of any nature whatsoever of Seller.
3. Closing. The closing ("Closing") shall take place at the offices of
Elecsys Corporation in Lenexa, Kansas on November 24, 2004. This Agreement shall
be effective as of 12:01 a.m. local time, on the date of the Closing (the
"Closing Date").
4. Amount and Terms of Payments. In consideration of Seller's sale of the
Assets to Buyer, Elecsys unconditionally agrees to pay to Seller a total of
$375,000.00 (hereinafter called the "Purchase Price"). At the direction of
Seller, the Purchase Price shall be paid at Closing in two payments as follows:
(a) by delivery to the Members, pro-rata in proportion to their percentage
interests as listed on Exhibit A hereto, of an initial payment of $187,500 in
cash, and (b) by delivery to the Members, pro-rata in proportion to their
percentage interests as listed on Exhibit A hereto, of a second payment of (i)
cash and (ii) restricted shares of the Common Stock of Elecsys (the "Stock")
with a combined value of $187,500; provided, however that Xxxxxx Xxxx and Xxxxx
Xxxxx shall receive 100% of their pro-rata portion of the second payment in
cash. Each Member (other than Xxxxxx Xxxx and Xxxxx Xxxxx) shall receive their
pro-rata portion of the second payment in that combination of cash and Stock
selected by each Member on the signature page hereto; provided, however, that no
fractional shares of Stock shall be issued. The price used to determine the
number of shares Stock to be issued to each Member, if any, shall be $2.37 (the
30-day trailing average closing price of the Stock on November 18th, 2004).
5. Representations and Warranties of Seller, the Members and Buyer.
(A) In addition to any other representations and warranties contained in
this Agreement, Seller represents and warrants to Buyer that:
(1) There are no provisions of any existing agreements binding on
Seller or affecting the Assets that conflict with or in any way
prevent the execution, delivery or carrying out of the terms of
this Agreement.
(2) Seller is the sole owner of all Assets and all Assets will be
assigned, transferred, conveyed and delivered to Buyer free and
clear of any and all liens, pledges, claims or other
encumbrances.
(3) Network Technologies Group, LLC is a limited liability company
duly organized, validly existing and in good standing under the
laws of the state of Missouri. Seller has the full power and
authority to execute and deliver this Agreement, to perform
hereunder, and to consummate the transactions contemplated
hereby, without the necessity of any act, approval, or consent of
any other person, entity, or governmental authority. This
Agreement, when executed, will constitute the valid and binding
obligation of the Seller, enforceable against Seller according to
its terms.
(4) Seller is not in violation of any law, rule, regulation or court
order, local state or federal, pertaining to the operation or
conduct of its business. There are no known judgments, suits,
actions, investigations or
proceedings pending or threatened in any court or by any
governmental authority or private arbitration tribunal against
Seller nor is there any basis for any of the foregoing.
(5) Seller has filed in true and correct form all federal, state and
local tax returns and other reports required to be filed, and has
paid all taxes and assessments which have become due and payable,
whether or not so shown on any such return or report. Seller has
received no notice of, nor does Seller have any knowledge of, any
notice of deficiency or assessment or proposed deficiency or
assessment from any taxing governmental authority. There are no
audits pending with respect to Seller and there are no
outstanding agreements or waivers by or with respect to Seller
that extend the statutory period of limitations applicable to any
federal, state, local or foreign tax returns or taxes for any
period. There are no determined tax deficiencies or proposed tax
assessments against Seller.
(6) Except with respect to the trade accounts payable listed on
Schedule 2(ii), Seller has paid all bills, invoices and other
obligations due to all creditors of Seller as of the Closing
Date, and will promptly pay all bills, invoices and other
obligations to all creditors of Seller that may arise after the
Closing Date.
(7) Schedule 2(ii) sets forth a true, correct and complete list of
all trade accounts payable as of the date of this Agreement.
(8) Schedule 1(e) sets forth a true, correct and complete list of all
accounts receivable as of the date of this Agreement. All
accounts receivable arose out of the sales of inventory or the
provision of services in the ordinary course of the Seller's
business and are collectable.
(B) In addition to any other representations and warranties contained in
this Agreement, each Member who elects to receive Stock represents and warrants
to Buyer that:
(1) Such Member is acquiring the Stock for its own account and has no
intention of selling or granting any participation in or
otherwise distributing the Stock in any transaction in violation
of state or federal securities laws, without prejudice, however,
to such Member's right at all times to sell or otherwise dispose
of the Stock under an exemption from registration available under
state and federal securities laws, including without limitation,
Rule 145 promulgated under the Securities Act of 1933, as amended
(the "Act"), if available.
(2) Such Member understands that the Stock is characterized as
"restricted securities" under the Act inasmuch as it is being
acquired from Elecsys in a transaction not involving a public
offering. Such Member understands that the Stock may only be
resold without registration under the Act and applicable state
securities laws in certain limited circumstances. Such Member
represents that it is knowledgeable with respect to Rule 145
promulgated under the Act.
