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Table of Content
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2022
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    FOR THE TRANSITION PERIOD FROM________________ TO ______________
Commission File number 1-10799
ADDvantage Technologies Group, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma73-1351610
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1430 Bradley Lane, Suite 196
Carrollton, Texas 75007
(Address of principal executive office)
(918) 251-9121
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No £
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ Accelerated filer £
Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Shares outstanding of the issuer's $.01 par value common stock as of May 10, 2022 were 13,219,857.
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Table of Content
ADDVANTAGE TECHNOLOGIES GROUP, INC.
Form 10-Q
For Period Ended March 31, 2022
Page
March 31, 2022 and September 30, 2021
Three and Six Months Ended March 31, 2022 and 2021
Three and Six Months Ended March 31, 2022 and 2021
Six Months Ended March 31, 2022 and 2021
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Exhibits

2
Table of Content
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.
ADDvantage Technologies Group, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)
March 31,
2022		September 30, 2021
Assets
Current assets:
Cash and cash equivalents$3,934 $2,608 
Restricted cash1,912 334 
Accounts receivable, net of allowances of $250, respectively
369 7,013 
Unbilled revenue3,177 2,488 
Inventories, net of allowances of $3,647 and $3,476, respectively
5,808 5,922 
Prepaid expenses and other assets1,682 1,431 
Total current assets16,882 19,796 
Property and equipment, at cost:
Machinery and equipment5,386 4,973 
Leasehold improvements899 813 
Total property and equipment, at cost6,285 5,786 
Less: Accumulated depreciation(2,670)(2,293)
Net property and equipment3,615 3,493 
Right-of-use lease assets2,239 2,730 
Intangibles, net of accumulated amortization948 1,107 
Goodwill58 58 
Other assets130 128 
Total assets$23,872 $27,312 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$8,093 $7,044 
Accrued expenses1,449 1,581 
Deferred revenue225 168 
Bank line of credit— 2,050 
Right-of-use lease obligations, current1,196 1,198 
Finance lease obligations, current698 582 
Other current liabilities843 692 
Total current liabilities12,504 13,315 
Right-of-use lease obligations, long-term1,533 2,141 
Finance lease obligations, long-term1,499 1,429 
Total liabilities15,536 16,885 
Shareholders’ equity:
Common stock, $0.01 par value; 30,000,000 shares authorized; 13,189,112 and 12,610,229 shares issued and outstanding, respectively
132 126 
Paid in capital748 (578)
Retained earnings7,456 10,879 
Total shareholders’ equity8,336 10,427 
Total liabilities and shareholders’ equity$23,872 $27,312 


See notes to unaudited consolidated financial statements.
3
Table of Contents
ADDvantage Technologies Group, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended March 31,Six Months Ended March 31,
2022202120222021
Sales$23,759 $12,667 $42,449 $25,416 
Cost of sales18,001 9,486 32,060 18,606 
Gross profit5,758 3,181 10,389 6,810 
Operating expenses2,753 2,167 5,253 4,224 
Selling, general and administrative expenses3,850 3,757 7,538 6,972 
Depreciation and amortization expense318 304 662 585 
Loss (gain) on disposal of assets2 — 2 (10)
Loss from operations(1,165)(3,047)(3,066)(4,961)
Other income (expense):
Interest income— 33 — 81 
Other expense, net(168)(8)(240)(27)
Interest expense(61)(42)(116)(110)
Other income (expense), net(229)(17)(356)(56)
Loss before income taxes(1,394)(3,064)(3,422)(5,017)
Income tax expense— — — — 
Net loss$(1,394)$(3,064)$(3,422)$(5,017)
Loss per share:
Basic and diluted$(0.11)$(0.25)$(0.27)$(0.41)
Shares used in per share calculation:
Basic and diluted13,071,053 12,416,594 12,875,055 12,281,721 












See notes to unaudited consolidated financial statements.
4
Table of Contents
ADDvantage Technologies Group, Inc.
Consolidated Statements of Changes in Shareholders' Equity
(in thousands, except share amounts)
(Unaudited)


Common StockPaid-in
Capital		Retained
Earnings
SharesAmountTotal
Balance, September 30, 202112,610,229 $126 $(578)$10,879 $10,427 
Net loss— — — (2,029)(2,029)
Common stock issuance320,787 3 633 — 636 
Restricted stock issuance110,111 1 (1)— — 
Amortization of stock-based compensation— — 281 — 281 
Balance, December 31, 202113,041,127 $130 $335 $8,850 $9,315 
Net loss— — — (1,394)(1,394)
Common stock issuance143,985 2 166 — 168 
Restricted stock issuance4,000 — — — — 
Amortization of stock-based compensation— — 247 — 247 
Balance, March 31, 202213,189,112 $132 $748 $7,456 $8,336 

Common StockPaid-in
Capital		Retained
Earnings
SharesAmountTotal
Balance, September 30, 202011,822,009 $118 $(2,567)$17,382 $14,933 
Net loss— — — (1,953)(1,953)
Common stock issuance238,194 3 876 — 879 
Restricted stock issuance306,390 3 (3)— — 
Amortization of stock-based compensation— — 315 — 315 
Balance, December 31, 202012,366,593 $124 $(1,379)$15,429 $14,174 
Net loss— — — (3,064)(3,064)
Common stock issuance7,779 — 21 — 21 
Restricted stock issuance(10,000)(1)— — (1)
Stock option exercise49,000 — 89 — 89 
Amortization of stock-based compensation— — 246 — 246 
Balance, March 31, 202112,413,372 $124 $(1,023)$12,364 $11,465 

Due to rounding, numbers presented may not foot to the totals provided.










See notes to unaudited consolidated financial statements.
5
ADDvantage Technologies Group, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended March 31,
20222021
Operating Activities:
Net loss$(3,422)$(5,017)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation503 426 
Amortization159 159 
Non cash amortization of right-of-use asset and liability(58)(105)
Provision for excess and obsolete inventories171 115 
Share based compensation expense528 561 
Loss (gain) from disposal of property and equipment2 (10)
Changes in assets and liabilities:
Accounts receivable6,644 (649)
Unbilled revenue(689)(54)
Income tax receivable/payable— 35 
Inventories(57)(247)
Prepaid expenses and other assets(254)(533)
Accounts payable1,049 881 
Accrued expenses and other liabilities19 375 
Deferred revenue57 (46)
Net cash provided by (used in) operating activities4,652 (4,109)
Investing Activities:
Proceeds from promissory note receivable— 1,505 
Purchases of property and equipment(194)(93)
Disposals of property and equipment42 29 
Net cash (used in) provided by investing activities (152)1,441 
Financing Activities:
Change in bank line of credit(2,050)— 
Payments on financing lease obligations(350)(207)
Payments on notes payable— (1,249)
Proceeds from sale of common stock804 900 
Proceeds from stock options exercised— 89 
Net cash used in financing activities(1,596)(467)
Net increase (decrease) in cash, cash equivalents and restricted cash2,904 (3,135)
Cash, cash equivalents and restricted cash at beginning of period2,942 8,373 
Cash, cash equivalents and restricted cash at end of period$5,846 $5,238 





See notes to unaudited consolidated financial statements.
6
Table of Contents
ADDvantage Technologies Group, Inc.
Notes to Unaudited Consolidated Financial Statements
Note 1 - Basis of Presentation and Accounting Policies
Basis of presentation
The consolidated financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company”). Intercompany balances and transactions have been eliminated in consolidation. The Company’s reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”).
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. However, the information furnished reflects all adjustments, which are, in the opinion of management, necessary in order to make the unaudited consolidated financial statements not misleading. 
The Company’s business is subject to seasonal variations due to weather in the geographic areas where services are performed, as well as calendar events and national holidays. Therefore, the results of operations for the six months ended March 31, 2022 and 2021, are not necessarily indicative of the results to be expected for the full fiscal year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13: “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.”  This ASU requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Upon adoption, entities will use forward-looking information to better form their credit loss estimates. This ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. On November 15, 2019, the FASB delayed the effective date of the standard for companies that qualify under smaller reporting company reporting rules. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the Securities and Exchange Commission definition. We are currently in the process of evaluating this new standard update, however we do not anticipate the adoption will have a material impact on our results.
Note 2 – Revenue Recognition
The Company’s principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment, primarily in the United States. Sales to international customers totaled approximately $1.5 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively, and $2.6 million and $1.3 million for the six month period ended March 31, 2022 and 2021, respectively.
The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers. Sales, which individually accounted to 10% or greater of the Company's revenue, to two customers which totaled 38%, and to three customers comprised approximately 24%, of consolidated revenues for the six months ended March 31, 2022 and 2021, respectively.
7
Our sales by type were as follows, in thousands:
Three Months Ended March 31,Six Months Ended March 31,
2022202120222021
Wireless services$7,767 $4,334 $14,885 $9,581 
Telco equipment15,986 8,189 27,410 15,464 
Telco repair6 7 18 13 
Telco recycle— 137 136 358 
Total sales$23,759 $12,667 $42,449 $25,416 
Contract assets and contract liabilities are included in unbilled revenue and deferred revenue, respectively, in the consolidated balance sheets. At March 31, 2022 and September 30, 2021, contract assets were $3.2 million and $2.5 million, respectively, and contract liabilities were $0.2 million and $0.2 million, respectively. The Company recognized $0.2 million of contract revenue during the six months ended March 31, 2021 related to contract liabilities recorded in deferred revenue at September 30, 2021.
Note 3 – Accounts Receivable Agreements
On March 17, 2022, the Company replaced its $3.0 million credit facility for its Nave and Triton subsidiaries with its primary financial lender with new accounts receivable purchase facilities with capacities of $9.0 million for Nave and $1.5 million for Triton. Under both facilities, the lender advances the Company 90% of sold receivables and establishes a reserve of 10% of the sold receivables until the Company collects the sold receivables. The lender charges a fee of 1.3% of sold receivables, and both facilities mature on March 17, 2023.

