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 ("
Elecsy
s"),
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
14833 West 95th Street,
Lenexa,
Kansas (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 Steven Wall and Perry
Peden shall
receive
100% of their
pro-rata
portion of the second
payment in
cash.
Each Member
(other than Steven Wall and Perry Peden) 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 unde