(3) Such Member understands that the certificates evidencing the
Stock will bear a restrictive legend similar in form to the
following: "These securities have not been registered under the
Securities Act of 1933, as
amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of
counsel satisfactory to the Company that such registration is not
required or unless sold pursuant to Rule 145 of such Act."
(4) Such Member is an "accredited investor" for purposes of Section
4(2) of the Securities Act of 1933 (the "Securities Act") and
Regulation D and Rule 30.501(a) promulgated thereunder, and such
Member has knowledge and experience in business and financial
matters as to be capable of evaluating the Company and the
proposed activities thereof and the risks and merits of the
Stock.
(C) Buyer represents and warrants to Seller and the Members that:
(1) There are no provisions of any existing agreements binding on
Buyer that conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement.
(2) Buyer has the full power and authority to execute and deliver
this Agreement, to perform hereunder, and to consummate the
transactions contemplated hereby, without the necessity of any
act, approval, or consent of any other person, entity, or
governmental authority. This Agreement, when executed, will
constitute the valid and binding obligation of the Buyer,
enforceable against Buyer according to its terms.
(3) The Stock has been duly authorized by Elecsys and when issued and
delivered to Seller against payment therefore in accordance with
the term of this Agreement, will be validly issued, fully paid
and nonassessable, and will be free of any and all liens and
restrictions on transfer, other than restrictions on transfer
under applicable state and federal securities laws.
6. Conditions to Obligation to Close. Each and every obligation of Buyer
and Seller to be performed in connection with the Closing on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) Buyer and Xxx Xxxxxxxx shall have entered into an employment and
noncompetition agreement (the "Employment Agreement") on terms
satisfactory to Buyer, pursuant to which Xx. Xxxxxxxx will (i)
become President of Buyer, and (ii) be responsible for the
business and market development of Buyer. The Employment
Agreement will provide that Xx. Xxxxxxxx will be paid, in
addition to any other compensation, $50,000 in equal amounts over
the first 12 months of his employment with Buyer. The Employment
Agreement will also provide that Xx. Xxxxxxxx will receive a one
time bonus of $25,000 when and if the value of payments actually
received by Buyer for sales of products at standard prices by the
Buyer to Praxair for use in the Pacific Gas & Electric monitoring
program exceed $1,000,000 in the aggregate;
(b) Seller shall have provided Buyer with written confirmation,
satisfactory to Buyer, of the termination of the Cross-Investment
Agreement between Seller and Talon Interactive ("Talon");
(c) Seller shall have provided Buyer an executed Consent and Estoppel
Certificate in the form attached hereto as Exhibit B;
(d) Seller shall have delivered to Buyer an executed Consent to Use
of Name in the form attached hereto as Exhibit C;
(e) Each of Seller and Buyer shall have delivered to each other a
certificate, signed by an authorized representative and providing
that the representations and warranties contained in Sections
5(A) and 5(C), hereof, as applicable, remain true; and
(g) Buyer and Talon shall have entered into a Sublease Agreement, on
terms satisfactory to Buyer, with regard to the Location.
7. Post Closing Agreements and Obligations.
(a) Buyer agrees that for a period of three years from the Closing
Date, Buyer will pay to Seller, for distribution to the Members,
pro-rata in proportion to their percentage interests as listed on
Exhibit A hereto, an amount equal to 5% of the net sales proceeds
actually received by Buyer in connection with sales of "ScadaNET
Products." "ScadaNET Products" means ScadaNET Network-based
products, services and accessories in production or development
by Seller as of the Closing Date. Such payments will be made in
cash and delivered to Seller on a quarterly basis consistent with
Buyer's fiscal year.
(b) Buyer agrees that if within three years of the Closing Date (the
"Period") Buyer sells any of the Assets and the proceeds from the
sale of such Assets during the Period exceeds $500,000 in the
aggregate, Buyer will pay to Seller, for distribution to the
Members, pro-rata in accordance with their percentage interests
as provided on Exhibit A hereto, an amount equal to 50% of the
proceeds in excess of $500,000.
(c) Buyer agrees to offer to key employees of the Subsidiary the
opportunity to participate in the Elecsys Corporation Incentive
Stock Option plan on similar terms to comparable key employees at
Buyer's DCI subsidiary.
(d) Elecsys agrees that within seven days of the Closing Date it
shall submit an Additional Listing Application to the American
Stock Exchange with respect to the Stock issued to the Members,
if any.
(e) Seller agrees that within seven days of the Closing Date Seller
shall change its name with the Missouri Secretary of State and
the Kansas Secretary of State.
8. Indemnification and Resolution of Disputes.
(A) Seller's and Member's Indemnification. Seller and each Member
agree, jointly and severally (provided, however, that the
liability of each Member shall not exceed the aggregate amount of
cash and Stock received by such Member pursuant to the terms of
this Agreement) to defend, indemnify and hold harmless Buyer
against and in respect of any and all loss, liability and expense
resulting
from:
(1) The inaccuracy of any representation or breach of warranty
or non-fulfillment of any obligation by Seller or such
Member under this Agreement;
(2) Any and all actions, suits, proceedings, claims, demands,
assessments, tax deficiencies, judgments, costs and expenses
(including attorneys' fees) incident to any of the foregoing
provisions;
(3) Any liabilities, accounts payable or other obligations
relating to the Excluded Assets; and
(4) Any liabilities, accounts payable or other obligations
relating to the Assets and arising or payable prior to the
Closing Date.