On March 17, 2022, the Company also restructured its accounts receivable purchase facilities secured by the Company’s Fulton subsidiary’s receivables. Under the restructure, the credit capacity excluding a major customer was reduced from $4.5 million to $2.0 million, with a fee of 1.6% of sold receivables. The credit capacity secured by receivables of a major customer was reduced from $8.5 million to $6.5 million, with a fee of 1.5% of sold receivables. The lender advances the Company 90% of sold receivables and establishes a reserve of 10% of the sold receivables at initial sale, which increases to 100% over time after 120 days, until the Company collects the sold receivables. The facilities mature on December 17, 2022.
The Company has a total capacity under all four lines of $19.0 million, which can be reallocated between the lines as needed. As of March 31, 2022, the lender has a reserve against the sold receivables of $1.9 million, which is reflected as restricted cash.  The facilities agreements address events and conditions which may obligate the Company to immediately repay the institution the outstanding purchase price of the receivables sold. The total amount of receivables uncollected by the institution was $11.3 million at March 31, 2022 for which there is a limit of $19.0 million. Although the sale of receivables is with recourse, the Company did not record a recourse obligation at March 31, 2022 as the Company concluded that the sold receivables are collectible. 
For the six months ended March 31, 2022 and 2021, the Company received proceeds from the sold receivables from all of the facilities of $19.9 million and $9.5 million, respectively, and included the proceeds in net cash used in operating activities in the consolidated statements of cash flows. The Company recorded costs of $0.3 million and $0.1 million for the six months ended March 31, 2022 and 2021, respectively, in other expense in the consolidated statements of operations.
Note 4 – Inventories
Inventories, which are all within the Telco segment, at March 31, 2022 and September 30, 2021 are as follows, in thousands:
March 31, 2022September 30, 2021
New equipment$1,437 $1,295 
Refurbished and used equipment8,018 8,103 
Allowance for excess and obsolete inventory(3,647)(3,476)
Total inventories, net$5,808 $5,922 
8
New equipment includes products purchased from manufacturers plus “surplus-new,” which are unused products purchased from other distributors or multiple system operators. Refurbished and used equipment include factory refurbished, Company refurbished and used products.
Note 5 – Intangible Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company groups assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted future cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.
Intangible assets with their associated accumulated amortization and impairment at March 31, 2022 and September 30, 2021 are as follows, in thousands:
March 31, 2022
Intangible assets:GrossAccumulated AmortizationNet
Customer relationships – 10 years
$3,155 $(2,833)$322 
Trade name – 10 years
2,122 (1,496)626 
Total intangible assets$5,277 $(4,329)$948 
September 30, 2021
Intangible assets:GrossAccumulated
Amortization		Net
Customer relationships – 10 years
$3,155 $(2,780)$375 
Trade name – 10 years
2,122 (1,390)732 
Total intangible assets$5,277 $(4,170)$1,107 

Note 6 – Debt
Credit Agreement
On March 17, 2022, the Company closed its $3.0 million credit facility for its Nave and Triton subsidiaries with its primary financial lender. See Note 3 - Accounts Receivable Agreements for more information about the Company's receivables purchase facilities.
Note 7 – Equity Distribution Agreement and Sale of Common Stock
On April 24, 2020, the Company entered into an Equity Distribution Agreement with Northland Securities, Inc., as agent (“Northland”), pursuant to which the Company may offer and sell, from time to time, through Northland, shares of the Company’s common stock, par value 0.01 per share, having an aggregate offering price of up to $13.9 million ("Shares").
The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 3, 2020, as amended on March 23, 2020, and declared effective by the SEC on April 1, 2020.
Pursuant to the Sales Agreement, Northland may sell the Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933 (the “Securities Act”), including sales made by means of ordinary brokers’ transactions, including on The Nasdaq Capital Market, at market prices or as otherwise agreed with Northland. Northland will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company may impose. The Sales
9

Agreement may be terminated without prior notice at any time prior to the fulfillment if additional sales are deemed not warranted.
The Company will pay Northland a commission rate equal to an aggregate of 3.0% of the aggregate gross proceeds from each sale of Shares and have agreed to provide Northland with customary indemnification and contribution rights. The Company will also reimburse Northland for certain specified expenses in connection with entering into the Sales Agreement. The Sales Agreement contains customary representations and warranties and conditions to the placements of the Shares pursuant thereto.
During the six months ended March 31, 2022, 464,772 shares were sold by Northland on behalf of the Company with gross proceeds of $0.8 million, and net proceeds after commissions and fees of $0.8 million.
Note 8 – Earnings Per Share
Basic and diluted earnings per share for the three and six months ended March 31, 2022 and 2021 are (in thousands, except per share amounts):
Three Months Ended March 31,Six Months Ended March 31,
2022202120222021
Net loss attributable to common shareholders$(1,394)$(3,064)(3,422)(5,017)
Basic and diluted weighted average shares13,071,053 12,416,594 12,875,055 12,281,721 
Basic and diluted loss per common share:$(0.11)$(0.25)$(0.27)$(0.41)
The table below includes information related to stock options that were outstanding at the end of each respective three and six-month period ended March 31, but have been excluded from the computation of weighted-average stock options for dilutive securities because their effect would be anti-dilutive.
Three Months Ended March 31,Six Months Ended March 31,
2022202120222021
Stock options excluded50,000 90,744 50,000 95,423 
Weighted average exercise price of stock options$1.28 $1.52 $1.28 $1.53 
Average market price of common stock$1.32 $2.94 $1.69 $2.74 
Note 9 – Supplemental Cash Flow Information
(in thousands)Six Months Ended March 31,
20222021
Supplemental cash flow information:
Cash paid for interest $121 $73 
Supplemental noncash investing and financing activities:
Assets acquired under financing leases$475 $369 
Note 10 – Stock-Based Compensation
Plan Information
The 2015 Incentive Stock Plan (the “Plan”) provides for awards of stock options and restricted stock to officers, directors, key employees and consultants. At March 31, 2022, 2,100,415 shares of common stock were reserved for stock award grants under the Plan.  Of these reserved shares, 217,029 shares were available for future grants.
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Stock Options
As of September 30, 2021, there were 50,000 stock options with a weighted average exercise price of $1.28 per share and an aggregate intrinsic value of $54,000 outstanding under the Plan. There were no stock options granted, exercised, expired or forfeited during the six months ended March 31, 2022. As of March 31, 2022, 50,000 stock options remained outstanding and exercisable, with an average exercise price of $1.28 per share and an aggregate intrinsic value of $7,500.
Restricted stock awards
A summary of the Company's non-vested restricted share awards (RSA) at March 31, 2022 and changes during the quarter ended March 31, 2022 is presented in the following table (in thousands, except shares):
SharesFair Value
Non-vested at December 31, 2021737,634 $1,768 
Granted40,000 53 
Vested (144,847)(370)
Forfeited(36,000)(74)
Non-vested at March 31, 2022596,787 $1,377 
During the three month period ended March 31, 2022 and 2021, compensation expenses related to share-based arrangements including restricted stock and stock option awards, were $0.2 million and $0.2 million, respectively.
During the six month period ended March 31, 2022 and 2021, compensation expenses related to share-based arrangements including restricted stock and stock option awards, were $0.5 million and $0.6 million respectively.
The Company did not recognize a tax benefit for compensation expense recognized during the three and six month period ended March 31, 2022 and 2021.
At March 31, 2022, unrecognized compensation expense related to non-vested share-based compensation awards not yet recognized in the consolidated statements of operations was $0.6 million. That cost is expected to be recognized over a period of 2.9 years.
Note 11 – Leases
Our Wireless segment has an operating lease for a building in Fridley, Minnesota for Fulton Technologies, Inc. As a result of closing down and vacating Fulton Technologies, Inc.’s Minnesota office in May 2019, a third-party telecom company began subleasing this building in June 2019. The lease term expired on December 31, 2021.
Our Telco segment has an operating lease for a building in Jessup, Maryland for Nave Communications.  As a result of moving Nave’s operations to Palco Telecom, a third-party logistics provider in Huntsville, Alabama, in fiscal year 2020, Nave completely vacated the building in May 2020 and has subleased part of the building through the end of the lease period. 
Rental payments received related to these subleases were recorded as a reduction to rent expense in our consolidated statements of operations for the three and six month periods ending March 31, 2022 and 2021.
Note 12 – Segment Reporting
The Company is reporting its financial performance based on its external reporting segments: Wireless Infrastructure Services and Telecommunications.  These reportable segments are described below.
Wireless Infrastructure Services (“Wireless”) The Company's Wireless segment provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers.  These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.
Telecommunications (“Telco”) The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of
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telecommunications providers, enterprise customers and resellers located primarily in North America. This segment also offers its customers repair and testing services for telecommunications networking equipment.
The Company evaluates performance and allocates its resources based on operating income. The accounting policies of its reportable segments are the same as those described in the summary of significant accounting policies. Segment assets consist primarily of cash and cash equivalents, accounts receivable, inventory, property and equipment, goodwill and intangible assets. The Company allocates its corporate general and administrative expenses to the reportable segments.
Three Months EndedSix Months Ended
(in thousands)March 31, 2022March 31, 2021March 31, 2022March 31, 2021
Sales
Wireless$7,766 $4,334 $14,885 $9,581 
Telco15,993 8,333 27,564 15,835 
Total sales$23,759 $12,667 $42,449 $25,416 
Gross profit
Wireless$1,537 $1,527 $3,044 $3,136 
Telco4,221 1,654 7,345 3,674 
Total gross profit (loss)$5,758 $3,181 $10,389 $6,810 
Loss from operations
Wireless$(2,203)$(1,537)$(4,528)$(2,642)
Telco1,038 (1,510)1,462 (2,319)
Total loss from operations$(1,165)$(3,047)$(3,066)$(4,961)
(in thousands)March 31, 2022September 30, 2021
Segment assets
Wireless$9,290 $7,867 
Telco9,256 14,472 
Non-allocated5,326 4,973 
Total assets$23,872 $27,312 
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Special Note on Forward-Looking Statements
Certain statements in Management's Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally are identified by the words “estimates,” “projects,” "anticipates," “believes,” “plans,” “intends,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. These statements are subject to a number of risks, uncertainties and developments beyond our control or foresight, including changes in the trends of the wireless infrastructure services industry, changes in the trends of the telecommunications industry, changes in our supplier agreements, technological developments, changes in the general economic environment, the potential impact of the novel strain of coronavirus (“COVID-19”) pandemic, the growth or formation of competitors, changes in governmental regulation or taxation, changes in our personnel and other such factors. Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in the forward-looking statements. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
Overview
The following MD&A is intended to help the reader understand the results of operations, financial condition, and cash flows of the Company. MD&A is provided as a supplement to, and should be read in conjunction with the information presented elsewhere in this quarterly report on Form 10-Q and with the information presented in our annual report on Form 10-K for the year ended September 30, 2021, which includes our audited consolidated financial statements and the accompanying notes to the consolidated financial statements.
The Company reports its financial performance based on two external reporting segments: Wireless and Telecommunications.  These reportable segments are described below.
Wireless Infrastructure Services (“Wireless”)
The Company’s Wireless segment provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers. These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.
Telecommunications (“Telco”)
The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America. This segment also offers its customers repair and testing services for telecommunications networking equipment. In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment.
Recent Business Developments
COVID-19
On March 11, 2020, the World Health Organization declared the current outbreak of COVID-19 to be a global pandemic, and on March 13, 2020, the United States declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state and local governments have imposed varying degrees of restrictions on business and social activities to contain COVID-19, including quarantine and “stay-at-home” or “shelter-in-place” orders in markets where we operate. Despite these “stay-at-home” or “shelter-in-place” orders, we are classified as an essential business due to the services and products we provide to the
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telecommunications industry. Therefore, we continue to operate in the markets we serve while these orders were in place. Most of our back-office and administrative personnel worked from home while these orders were in place, these personnel began working in the office as restrictions were relaxed or lifted. 
With the partial reopening of the economy the economic effects of the pandemic, including new Covid 19 variants, and resulting societal changes remain unpredictable. Although we experienced increased revenues in recent quarters compared to prior year quarters since the pandemic began in 2020, there are a number of uncertainties that could impact our future results of operations, including the efficacy and widespread distribution of a vaccine, the return of major outdoor events during the summer and fall months, and the impact of COVID-19 on the operating results and capital budgets of our customers.
Results of Operations
Comparison of Results of Operations for the three months ended March 31, 2022 and March 31, 2021
Consolidated
Consolidated sales increased $11.1 million, or 88%, to $23.8 million for three months ended March 31, 2022 from $12.7 million for the three months ended March 31, 2021.  The increase in sales was due to increased sales in the Telco segment of $7.7 million and an increase in Wireless segment sales of $3.4 million.
Consolidated gross profit was $5.8 million, or 24% gross margin for the three months ended March 31, 2022, compared to gross profit of $3.2 million, or 25% gross margin for the three months ended march 31, 2021, an increase of $2.6 million. The increase in gross profit was due to an increase in the Telco segment of $2.6 million. The decrease in gross margin percent was due to lower margins in the Wireless segment offset by increases in the Telco segment as a result of continued global supply chain constraints.
Consolidated operating expenses include indirect costs associated with operating our business. Indirect costs include indirect personnel costs, facility costs, vehicles, insurance, communication, and business taxes, among other cost categories. Operating expenses were $2.8 million, compared to $2.2 million in the same period last year, an increase of $0.6 million due primarily to increases in headcount in our Wireless segment to support 5G services activity.
Consolidated selling, general and administrative ("SG&A") expenses include overhead costs, which consist of personnel costs, insurance, professional services, and communication, among other less significant cost categories. SG&A expense increased $0.1 million, or 2%, to $3.9 million for the three months ended March 31, 2022 from $3.8 million for the same period last year. The increase in SG&A relates primarily to increased selling and commissions expenses to support higher revenues.
Segment Results
Wireless
Revenues for the Wireless segment increased $3.5 million to $7.8 million for the three months ended March 31, 2022 from $4.3 million for the same period of last year. The growth in revenues over the prior year period relates to the pace of the 5G services activity construction undertaken on behalf of our expanded customer base. Revenues from some customers have been impacted by global supply chain issues as components necessary for build outs have slowed in some cases.
Gross profit was $1.5 million, or 20% for the three months ended March 31, 2022 compared to $1.5 million, or 35%, for the three months ended March 31, 2021. The decrease in the gross profit percentage was the result of new business with a major customer at a lower margin level caused by deploying to new markets and related startup costs, and as a result of a couple of non-profitable markets, due to lower volume commitments from some customers, which we have exited.
Loss from operations was $2.2 million and $1.5 million for three months ended March 31, 2022 and 2021, respectively. The increase is mainly attributable to investment in our regional growth strategy associated with anticipated 5G infrastructure build outs.
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Telco
Sales for the Telco segment increased $7.7 million to $16.0 million for the three months ended March 31, 2022 from $8.3 million for the same period last year. The increase in revenues was related to increased sales of used and refurbished equipment as a result of continued global supply chain constraints.
Gross profit was $4.2 million and $1.7 million for the three months ended March 31, 2022 and 2021, respectively. The increased gross profit was due primarily to increased revenues of $16.0 million. Additionally, global supply chain issues have generally led to higher pricing to customers.
Income from operations was $1.0 million for the three months ended March 31, 2022 compared to a loss of $1.5 million for the same period last year, primarily due to the reasons discussed above.

Comparison of Results of Operations for the six months ended March 31, 2022 and March 31, 2021

Consolidated

Consolidated sales increased $17.0 million, or 67%, to $42.4 million for the six months ended March 31, 2022 from $25.4 million for the six months ended March 31, 2021. The increase in sales was due to increased sales in the Telco segment of $11.7 million and an increase in Wireless segment sales of $5.3 million.

Consolidated gross profit increased $3.6 million, or 53%, to $10.4 million for the six months ended March 31, 2022 from $6.8 million for the same period last year. The increase in gross profit was due to an increase in the Telco segment of $3.6 million, partially offset by a decrease in the Wireless segment of $0.1 million.

Consolidated operating expenses increased $1.1 million, or 24%, to $5.3 million for the six months ended March 31, 2022 from $4.2 million for the same period last year, due primarily to increases in headcount in our Wireless segment to support 5G services activity.

Consolidated selling, general and administrative expenses increased $0.5 million, or 8%, to $7.5 million for the six months ended March 31, 2022 from $7.0 million for the same period last year. The increase in SG&A relates primarily to increased selling and commissions expenses to support higher revenues.

Segment Results

Wireless

Revenues for the Wireless segment were $14.9 million for the six months ended March 31, 2022 and $9.6 million for the same period last year, an increase of $5.3 million. The increase in revenues over the prior year period relates to the pace of the 5G services activity now underway.

Gross profit was $3.0 million, or 20% for the six months ended March 31, 2022 and $3.1 million, or 33%, for six months ended March 31, 2021. The decreases were the result of new business with a major customer at a lower margin level caused by deploying to new markets and related startup costs, and as a result of a couple of non-profitable markets, due to lower volume commitments from some customers, which we have exited.
Loss from operations was $4.5 million and $2.6 million for six months ended March 31, 2022 and 2021, respectively. The increase is mainly attributable to investment in our regional growth strategy associated with anticipated 5G infrastructure build outs.

Telco

Sales for the Telco segment increased $11.7 million to $27.5 million for the six months ended March 31, 2022 from $15.8 million for the same period last year. The increase was related to increased sales of used and refurbished equipment as a result of continued global supply chain constraints.
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Gross profit was $7.3 million for the six months ended March 31, 2022 compared to $3.7 million for six months ended March 31, 2021, primarily as a result of the segment's increase in revenues.

Income from operations was $1.5 million for the six months ended March 31, 2022 compared to a loss of $2.3 million for the same period last year.
Non-GAAP Financial Measure
Adjusted EBITDA is a supplemental, non-GAAP financial measure.  EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA as presented also excludes impairment charges for operating lease right-of-use assets and intangible assets including goodwill, stock compensation expense, other income, other expense, interest income and income from equity method investment. Adjusted EBITDA is presented below because this metric is used by the financial community as a method of measuring our financial performance and of evaluating the market value of companies considered to be in similar businesses.  Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance. Adjusted EBITDA, as calculated below, may not be comparable to similarly titled measures employed by other companies.  In addition, Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs.
The following table provides a reconciliation by segment of loss from operations to Adjusted EBITDA for the three- and six-month periods ended March 31, 2022 and 2021, in thousands:

Three Months Ended March 31, 2022Three Months Ended March 31, 2021
WirelessTelcoTotalWirelessTelcoTotal
Income (loss) from operations$(2,203)$1,038 $(1,165)$(1,537)$(1,510)$(3,047)
Depreciation and amortization expense197 121 318 176 128 304 
Stock compensation expense114 133 247 107 139 246 
Adjusted EBITDA$(1,892)$1,292 $(600)$(1,254)$(1,243)$(2,497)
Six Months Ended March 31, 2022Six Months Ended March 31, 2021
WirelessTelcoTotalWirelessTelcoTotal
Income (loss) from operations$(4,528)$1,462 $(3,066)$(2,642)$(2,319)$(4,961)
Depreciation and amortization expense416 246 662 328 257 585 
Stock compensation expense257 271 528 247 314 561 
Adjusted EBITDA$(3,855)$1,979 $(1,876)$(2,067)$(1,748)$(3,815)

Critical Accounting Policies
Our unaudited consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of our significant accounting policies is included in Note 1- Basis of Presentation and Accounting Policies in our Form 10-K.
General
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience, current market conditions, and various other factors we believe to be reasonable, which form the basis for making judgments about the carrying values of certain assets. Actual results could differ from these estimates under different assumptions or conditions. The most significant estimates and assumptions are discussed below.
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Inventory Valuation
For our Telco segment, our position in the telecommunications industry requires us to carry large inventory quantities relative to annual sales, but it also allows us to realize higher gross profit margins on our sales.  We market our products primarily to telecommunication providers, resellers, and other users of telecommunication equipment who are seeking products for which manufacturers have discontinued production or cannot ship new equipment on a same-day basis, as well as providing used products as an alternative to new products from the manufacturer.  Carrying these large inventory quantities represents our largest risk for our Telco segment.
Our inventories are all carried in the Telco segment and consist of new and used electronic components for the telecommunications industry.  Inventory is stated at the lower of cost or net realizable value, with cost determined using the weighted-average method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  At March 31, 2022, we had total inventory, before the reserve for excess and obsolete inventories, of $9.5 million, consisting of $1.4 million in new products and $8.0 million in used or refurbished products.
We regularly review the value of our inventory in detail with consideration given to rapidly changing technology which can significantly affect future customer demand. For individual inventory items, we may carry inventory quantities that are excessive relative to market potential, or we may not be able to recover our acquisition costs. In order to address the risks associated with our investment in inventory, we review inventory quantities on hand and reduce the carrying value for obsolete and excess inventories, when our analysis indicates that cost will not be recovered when an item is sold.
We identified certain inventory that more than likely will not be sold or that the cost will not be recovered. Therefore, we have an obsolete and excess inventory reserve of $3.6 million at March 31, 2022. If actual market conditions differ from those projected by management, this could have a material impact on our gross margin and inventory balances based on additional write-downs to net realizable value or a benefit from inventories previously written down.
Inbound freight charges are included in cost of sales. Purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other inventory expenditures are included in operating expenses.
Intangibles
Intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 years to 10 years. Intangible assets are also tested for impairment when events and circumstances indicate that the carrying value may not be recoverable. As of March 31, 2022, there were no indicators of impairment present.
Liquidity and Capital Resources
Cash Flows Provided by Operating Activities
During the six months ended March 31, 2022, cash provided by operations was $4.7 million. Cash flows from operations were negatively impacted by a net loss of $3.4 million, offset by net cash provided by working capital of $6.8 million primarily related to the reduction of receivables associated with our new accounts receivable purchase facilities, and non-cash adjustments of $1.3 million, primarily depreciation and amortization.
Cash Flows Used in Investing Activities
During the six months ended March 31, 2022, cash used in investing activities was $0.2 million, consisting of purchases of property and equipment.
Cash Flows Used in Financing Activities
During the six months ended March 31, 2022, cash used in financing activities was $1.6 million, primarily consisting of $2.1 million related to repayment of our bank line of credit and payments on financing lease obligations of $0.3 million, partially offset by net proceeds from the sale of our common stock utilizing our shelf registration of $0.8 million. 
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Liquidity and Capital Resources
At March 31, 2022 we had cash and equivalents and restricted cash on hand of $5.8 million.
On March 17, 2022, the Company replaced its $3.0 million credit facility for its Nave and Triton subsidiaries with its primary financial lender with new accounts receivable purchase facilities. The Company also restructured its accounts receivable purchase facilities secured by the Company’s Fulton subsidiary’s receivables. With the new and restructured receivables purchase facilities, the Company has increased its overall capacity to factor its accounts receivable during the quarter ended March 31, 2022 from $16.0 million to $19.0 million for working capital needs.
We entered into an Equity Distribution Agreement (the “Sales Agreement”) with Northland Securities, Inc., as agent (“Northland”), pursuant to which we may offer and sell, from time to time, through Northland, shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $13.9 million ("Shares"). The offer and sale of the Shares will be made pursuant to a shelf registration statement on Form S-3 and the related prospectus filed by us with the Securities and Exchange Commission (the "SEC") on March 3, 2020, as amended on March 23, 2020, and declared effective by the SEC on April 1, 2020. The shelf registration statement will remain effective for three years from the date declared effective by the SEC. We currently have approximately $9.9 million available to us to fund our working capital needs under the Sales Agreement. Based on our availability under our accounts receivable purchase facilities and our Sales Agreement, we believe we have sufficient liquidity and capital resources to cover our operating losses and our additional working capital and debt payment needs. 
We continue to evaluate opportunities to expand our business through selective acquisitions and internal growth initiatives. Our capital investment decisions are determined by an analysis of the projected return on capital employed of each of those alternatives, which is substantially driven by the cost to acquire existing assets from a third party, the capital required to invest in new equipment and the point in the 5G densification cycle. Based on these factors, we make capital investment decisions that we believe will support our long-term growth strategy. Depending on the timing and scope of these opportunities, we may need to seek additional funding to finance the necessary working capital for such opportunities.
Item 4.  Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure the information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.  Based on their evaluation as of March 31, 2022, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to accomplish their objectives and to ensure the information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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PART II.   OTHER INFORMATION

Item 2. Unregistered Sales of Securities and Use of Proceeds.