(B) Claims Procedure. Promptly after the assertion of any claim by
Buyer with respect to any matter referred to in paragraph (A)
above, or the receipt by Buyer of written notice of the assertion
or the commencement of any litigation with respect to any matter
referred to in paragraph (A) above, Buyer shall give written
notice of such claim to Seller and thereafter shall keep Seller
reasonably informed with respect to that claim; provided,
however, that failure of Buyer to give notice as provided in this
section shall not relieve Seller of its obligations hereunder. If
any litigation is brought against Buyer, Seller shall be entitled
to participate in such litigation, and at the request of Buyer,
shall assume the defense thereof with counsel satisfactory to the
Buyer at the Seller's sole expense. If Seller assumes the defense
of any litigation, it shall not settle the litigation unless the
settlement shall include, as an unconditional term thereof, the
giving by the claimant or plaintiff of a release of Buyer,
satisfactory to Buyer, from all liability with respect to such
litigation.
(C) Buyer's Indemnification. Buyer agrees to defend, indemnify and
hold harmless Seller against and in respect of any and all loss,
liability and expense resulting from the inaccuracy of any
representation or breach of warranty or non-fulfillment of any
obligation by Buyer under this Agreement.
(D) Claims Procedure. Promptly after assertion of any claim by Seller
with respect to any matter referred to in paragraph (C) above, or
the receipt by Seller of written notice of the assertion or the
commencement of any litigation with respect to any matter
referred to in paragraph (C) above, Seller shall give written
notice of such claim to Buyer and thereafter shall keep Buyer
reasonably informed with respect to that claim; provided,
however, that failure of Seller to give notice as provided in
this section shall not relieve Buyer of its obligations
hereunder. If any litigation is brought against Seller, Buyer
shall be entitled to participate in such litigation, and at the
request of Seller, shall assume the defense thereof with counsel
satisfactory to the Seller at the Buyer' sole expense. If Buyer
assumes the defense of any litigation, it shall not settle the
litigation unless the settlement shall include, as an
unconditional term thereof, the giving by the claimant or
plaintiff of a release of Seller, satisfactory to Seller, from
all liability with respect to such litigation.
9. Further Assurances. At any time, and from time to time after the
Closing, at Buyer's reasonable request and sole expense for any out-of-pocket
expenses incurred by Seller,
Seller shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take such other action, without
warranty or recourse, as Buyer may reasonable request to more effectively
transfer, convey and assign to Buyer, and to confirm Buyer's title to, the
Assets.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained herein, and
supersedes all prior agreements, representations and understandings of the
parties. No modification shall be binding unless executed in writing by the
parties. No waiver of any provisions shall be deemed, or shall constitute, a
waiver of any other provision whether or not similar, nor shall any waiver at
one time constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making such waiver.
11. Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto, their shareholders, successors in interest,
heirs, executors and assigns.
12. Execution in Counterparts; Binding Effect. This Agreement may be
executed via facsimile and in one or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the
same agreement, and shall become a binding agreement when one or more
counterparts have been signed by each party and delivered to the other party.
13. Governing Law. This Agreement shall be considered in accordance with
and be governed by the laws of the State of Kansas.
14. Survival of Representations and Warranties. All representations,
warranties, covenants and agreements made by each party herein shall survive the
date of execution of the Agreement.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written, intending to be legally bound.
Network Technologies Group, LLC NTG, Inc.
By: By:
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Name: Name:
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Title: Title:
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Elecsys Corporation
By:
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Name:
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Title:
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Members:
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Xxxxxx Xxxx
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Xxxxx Xxxxx
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Percentage of second Percentage of second
Name and Signature payment to be received payment to be received
in cash in Stock
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Xxx Xxxxxxxx: % %
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Xxxxxx Xxxxx: % %
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Xxxxxx Xxxxxx: % %
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Xxxxxx Xxxxxx: % %
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Xxxxxx Xxxxxxx: % %
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Xxxx Xxxxxx: % %
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Xxxxxx Xxxxxx: % %
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Exhibit A
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Name Percentage
of Member Interest
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Xxx Xxxxxxxx 20%
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Xxxxxx Xxxxx 10%
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Xxxxxx Xxxx 10%
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Xxxxx Xxxxx 10%
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Xxxxxx Xxxxxx 10%
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Xxxxxx Xxxxxx 5%
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Xxxxxx Xxxxxxx 5%
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Xxxx Xxxxxx 5%
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Xxxxxx Xxxxxx 5%
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Exhibit B
Exhibit C
Exhibit D
Schedule 1(b)
Schedule 1(c)
Schedule 1(d)
Schedule 1(e)
Schedule 2(ii)
Schedule 2(iii)