During the six months ended March 31, 2022, the Company sold 464,772 shares of common stock under its registration statement on Form S-3 effective as of April 1, 2020 (333-236859). Gross proceeds from such sales during the six months were $0.8 million and net proceeds were $0.8 million after the payment of $34 thousand in commissions to Northland Securities, Inc., the underwriter of the offering. Total gross proceeds to the Company from sales under such registration statement since its effective date are $4.0 million and total net proceeds to the Company are $3.8 million after the payment of $0.2 million in commissions to Northland. All sales have been made pursuant to the Prospectus Supplement filed with the Commission on April 24, 2020, under which the Company may sell up to $13.9 million in common stock. All net proceeds to the Company from such sales have been used in accordance with the “Use of Proceeds” section of such Prospectus Supplement.

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Item 6.  Exhibits.
Exhibit No.Description
10.1
10.2
10.3
10.4
10.5
10.6
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema.
101.CALXBRL Taxonomy Extension Calculation Linkbase.
101.DEFXBRL Taxonomy Extension Definition Linkbase.
101.LABXBRL Taxonomy Extension Label Linkbase.
101.PREXBRL Taxonomy Extension Presentation Linkbase.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ADDVANTAGE TECHNOLOGIES GROUP, INC.
(Registrant)
Date: May 12, 2022
/s/ Joseph E. Hart
Joseph E. Hart
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 2022
/s/ Michael A. Rutledge
Michael A. Rutledge
Chief Financial Officer
(Principal Financial Officer)
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BUSINESS LOAN AGREEMENT (ASSET BASED)

PrincipalLoan Date
Maturity
Loan No
Call / Coll
Account
Officer
Initials

$9,000,000.0003-17-2022
03-17-2023
18172003
LNS

References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.

Borrower:
ADDVANTAGE TECHNOLOGIES GROUP INC (TIN: 73-1351610)
NAVE COMMUNICATIONS COMPANY (TIN: 52-2182495)
1430 BRADLEY LANE SUITE 196
CARROLLTON, TX 75007
Lender:
Vast Bank, N.A.
Elgin
110 N Elgin Ave
Tulsa, OK 74120

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated March 17, 2022, is made and executed between ADDVANTAGE TECHNOLOGIES GROUP INC and NAVE COMMUNICATIONS COMPANY ("Borrower") and Vast Bank, N.A. ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of March 17, 2022, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following person or persons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC; JOSEPH E HART, President of NAVE COMMUNICATIONS COMPANY; and MICHAEL RUTLEDGE, CFO of ADDVANTAGE TECHNOLOGIES GROUP INC. along with Loan Officer's approval.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:
Conditions Precedent to Each Advance. Lender's obligation to make any Advance to or for the account of Borrower under this Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in full force and effect.
(4) All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender, and be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's Accounts, books, records, and operations, and Lender shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.
(7) There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled "Compliance Certificate."
Making Loan Advances. Advances under this credit facility, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day. Under no circumstances shall Lender be required to make any Advance in an amount less than $1,000.00.
Mandatory Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of Borrower's account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower's receipt of any such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender:
Perfection of Security Interests. Borrower agrees to execute all documents perfecting Lender's Security Interest and to take whatever actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any and all chattel paper and


instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and Lender will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender before any change in Borrower's name including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender before any change in Borrower's Social Security Number or Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which records shall be available to Lender or Lender's representative upon demand for inspection and copying at any reasonable time. With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables) are or will be located at . The above is an accurate and complete list of all locations at which Borrower keeps or maintains business records concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender schedules of Accounts and schedules of Eligible Accounts in form and substance satisfactory to the Lender. Thereafter supplemental schedules shall be delivered according to the following schedule:
Representations and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and warrants to Lender: (1) Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the definition of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower's expense to inspect, examine, and audit Borrower's records and to confirm with Account Debtors the accuracy of such Accounts.
MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as "Borrower." Unless specifically stated to the contrary, the word "Borrower" as used in this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers. Borrower understands and agrees that, with or without notice to any one Borrower, Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (B) with respect to any other Borrower alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (C) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (D) release, substitute, agree not to sue, or deal with any one or more of Borrower's or any other Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F) apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) sell, transfer, assign or grant participations in all or any part of the Loan; (H) exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I) settle or compromise any indebtedness; and (J) subordinate the payment of all or any part of any of Borrower's indebtedness to Lender to the payment of any liabilities which may be due Lender or others.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:
Organization. ADDVANTAGE TECHNOLOGIES GROUP INC is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Texas. ADDVANTAGE TECHNOLOGIES GROUP INC is duly authorized to transact business in all other states in which ADDVANTAGE TECHNOLOGIES GROUP INC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which ADDVANTAGE TECHNOLOGIES GROUP INC is doing business. Specifically, ADDVANTAGE TECHNOLOGIES GROUP INC is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. ADDVANTAGE TECHNOLOGIES GROUP INC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. ADDVANTAGE TECHNOLOGIES GROUP INC maintains an office at 1430 BRADLEY LANE SUITE 196, CARROLLTON, TX 75007. Unless ADDVANTAGE TECHNOLOGIES GROUP INC has designated otherwise in writing, the principal office is the office at which ADDVANTAGE TECHNOLOGIES GROUP INC keeps its books and records including its records concerning the Collateral. ADDVANTAGE TECHNOLOGIES GROUP INC will notify Lender prior to any change in the location of ADDVANTAGE TECHNOLOGIES GROUP INC's state of organization or any change in ADDVANTAGE TECHNOLOGIES GROUP INC's name. ADDVANTAGE TECHNOLOGIES GROUP INC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to ADDVANTAGE TECHNOLOGIES GROUP INC and ADDVANTAGE TECHNOLOGIES GROUP INC's business activities.
NAVE COMMUNICATIONS COMPANY is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Oklahoma. NAVE COMMUNICATIONS COMPANY is duly authorized to transact business in all other states in which NAVE COMMUNICATIONS COMPANY is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which NAVE COMMUNICATIONS COMPANY is doing business. Specifically, NAVE COMMUNICATIONS COMPANY is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. NAVE COMMUNICATIONS COMPANY has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. NAVE COMMUNICATIONS COMPANY maintains an office at 1430 BRADLEY LANE SUITE 196, CARROLLTON, TX 75007. Unless NAVE COMMUNICATIONS COMPANY has designated otherwise in writing, the principal office is the office at which NAVE COMMUNICATIONS COMPANY keeps its books and records including its records concerning the Collateral. NAVE COMMUNICATIONS COMPANY will notify Lender prior to any change in the location of NAVE COMMUNICATIONS COMPANY's state of organization or any change in NAVE COMMUNICATIONS COMPANY's name. NAVE COMMUNICATIONS COMPANY shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to NAVE COMMUNICATIONS COMPANY and NAVE COMMUNICATIONS COMPANY's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.
Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.


Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower's balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower's balance sheet and profit and loss statement for the period ended, prepared by Borrower.
All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for the following specific purposes: for business purpose only.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.


Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.
Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note or at the highest rate authorized by law, from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. If Lender is required by law to give Borrower notice before or after Lender makes an expenditure, Borrower agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts receivable, except to Lender.
Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.
Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.


DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.
FINANCIAL PROJECTIONS REQUIREMENT. Any recast of financial projections should be provided to the Bank. Additionally, if the borrower misses a quarterly projected Net Income by greater than 10%, the Bank will require revised projections.
RESERVE ACCOUNT CROSS UTILIZATION. The reserve accounts for all Business Manager facilities (Fulton Dish-only, Fulton non-Dish, Nave and Triton) may be cross-utilized to minimize reserve deficits.
REDUCTION OF BUSINESS MANAGER LINE. A stipulation will be added to the Business Manager Agreement stating that the Bank has the authority to reduce the face amount of the line(s) if being under utilized.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this Agreement, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Borrower's obligations under this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or


insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Oklahoma without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Oklahoma.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Tulsa County, State of Oklahoma.
Joint and Several Liability. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entity's behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. To the extent permitted by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:
Account. The word "Account" means a trade account, account receivable, other receivable, or other right to payment for goods sold or services rendered owing to Borrower (or to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset Based) may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time.
Borrower. The word "Borrower" means ADDVANTAGE TECHNOLOGIES GROUP INC and NAVE COMMUNICATIONS COMPANY and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Borrowing Base. The words "Borrowing Base" mean, as determined by Lender from time to time, the lesser of (1) $9,000,000.00 or (2) 90.000% of the aggregate amount of Eligible Accounts (not to exceed in corresponding Loan amount based on Eligible Accounts $9,000,000.00).
Business Day. The words "Business Day" mean a day on which commercial banks are open in the State of Oklahoma.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also includes without limitation all collateral described in the Collateral section of this Agreement.


Eligible Accounts. The words "Eligible Accounts" mean at any time, all of Borrower's Accounts which contain selling terms and conditions acceptable to Lender. The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts, credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:
(1) Accounts with respect to which the Account Debtor is employee or agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or directors.
(3) Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional.
(4) Accounts with respect to which the Account Debtor is not a resident of the United States, except to the extent such Accounts are supported by insurance, bonds or other assurances satisfactory to Lender.
(5) Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower.
(6) Accounts which are subject to dispute, counterclaim, or setoff.
(7) Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor.
(8) Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be unsatisfactory.
(9) Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.
(10) Accounts with respect to which the Account Debtor is the United States government or any department or agency of the United States.
(11) Accounts which have not been paid in full within 120 from the invoice date.
(12) The initial reserve requirement for the line will be 10%. The reserve requirements increase from 10% to 25% if accounts receivable exceed 60 days, increase from 25% to 50% if accounts receivable exceed 90 days, and increase from 50% to 100% if accounts receivable exceed 120 days.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Expiration Date. The words "Expiration Date" mean the date of termination of Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means Vast Bank, N.A., its successors and assigns.
Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note dated March 17, 2022 and executed by ADDVANTAGE TECHNOLOGIES GROUP INC and NAVE COMMUNICATIONS COMPANY in the principal amount of $9,000,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.
Primary Credit Facility. The words "Primary Credit Facility" mean the credit facility described in the Line of Credit section of this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.


Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED MARCH 17, 2022.
BORROWER:
ADDVANTAGE TECHNOLOGIES GROUP INC

By: _____________________________________________
JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC
NAVE COMMUNICATIONS COMPANY

By: _____________________________________________
JOSEPH E HART, President of NAVE COMMUNICATIONS COMPANY
LENDER:
VAST BANK, N.A.

By: _____________________________________________
Lauren Smith, Vice President

LaserPro, Ver. 22.1.0.044 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. - OK L:\CFI\LPL\C40.FC TR-12634 PR-62 (M)
DocuSign Envelope ID: DA15BCEF-6966-4EF3-B0FB-C3AF815A49DD

BUSINESSMANAGER AGREEMENT
WITH BUSINESSES AND PROFESSIONALS (Fixed Service Charge)

TO:    _Vast Bank N.A.        FROM: Nave Communications

_110 N Elgin Ste 500        1430 Bradley Lane Ste 196    

_Tulsa, Ok 74120        Carrollton, Tx 75007    
(the “Financial Institution”)    (the “Business”)

This BusinessManager® Agreement with Businesses and Professionals (“Agreement”) is between Financial Institution and Business and is intended to govern Business’ sale of Accounts, as defined below, to Financial Institution which Accounts arise from the sale of goods or provision of services to Business’ Customers and which Accounts Financial Institution may purchase pursuant to the terms of the Agreement. The accepted terms are as follows:

SECTION 1: DEFINITIONS

1.1“Accounts” means a right to payment of a monetary Obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, or (ii) for services rendered or to be rendered. The term Account shall include all obligations owing for what is commonly referred to as a receivable.

1.2“Additional Security Documents” means as that term is described in section 4.3.

1.3“Business Judgment” means, in connection with decisions made by Financial Institution, the exercise of such decisions in Financial Institution’s sole and exclusive business judgment and discretion.

1.4“Collateral” means all of Business’s now owned and hereafter acquired Accounts, Chattel Paper, Deposit Accounts, Inventory, Instruments, Documents, Letter of Credit Rights, Commercial Tort Claims, General Intangibles, Supporting Obligations and the Reserve and Reserve Account.

1.5“Complete Termination” occurs upon satisfaction of the following conditions:

1.5.1Payment in full of all Obligations of Business to Financial Institution and Financial Institution’s issuance of a UCC termination statement;

1.5.2If Financial Institution has issued or caused to be issued guarantees, promises, or letters of credit on behalf of Business, acknowledgement from any beneficiaries thereof that Financial Institution or any other issuer has no outstanding direct or contingent liability therein; and

1.5.3Business has executed and delivered to Financial Institution a general release in Section 14 of this document.

1.6“Credit Application” means any Credit Application executed by a Business’ Customer.

1.7“Credit Memo” means a credit memo or similar evidence (whether in written or electronic form) reflecting a deduction to the Face Amount of a Customer’s account with Business, other than a credit arising from a payment.

1.8“Customer” means a person obligated to pay one or more Accounts arising from goods sold or services Business rendered to the Customer, otherwise known as an Account Debtor under the Uniform Commercial Code.

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1.9“Customer Agreement” means any agreement, whether written or verbal, between Business and its Customer evidencing the terms of a sale of goods or rendition of services giving use to an Account.

1.10“Dispute” means any form of Customer Agreement dispute, including, but not limited to, a charge back, act to reject or return goods, alleged deduction, defense, offset, counterclaim or any other act or event in respect to an Account Debtor which may in any way diminish Financial Institution’s ability to fully or timely collect a Purchased Account, whether or not provable or bona fide.

1.11“Exposed Payment(s)” means payments received by Financial Institution from or for the account of a Payor that has become subject to a bankruptcy proceeding, to the extent such payments cleared the Payor’s deposit account within ninety (90) days of the commencement of said bankruptcy case.

1.12“Face Amount” means the outstanding balance of each Account for the price of the sale of goods or provision of services as reflected on an Invoice evidencing an Account offered for sale to Financial Institution.

1.13“Invoice” means each invoice or similar evidence (whether in written or electronic form) of the terms of a non-cash sale of goods or provision of services previously made by Business to a Customer in connection with each Account.

1.14“Net Amount” of an Account means the Face Amount of an Account less the Service Charge.

1.15“Obligations” means all of Business’ monetary and non-monetary Obligations to Financial Institution, whether pursuant to this Agreement, under any note, contract, guaranty, accommodation or otherwise, however and whenever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or later existing or due.
1.16“Purchased Accounts” means all Accounts purchased by Financial Institution under this Agreement.

1.17“Purchase Price” means as that term is described in section 2.2.

1.18“Repurchase Obligations” means the liability of Business to Financial Institution under this Agreement to repurchase any Purchased Account for an amount, on any date, equal to the unpaid Face Amount, plus (if incurred) attorneys’ fees and accrued and unpaid finance charges related to such Purchased Accounts. For the purpose of this Section, any Exposed Payments shall be included as a Repurchase Obligation.

1.19“Reserve” means whatever amount is maintained by Financial Institution in the Reserve Account that may serve to secure Business’ Repurchase Obligations or any other monetary obligations under this Agreement.

1.20“Reserve Account” means an interest bearing Deposit Account maintained by Financial Institution in connection with all Accounts sold to Financial Institution by Business under this Agreement reflecting an amount that is expected to equal the Reserve as established pursuant to Section 2.5 of this Agreement.

1.21“Service Charge” means a discount to the Face Amount of a Purchased Account equal to one and 3/10 percent (1.30%). Business acknowledges that the Service Charge in no event constitutes interest or a similar charge and that the transactions described in this Agreement are not transactions for the use, forbearance or detention of money. The Service Charge has been agreed upon by the parties and represents a reasonable and customary fair market value discount.

Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Uniform Commercial Code (“UCC”).


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SECTION 2: SALE; PURCHASE PRICE; BILLING; RESERVE

2.1Assignment and Sale.

2.1.1Financial Institution hereby agrees to evaluate for purchase from Business and Business hereby irrevocably agrees to offer to assign and sell to Financial Institution, as absolute owner, Business’ entire interest in that portion of its currently outstanding Accounts as are detailed in the attached Exhibit A to this Agreement. In addition, Business will offer for sale all of its hereafter created future Accounts, evidenced by Invoices that Business will simultaneously deliver to Financial Institution in support of such future Accounts.

2.1.2Business acknowledges that its currently outstanding Accounts listed on Exhibit A are not now, nor have they ever been declared to be, in default.

2.1.3Business and Financial Institution each acknowledge and agree that in connection with each Account offered to Financial Institution for sale that: (a) Business will submit to Financial Institution for Financial Institution’s determination as to the eligibility of the Accounts, all Invoices evidencing the terms underlying each Account; (b) the transactions contemplated by this Agreement are account purchase transactions; (c) the Accounts shall at all times be purchased by Financial Institution from Business at a discount in accordance with the Service Charge; (d) the purchase and sale of the Accounts shall vest absolute right, title and ownership of such Purchased Accounts together with all benefits of ownership, including to the right to verify any desired information in connection with Purchased Accounts with Customers; and (e) Business has no right and may not seek to require Financial Institution to authorize Business to reacquire, redeem, or otherwise re-vest title to any Purchased Accounts or any proceeds thereof. In connection with the sale and assignment of Purchased Accounts, Financial Institution shall become subrogated to all of Business’ rights as an unpaid vendor, lienholder, all of its related rights of stoppage in transit, replevin and reclamation, and rights against third parties (all of which will constitute part of the Purchased Accounts) and Business agrees to cooperate with Financial Institution in its exercise of these rights.

2.1.4The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $9,000,000.00, unless agreed to by Financial Institution which decision will be in Financial Institution’s Business Judgment.

2.1.5Business agrees to execute and deliver such further instruments, documents and endorsements to or for the benefit of Financial Institution as may be necessary to accomplish the sale and purchase described herein and to carry out the purposes of this Agreement.

2.2Purchase Price. The Purchase Price payable for Purchased Accounts will be equal to the Net Amount and payment of the Purchase Price, less the Reserve, shall be paid to Business on or before the next banking day after delivery of the Invoices evidencing the Accounts offered to Financial Institution, unless in Financial Institution’s Business Judgment it requires additional time for evaluation.

2.3Documentation.

2.3.1In respect to all Accounts offered for sale, Business will provide Financial Institution with Credit Applications, Customer Agreements, Invoices, payment information and, if applicable, Credit Memos related to all sales of goods and rendition of services, and such other documents and proof of delivery of goods or rendering of services as Financial Institution may reasonably require. As to the currently outstanding Accounts described on Exhibit A that become Purchased Accounts, payment of the Purchase Price by Financial Institution will be conclusive evidence of their assignment and sale to Financial Institution.

2.4Billing.

2.4.1Financial Institution will have authority, unless otherwise agreed to in writing by the parties, to send periodic statements (e.g. monthly) to all Customers itemizing their activity regarding all Accounts during the preceding billing period. All Customers will be instructed by Business (or Financial Institution on behalf of Business) to make payments to, at the sole discretion of Financial Institution, a post office box or electronic lockbox


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controlled exclusively by Financial Institution or through Automatic Clearing House (“ACH”) credit entries. If Financial Institution so requires, any Invoices that Business may later create and issue in connection with a Purchased Account shall clearly indicate that each Purchased Account has been assigned, sold, and is payable exclusively to Financial Institution.

2.4.2All payments received from or for the account of a Customer will be applied to the Obligations of that Customer and payment will be deemed made upon receipt by Financial Institution.

2.4.3All variations, modifications or extensions of indebtedness on Purchased Accounts under this Agreement may only be negotiated and/or authorized by Financial Institution.

2.4.4Nothing in this Agreement authorizes Business nor may Business seek to collect Purchased Accounts sold to Financial Institution. If Business receives payment on any Purchased Account (or any Accounts upon an Event of Default), it will receive those payments in trust for Financial Institution and will remit such payments, if made by Negotiable Instrument, in kind, to Financial Institution; or, if made electronically, will remit an amount equal to the amount of all funds received, both of which shall be completed by no later than the next business day.

2.5Reserve. Financial Institution will be entitled to create and maintain from the Purchase Price payments payable to Business, a Reserve in an amount which Financial Institution may adjust from time to time in its Business Judgment, to provide security for Business’ Repurchase Obligations as described in section 3 below. The Reserve will be held in a separate interest-bearing account for the benefit of the Financial Institution. The Reserve will be maintained in this account which, if not necessary for use by Financial Institution, will be available to Business upon a Complete Termination of this Agreement.

2.5.1The amount of the Reserve in connection with the currently outstanding Accounts will be calculated to equal the sum of a., b., c., and d. below:

a.10% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are less than 60 days from invoice date or less than 30 days past due;
b.25% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 61 and 90 days from invoice date or between 31 and 60 days past due;
c.50% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 91 and 120 days from invoice date or between 61 and 90 days past due;
d.if Financial Institution elects to purchase such Accounts, 100% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are greater than 120 days from invoice date or greater than 90 days past due.

2.5.2Thereafter, and subject to Financial Institution’s right to adjust the Reserve in its Business Judgment, Financial Institution will establish as a Reserve in the Reserve Account 10% of the Face Amount of all new Purchased Accounts subsequent to its initial purchase of the Purchased Accounts. Financial Institution may require the minimum amount of Reserve, after deduction for required repurchases, to be equal to the sum of e., f., and g. below:

e.10% of the Face Amount of all outstanding Purchased Accounts that are less than 60 days from invoice date or less than 30 days past due;
f.25% of the Face Amount of all outstanding Purchased Accounts that are between 61 and 90 days from invoice date or between 31 and 60 days past due;
g.50% of the Face Amount of all outstanding Purchased Accounts that are between 91 and 120 days from invoice date or between 61 and 90 days past due.

2.6Exposed Payments. Upon termination of this Agreement, Business shall pay to Financial Institution (or Financial Institution may retain or hold in the Reserve Account) the amount of all Exposed Payments. Financial Institution may charge the Reserve Account with the amount of any Exposed Payments that Financial Institution may become obligated to pay to a bankruptcy estate of a Customer that made the Exposed Payment to Financial Institution, on account of a claim asserted under Section 547 of Bankruptcy Code. Financial Institution shall


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pay to Business from time to time that balance of the Reserve Account for which a claim under Section 547 of Bankruptcy Code can no longer be asserted due to the passage of the statute of limitations, settlement with bankruptcy estate of the Customer or otherwise. Business shall indemnify Financial Institution from any loss arising out of the assertion of any Avoidance Claim and shall pay to Financial Institution on demand the amount thereof. Business shall notify Financial Institution within two business days of it becoming aware of the assertion of an Exposed Payment. This provision shall survive termination of this Agreement.



2.7Account Stated.

2.7.1Financial Institution, in its Business Judgment, may either provide Business with information on the Purchased Accounts and a monthly reconciliation of the relationship relating to billing, collection and account maintenance such as aging, posting, error resolution and mailing of statements or may instead make such information available electronically through an internet website. Either of the foregoing shall be in a format and in such detail as Financial Institution deems appropriate.

2.7.2Financial Institution’s books and records or all electronically stored information shall be admissible in evidence without objection as prima facie evidence of the status of the Purchased Accounts, non- purchased Accounts and Reserve Account between Financial Institution and Business. Each statement, report, or accounting rendered or issued by Financial Institution to Business and all electronically stored information shall be deemed conclusively accurate and binding on Business unless within fifteen (15) days after the date of issuance or, in the case of electronically stored information, the first of each month, Business notifies Financial Institution to the contrary by registered or certified mail, setting forth with specificity the reasons why Business believes such statement, report, or accounting or electronically stored information is inaccurate, as well as what Business believes to be correct. Business’ failure to receive any monthly statement or access the electronically stored information shall not relieve it of the responsibility to request such information and Business’ failure to do so shall nonetheless bind Business to whatever Financial Institution’s records or electronically stored information report.

SECTION 3: REPURCHASE OF PURCHASED ACCOUNTS

3.1image_01.jpgimage_01.jpgRequired Repurchase. With respect to any Purchased Accounts initially purchased by Financial Institution, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased Accounts remains unpaid following 120 days after its (circle one) invoice date / due date. With respect to any Purchased Accounts purchased after Financial Institution’s initial purchase, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased Accounts remains unpaid following 120 days after its (circle one) invoice date / due date. For purposes of this Agreement, the aging status of Purchased Accounts purchased from Business, as shown on the aging report of Purchased Accounts produced or generated by Financial Institution, will be deemed conclusive (absent manifest error) in determining which Purchased Accounts Financial Institution may require Business to repurchase. Regardless of when purchased, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts from any particular Customer if such Customer is bankrupt or insolvent, or if any Dispute arises with a Customer regarding such Purchased Accounts. Financial Institution may require Business to repurchase any or all outstanding Purchased Accounts (a) upon a Default, as defined in Section 9, or (b) upon the termination of this Agreement. Any decision by Financial Institution to require repurchase of less than the maximum amount permitted by this Agreement will not be deemed a waiver of Financial Institution’s rights to require such repurchase to the maximum extent permitted in this Agreement.

3.2Effecting Repurchase. Should Financial Institution require repurchase of one or more Purchased Accounts, Business will be liable to Financial Institution for payment of the Repurchase Obligation with respect to such Purchased Accounts. Upon an event of Default or termination under this Agreement, the Repurchase Obligation will also include the amount of all indemnities and other Obligations of Business arising under this Agreement. Without notice to or demand on Business, Financial Institution may debit the amount of such Repurchase Obligation (and any amount necessary to bring the Reserve to a level as may be required by Financial Institution in its Business Judgment) against Business’ Reserve Account, or any deposit account of Business maintained with Financial


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Institution. Business agrees to and irrevocably waives any right to withdraw Financial Institution’s authority, block or otherwise seek to preclude or interfere with the debit authority provided herein until section 11.3 is fully satisfied. In the event any deposit account contains insufficient funds for Financial Institution’s debit, or Financial Institution elects not to make such debit, Business agrees to pay any such deficiency or shortfalls on demand. Financial Institution will have no duty to bill or collect any Repurchased Accounts although such accounts shall continue to serve as Financial Institution’s Collateral.



SECTION 4: SECURITY INTEREST.

4.1In order to secure Business’ performance of all Obligations under this Agreement and any other agreement that may now or hereafter be entered into between Business and Financial Institution, Business grants to Financial Institution a continuing first priority ownership interest in the Purchased Accounts and first priority security interest in the Collateral. The priority rights granted by this section are designed to provide Financial Institution with sole rights of enforcement insofar as the collection of all Accounts.

4.2Notwithstanding the creation of this security interest, it is the express intention of the parties that their relationship shall be that of seller and purchaser of Purchased Accounts and once acquired by Financial Institution, Business shall no longer have any rights or title to any Purchased Account pursuant to § 9-318(a) of the UCC.

4.3Business agrees to execute such additional documents and take such further action as Financial Institution may deem necessary or desirable in order to perfect the security interest granted herein and otherwise to effectuate the purposes of the Agreement. In the event that Financial Institution requires additional security for Business’ Obligations under this Agreement, and Business or other party executes additional security agreements, pledge agreements, guaranties and documents of similar significance (collectively, the “Additional Security Documents”), terms used therein such as, but not limited to, “loans,” “indebtedness,” and “obligations,” will be deemed to include the Repurchase Obligations. Despite the provisions of the Additional Security Documents, the Repurchase Obligations secured by those documents will not constitute a loan.

4.4Financial Institution is authorized to have filed any initial financing statements and amendments thereto that: indicate the Collateral as “all assets” of Business or words of similar effect, regardless of whether any particular asset comprising the Collateral falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail; contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including: (i) whether Business is an organization, the type of organization, and any organization identification number issued to Financial Institution and,
(ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted Collateral or timber to be cut, a sufficient description of real property to which the Collateral relates; and (iii) containing a notification that Business has granted a negative pledge to Financial Institution and that any subsequent lienor may be tortiously interfering with Financial Institution’s right and advise third parties that any notification to any of Business’ Account Debtors will interfere with Financial Institution’s collection rights.

SECTION 5: REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1Representations and Warranties. Business represents and warrants to Financial Institution that:
(a) it is fully authorized to enter into and perform under this Agreement, and that this Agreement constitutes its legal, valid and binding obligation; (b) Business is solvent and in good standing in the State of its organization; (c) it is not the present intent of Business to seek protection under any chapter of Title 11 of the United States Financial Bankruptcy Code or under any state insolvency laws or any statutory Assignment for the Benefit of Creditor laws;
(d) its Accounts are currently and were at the time of their creation, bona fide and existing Obligations of Customers of Business arising out of its sales of goods or performance of services to independent and not affiliated Customers, free and clear of all security interests, liens, and claims whatsoever of third parties; (e) the documentation under which the Accounts are payable authorize the charge and collection of interest at the rate provided in such documentation;
(f) all Accounts and all documents and practices related to them comply with all applicable federal and state laws; (g) the Accounts will be paid by Customers prior to the date of required repurchase or will be repurchased by Business


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pursuant to Sections 3.1 and 3.2; (h) the Collateral in which a security interest is granted in Section 4.1 or in any Additional Security Documents is not subject to any other security interest, lien or encumbrance whatsoever (except in favor of Financial Institution), and Business will not permit such Collateral to become so encumbered without Financial Institution’s prior written consent, which consent may be withheld in its Business Judgment; (i) Business’ inventory is not subject to any security interest, lien or encumbrance whatsoever and Business will not permit its inventory to become so encumbered without Financial Institution’s prior written consent.



5.2Covenants.

5.2.1Business covenants that: (i) it will allow Financial Institution to review and inspect during reasonable business hours, and Business will supply all financial information, financial records, and documentation on Business, any guarantors, or any Customer, that Financial Institution may request; (ii) with respect to each Purchased Account as it arises: (a) Business will have made delivery of the goods and/or will have rendered the services represented by the Invoice, and the goods and/or services will have been accepted; (b) Business will have preserved and will continue to preserve any liens and any rights to liens available by virtue of the sales and/or services;
(c) the Customer will not be an affiliate of Business (e.g., parent, subsidiary, etc.); (d) Financial Institution’s copy of the Invoice will be genuine and will comply with this Agreement; (e) Business will have no knowledge of any Dispute that may impair the validity of the transaction or the Customer’s Obligation to pay Purchased Accounts in accordance with the terms; (f) Business will have the right to render the services and/or to sell the goods creating the Purchased Accounts, and will do so in compliance with all applicable laws; (g) Business will have paid or provided for the payment of all taxes arising from the transaction in respect to all Purchased Accounts; (h) the Purchased Accounts will not be subject to any deduction, offset, defense, or counterclaim; and (i) Business will notify Financial Institution immediately of any upgrades and/or changes to its accounting software; (iii) the transactions described in Section 2.1 are account purchase transactions, and Business will reflect such transactions in its accounting books and records as absolute sales of Purchased Accounts to Financial Institution; Business will reimburse and indemnify Financial Institution for all loss, damage and expenses, including reasonable attorneys’ fees, incurred in defending such transactions as absolute sales of Purchased Accounts, or as a result of the recharacterization of such transactions; and
(iv) in the event of the commencement of any case under any bankruptcy or insolvency laws by or against Business, Business will not oppose or object and will consent to any motion by Financial Institution seeking relief from the automatic stay provisions of such laws with respect to the Reserve or the Reserve Account, or to any motion by Financial Institution with respect to any Purchased Account or the Collateral.

5.2.2Business shall not, without the prior written consent of Financial Institution in each instance: (a) grant any extension of time for payment of any Purchased Accounts, (b) compromise or settle any Purchased Accounts for less than the full amount thereof, (c) release in whole or in part any Customer, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any Purchased Account.

5.2.3From time to time as requested by Financial Institution, at the sole expense of Business, Financial Institution or any designees shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default, to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default) any of the Collateral, including Business’ books and records, and Business shall permit Financial Institution to make copies of such books and records or extracts therefrom as Financial Institution may request. Without expense to Financial Institution, Financial Institution may use any of Business’ business premises, personnel and equipment, including computer equipment, programs, printed output and computer readable media, supplies for the collection of Accounts and realization on other Collateral as Financial Institution deems appropriate in its Business Judgment. Business hereby irrevocably authorizes all accountants and third parties, upon written or verbal request, to promptly disclose and deliver to Financial Institution at Business’ expense all financial information, books and records, work papers, management reports and other information in their possession relating to Business.

5.2.4Before sending any Invoice to a Customer, Business shall mark same with a notice of assignment in compliance with 9-406 of the UCC in the form and manner as may be required by Financial Institution in the event Financial Institution deems it advisable for Business to do so, Financial Institution deems itself insecure or Business commits any Event of Default.


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5.2.5Business shall cause to be paid when due all payroll and other taxes, and shall provide proof thereof to Financial Institution in such form as Financial Institution shall reasonably require. Business hereby irrevocably authorizes and will direct each of its bookkeeping staff as well as any outside accounting firm, in whatever form is requested by Financial Institution, to openly communicate with Financial Institution with regard to all bookkeeping functions and accounting aspects of Business’ business and each shall have a continuing duty to fully and accurately report to Financial Institution information pertaining to any and all bookkeeping, accounting and payroll functions and reporting.

SECTION 6: FORMS AND PROCEDURES; RESPONSIBILITY FOR USE

6.1Forms and Procedures. Business will use only forms, agreements, and advertising materials supplied to or approved by Financial Institution in connection with the Purchased Accounts, and will follow all procedures that are satisfactory to Financial Institution in connection with the use of such forms, agreements, and advertising materials. Financial Institution does not desire to manage or operate Business but to insure that Business is properly representing the billing terms to its Customers.

6.2Responsibility for Use. Business shall provide to Financial Institution all information used to create the form of Credit Application and Customer Agreement and other documentation. Business is solely responsible for the adequacy, completeness, delivery and accuracy of the raw data relating to the Purchased Accounts, its preparation in the form required by Financial Institution, and its transmission to Financial Institution. Business understands that these documents should be reviewed by Business’ counsel, as Financial Institution makes no representation or warranty as to their enforceability in Business’ state or their compliance with applicable federal and state laws. Financial Institution and Business agree that Financial Institution is the owner of all Accounts purchased by Financial Institution, and that all activities of Financial Institution in connection with the purchase of Accounts, receipt of payments for the Purchased Accounts, generation of information, and processing of data, is for the account of Financial Institution’s own affairs, and that the information generated in connection with those activities is the property of Financial Institution. Financial Institution shall at no time perform as a collection agency under this Agreement.

SECTION 7: POWER OF ATTORNEY

7.1Business appoints Financial Institution as its attorney-in-fact for all appropriate purposes under this Agreement including: to receive, open, and dispose of all mail addressed to Business relating to Accounts; to endorse Business’ name upon any notes, acceptances, checks, drafts, money orders, and other evidences of payment of Accounts that may come into Financial Institution’s possession, and to deposit or otherwise handle the same; and to do all other acts and things necessary to carry out the terms of this Agreement. This power, being coupled with an interest, is irrevocable while any Purchased Account owned by Financial Institution remains unpaid or any Obligation remains outstanding.

7.2As permitted by applicable state law, if the Repurchase Obligation is not paid in full after demand, Business authorizes any attorney to appear for Business in any court of record in the United States, and to confess judgment for such amount as may appear to be unpaid, together with any allowable fees for collection of the judgment.

SECTION 8: APPLICABLE LAW

This Agreement will be governed by, construed and enforced according to the laws of the State of Oklahoma.

SECTION 9: DEFAULT

9.1Events of Default. The following events will constitute a default (an “Event of Default”) under the terms of this Agreement: (a) Business fails, on demand, to pay any Repurchase Obligations or any other monetary Obligation under this Agreement, or Business fails to perform any non-monetary duty Business owes to Financial Institution under this Agreement, or the Business fails to pay any indebtedness of the Business owed to the Financial Institution according to its terms; (b) Business breaches the representations set forth in Section 5.1(d) or fails to turn over payments on Purchased Accounts to Financial Institution, as set out in Section 2.4.4; (c) except for the Obligations described in Sections 9.1(a), and 9.1(b) hereof, Business fails to perform any Obligation, covenant or liability in


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connection with this Agreement within ten (10) days after the date that written notice is given to Business; (d) any warranty, representation or statement whenever made by Business in connection with this Agreement proves to be false in any material respect when made, or Business fails to disclose to Financial Institution that any such warranty, representation or statement has become false in any material respect; (e) dissolution or termination of Business if Business is a corporation, partnership, or other entity, or if Business is an individual, the death or incompetency of such individual; (f) without prior written consent by Financial Institution, a transfer occurs of more than 25% of the equity ownership or assets of Business, whether Business is a corporation, partnership or other entity; (g) Business’ insolvency; (h) the institution of any Assignment for the Benefit Creditors, the appointment of a receiver or trustee for its assets, the commencement of any proceeding under any bankruptcy or insolvency laws by or against Business, or any proceeding for the dissolution or liquidation, settlement of claims against or winding up of its affairs; (i) the attempted termination or withdrawal of any guaranty executed by any person in respect to Business’ Obligations; (j) Business fails to pay when due any tax imposed on it, or any tax lien is filed against Business or any of its assets; (k) any judgment against Business remains unpaid, or has not been stayed on appeal, discharged, bonded or dismissed, for a period of 30 days; (l) Business discontinues its business as a going concern; or (m) Financial Institution, in good faith, believes the prospect of Business’ payment or performance of its Obligations have been impaired.

9.2Effect of Default. Upon the occurrence of any Event of Default, Business irrevocably authorizes Financial Institution at Business’ expense, to exercise at any time any one or more of the following powers until all of the Obligations have been paid in full:

9.2.1Receive, take, endorse, assign, deliver, accept and deposit, in the name of Financial Institution or Business, any and all proceeds of any Collateral securing the Obligations or the proceeds thereof;

9.2.2Take or bring, in the name of Financial Institution or Business, all steps, actions, suits or proceedings deemed by Financial Institution necessary or desirable to effect collection of or other realization upon Financial Institution’s Accounts;

9.2.3Pay any sums necessary to discharge any lien or encumbrance which may become senior to Financial Institution’s security interest in any Collateral, which sums shall be included as Obligations hereunder, and in connection with which sums a late charge shall accrue and shall be due and payable;

9.2.4Communicate directly with Business’ Customers to, among other things, verify the amount and validity of any Account created by Business;

9.2.5In order to satisfy any of the Obligations, Business authorizes Financial Institution to initiate electronic debit or credit entries through the ACH system to any deposit account maintained by Business.
9.2.6Change the address for delivery of mail to Business and to receive and open mail addressed
to Business;
9.2.7Notify any Customer obligated with respect to any Account, that the underlying Account
has been assigned to Financial Institution by Business and that payment thereof is to be made to the order of and directly and solely to Financial Institution;
9.2.8Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts and discharge or release any Customer (including filing of any public record releasing any lien granted to Business by such account debtor), without affecting any of the Obligations.
9.2.9Financial Institution shall be entitled to any form of equitable relief that may be appropriate without having to establish any inadequate remedy at law or other grounds other than to establish that its Collateral is subject to being improperly used, moved, dissipated or withheld from Financial Institution. Financial Institution shall be entitled to freeze, debit and/or effect a set-off against any fund or account Business may maintain with any Financial Institution and so notify such financial institution without regard to any draft that may have been issued and have not cleared. In the event as a result of an Event of Default, Financial Institution deems it necessary to seek equitable relief, including, but not limited to, injunctive or receivership remedies, Business waives any requirement that Financial Institution post or otherwise obtain or procure any bond. Alternatively, in the event Financial Institution, in its sole and exclusive discretion, desires to procure and post a bond, Financial Institution may procure and file with


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the court a bond in an amount up to and not greater than $10,000.00 notwithstanding any common or statutory law requirement to the contrary. Upon Financial Institution’s posting of such bond it shall be entitled to all benefits as if such bond was posted in compliance with state law. Business also waives any right it may be entitled to, including an award of attorney’s fees or costs, in the event any equitable relief sought by and awarded to Financial Institution is thereafter, for whatever reason(s), vacated, dissolved or reversed. All post-judgment interest shall bear interest at either the contract rate or such higher rate as may be allowed by law.
9.2.10All of Business’ rights of access to any online, internet services that Financial Institution makes available to Business, shall be provisional pending Business’ curing of all such Events of Default. During such period of time, Financial Institution may limit or terminate Business’ access to Financial Institution’s online services. Business acknowledges that the information Financial Institution makes available to Business constitutes and satisfies any duty to respond to a Request for an Accounting or Request regarding a Statement of Account that is referenced in
§ 9-210 of the UCC.

9.2.11The Parties acknowledge that it shall be presumed commercially reasonable and Financial Institution shall have no duty to undertake to collect any Account or Purchased Account including those in which Financial Institution receives information from an Account Debtor that a Dispute exists. Furthermore, in the event Financial Institution undertakes to collect from or enforce an Obligation of an Account Debtor or other person obligated on Collateral and ascertains that the possibility of collection is outweighed by the likely costs and expenses that will be incurred, Financial Institution may at any such time cease any further collection efforts and such action shall be considered commercially reasonable. Before Business may, under any circumstances, seek to hold Financial Institution responsible for taking any uncommercially reasonable action, Business shall be required to first notify Financial Institution, in writing, of all reasons why Business believes Financial Institution has acted in any uncommercially reasonable manner and advise Financial Institution of the action that Business believes Financial Institution should take.

SECTION 10: NON-LIABILITY OF FINANCIAL INSTITUTION; RELEASE; INDEMNITY; WAIVER

10.1 Except for a breach by Financial Institution of this Agreement, Business releases, discharges, and acquits Financial Institution, its officers, directors, employees, participants, agents, successors and assigns from any and all claims, demands, losses, and liability of any nature which Business ever had, now or later can, will or may have in connection with, or arising out of, the transactions described in this Agreement and the documentation thereof. Financial Institution will not be liable for any indirect, special or consequential damages, such as loss of anticipated revenues or other economic loss in connection with, or arising out of, any default in performance or other matter arising under this Agreement. Nor will Financial Institution be liable for any errors of judgment or mistake of fact when acting as Business’ attorney-in-fact, pursuant to Section 6, or liable for delay in the performance of Financial Institution’s duties caused by strike, lawsuit, riot, civil disturbance, fire, shortage of supplies or materials, or any other cause reasonably beyond Financial Institution’s control. Business indemnifies and holds Financial Institution, its officers, directors, employees, participants, agents, successors and assigns harmless from (and will pay all reasonable attorneys’ fees with respect to) any loss or claim involving breach of warranty or representation by Business, any claim or liability sustained by virtue of acting in reliance upon data or information furnished by Business to Financial Institution, and any loss or claim by any Customer relating to goods and/or services (or the manner or type of their sale or provision) giving rise to Accounts purchased by Financial Institution hereunder. IF ANY FORM OF LITIGATION IS INSTITUTED BY BUSINESS AGAINST FINANCIAL INSTITUTION FOR VIOLATION OF THIS AGREEMENT, OR ANY WRONGFUL CONDUCT ASSOCIATED WITH THIS AGREEMENT, BUSINESS HEREBY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL. BUSINESS FURTHER AGREES THAT ITS DAMAGES WILL BE LIMITED, IN ANY CASE, TO THE AMOUNT OF THE SERVICE CHARGE PAID BY BUSINESS TO FINANCIAL INSTITUTION DURING THE PRECEDING TWELVE (12) MONTH PERIOD.

SECTION 11: EFFECTIVE DATE; TERMINATION; BINDING EFFECT

11.1This Agreement will be effective when accepted by Financial Institution, and will continue in full force and effect until the earlier of: (a) one year after the effective date of this Agreement, or (b) sixty (60) days after written notice of termination has been given by one party to the other (in each case subject to immediate termination upon a Default); and the term of this Agreement will automatically be extended for periods of one year each following


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its otherwise scheduled termination, subject to Section 9.2 above, and to the parties’ rights to terminate this Agreement under clause (b) of this Section 11.1.

11.2Upon termination of this Agreement, Business will pay all of its Obligations to Financial Institution, and in any event, Business will remain liable to Financial Institution for any deficiency remaining after liquidation of any Collateral. Financial Institution may withhold any payment to Business unless supplied with an indemnity satisfactory to Financial Institution. This Agreement will bind Business and Business’ heirs, executors, successors and assigns and will inure to the benefit of Financial Institution and Financial Institution’s successors and assigns. Business agrees that Financial Institution may assign this Agreement or delegate its duties under this Agreement, but that Business may not do so without Financial Institution’s prior written approval.

11.3In recognition of Financial Institution’s right to have its attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Business, Financial Institution shall not be required to record any terminations or satisfaction of Financial Institution’s security interest in the Collateral or its ownership interest in the Purchased Accounts unless and until Complete Termination has occurred. Business understands that this provision constitutes a waiver of its rights under § 9-513 of the UCC.

SECTION 12: ATTORNEY’S FEES; PAST-DUE OBLIGATIONS; WAIVER; SEVERABILITY; HEADINGS; ENTIRE AND CONTROLLING AGREEMENT; NOTICES; COUNTERPARTS; SAVINGS AND MISCELLANEOUS PROVISIONS

12.1Business will pay all reasonable expenses incurred by Financial Institution in connection with the execution of this Agreement, including expenses incurred in connection with the filing of financing statements, continuation statements and record searches. All past-due Obligations of Business arising under this Agreement will bear interest at the maximum nonusurious rate permitted under applicable state or federal law. Business hereby waives grace, demand (other than demand pursuant to Section 3.2 hereof), presentment for payment, notice of dishonor or default, notice of intent to accelerate, notice of acceleration, protest and notice of protest, and bringing of suit against Business. Upon liquidation of any Collateral, settlement or prosecution of a dispute with any Customer, or enforcement of any Obligations of Business under this Agreement, Business will pay to Financial Institution, and Financial Institution may charge to Business’ account, all costs and expenses incurred, including reasonable attorneys’ fees, and such costs, expenses and fees will constitute part of Business’ Obligations. No delay or failure on Financial Institution’s part in exercising any right, privilege, or option will operate as a waiver of such, or of any other right, privilege, or option, and no waiver, amendment or modification of any provision of this Agreement will be valid unless in writing signed by Financial Institution, and then only to the extent stated. Should any provision of this Agreement be prohibited by or invalid under applicable law, the validity of the remaining provisions will not be affected. The section headings are for convenience only, and will not define or limit the scope, extent, meaning or intent of this Agreement. This Agreement embodies Business’ entire agreement as to its affiliation with Financial Institution’s BusinessManager program, although Business anticipates that Financial Institution will subsequently outline certain depository and other Financial Institution procedures. In the event of any inconsistency between this Agreement and any other agreement signed by Business and Financial Institution in connection with this Agreement, including but not limited to, any Additional Security Documents, the terms and provisions of this Agreement will control, and the terms and provisions of any such other document will be ineffective to the extent of any such inconsistency. Any notice, request or demand to be given will be deemed given when deposited with a delivery service addressed to, or sent by registered or certified mail to, the address of the recipient listed at the beginning of this Agreement or to subsequent addresses which have been properly noticed to the other party. This Agreement may be executed in multiple counterparts, which when taken together, will constitute one and the same Agreement.

12.2The parties acknowledge that the transactions contemplated by this Agreement are account purchase transactions; however, if they should ever be recharacterized by any court, nothing contained in this Agreement or in any Additional Security Documents will be construed, or will operate in any event, so as to require Business to pay interest at a rate greater than the highest lawful rate of interest permitted by the laws then in force and governing this Agreement. In no event, whether by reason of acceleration of the maturity of the Obligations due or otherwise, will Service Charges contracted for, charged, received, paid or agreed to be paid to Financial Institution, exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, Service Charges would otherwise be payable to Financial Institution in excess of the maximum lawful amount, the Service Charges will be


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reduced to the maximum amount permitted under applicable law, and if from any circumstance Financial Institution will have received anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excess will be applied to the reduction of the principal amount of Obligations and not to the payment of Service Charges. If such excess interest exceeds the unpaid balance of the principal amount of Obligations, such excess will be refunded to Business. All Service Charges paid or agreed to be paid to Financial Institution, to the extent permitted by applicable law, will be amortized, prorated, allocated and spread throughout the full term of the Agreement until payment in full of all principal Obligations owing by Business, so that the Service Charges for such full term will not exceed the maximum amount permitted by applicable law.

12.3This Agreement shall be deemed to be one of financial accommodation and not assumable by Business as debtor or debtor-in-possession, or any trustee in any bankruptcy proceeding without Financial Institution’s express written consent and may be suspended in the event a petition in bankruptcy is filed by or against Business.

12.4In the event Business’ principals, officers or directors, directly or indirectly, form a new entity, whether corporate, partnership, limited liability company or otherwise, similar to that of Business during the term of this Agreement, such newly formed entity shall be deemed to have expressly assumed the Obligations due Financial Institution by Business under this Agreement. Upon the formation of any such newly formed entity, Financial Institution shall be deemed to have been granted an irrevocable power of attorney with authority to execute, on behalf of the newly formed entity, one or more financing statements and have each filed with the appropriate secretary of state or UCC filing office. Financial Institution shall be held-harmless and be relieved of any liability statement or the resulting perfection of a security interest in any of the newly formed entity’s assets. In addition, Financial Institution shall have the right to notify the new formed entity’s account debtors of Financial Institution’s security interest rights, its right to collect all Accounts, and to notify any new factor or lender who has sought to procure a competing lien of Financial Institution’s rights in such newly formed entity’s assets.

12.5Business’ principal(s) acknowledge that the duty to accurately complete each form of Exhibit A transmitted to Financial Institution is critical to this Agreement and as such all Obligations with respect thereto are non-delegable. Each of Business’ principal(s) acknowledge that he/she shall remain fully responsible for the accuracy of each form of Exhibit A transmitted to Financial Institution regardless of who is delegated the responsibility to prepare and/or complete such Exhibit A.

12.6Business shall fully complete and execute, as taxpayer, prior to or immediately upon the execution of this Agreement, IRS Form 8821 supplied by the Department of the Treasury, Internal Revenue Service or such other forms as may be requested by Financial Institution, irrevocably authorizing Financial Institution to inspect or receive tax information relating to any type of tax, tax form, years or periods or otherwise desired by Financial Institution on an ongoing basis.

12.7Business will cooperate with Financial Institution in obtaining a control agreement in form and substance satisfactory to Financial Institution with respect to Collateral consisting of a Deposit Account, if such Deposit Account is maintained with any financial institution besides Financial Institution.

12.8As to any Account proceeds that do not represent payment of any Purchased Accounts and notwithstanding Financial Institution’s security interest therein, so long as Business has not committed an Event of Default, Financial Institution shall be deemed to have received such proceeds of Accounts as a pure pass-through for and on account of Business unless Financial Institution asserts any rights to such proceeds as is authorized by this Agreement.

12.9Any claim or cause of action that Business may have or seek to assert against Financial Institution, whether predicated on this Agreement or otherwise, shall neither constitute a defense nor serve as any basis to excuse non-performance of the Business’ duty to hold in trust and turn over all proceeds of Accounts to Financial Institution as provided in Section 2.4.4. Business’ duties and Obligations contained herein shall at all times be deemed independent covenants such that Business’ duty to honor the provisions of this Section may at no time be excused or otherwise adversely affected due to, inter alia, any breach that Business may assert against Financial Institution.


DocuSign Envelope ID: DA15BCEF-6966-4EF3-B0FB-C3AF815A49DD

12.10Any claim, dispute or controversy arising out of or relating to this Agreement must be brought in Business’ individual capacity and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding (collectively, “Class Action”). Accordingly, Business expressly waives any right in respect to any such claim, dispute or controversy to initiate, join or maintain any Class Action in any form.

12.11In the event this Agreement is duly terminated in accordance with section 11, and for whatever reason, after such termination, any claim in connection with, related to or arising under this Agreement is asserted or made against Financial Institution by any person, including Business, Financial Institution shall be entitled to treat all protections afforded to Financial Institution under this Agreement as revived, including, but not limited to, the protections contained in sections 4, 8 and 12.1.
SECTION 13: ACKNOWLEDGMENT

THE UNDERSIGNED ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS AND WAIVERS OF CERTAIN RIGHTS, AND THAT THIS AGREEMENT HAS BEEN FULLY UNDERSTOOD PRIOR TO EXECUTION. BUSINESS FURTHER REPRESENTS AND WARRANTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH ITS OWN LEGAL COUNSEL REGARDING THIS AGREEMENT AND ITS FULL LEGAL EFFECT, AND THAT IT IS NOT RELYING UPON ANY ORAL REPRESENTATIONS ON THE PART OF FINANCIAL INSTITUTION, ITS EMPLOYEES OR AGENTS IN ENTERING INTO THIS AGREEMENT.

SECTION 14: GENERAL RELEASE

Business agrees that pursuant to section 11.3, the following release language shall be effective upon the termination of this Agreement and Financial Institution shall have the right, but not the obligation, to require Business to reaffirm and acknowledge the effectiveness of this release at the time of termination pursuant to section 11:

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, the undersigned and each of them (collectively “Releasor”) hereby forever releases, discharges and acquits Vast Bank N.A. (“Releasee”), its parent, directors, shareholders, agents and employees, of and from any and all claims of every type, kind, nature, description or character, and irrespective of how, why, or by reason of what facts, whether heretofore existing, now existing or hereafter arising, or which could, might, or may be claimed to exist, of whatever kind or name, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as though fully set forth herein at length, to the extent that they arise out of or are in any way connected to or are related to this Business Manager Agreement with Businesses and Professionals.

Releasor agrees that the matters released herein are not limited to matters which are known or disclosed, and the Releasor waives any and all rights and benefits which it now has, or in the future may have.

Releasor acknowledges that factual matters now unknown to it may have given or may hereafter give rise to claims which are presently unknown, unanticipated and unsuspected, and it acknowledges that this Release has been negotiated and agreed upon in light of that realization and that it nevertheless hereby intends to release, discharge and acquit the Releasee from any such unknown claims.

Acceptance of this Release shall not be deemed or construed as an admission of liability by any party released.

Releasor acknowledges that either (a) it has had advice of counsel of its own choosing in negotiations for and the preparation of this release, or (b) it has knowingly determined that such advice is not needed.


SECTION 15: SPECIAL STIPULATIONS

image_2.jpgimage_2.jpgimage_2.jpg




DocuSign Envelope ID: DA15BCEF-6966-4EF3-B0FB-C3AF815A49DD



ACCEPTANCE:

This Agreement is accepted this     day of March, 2022.


DocuSign Envelope ID: DA15BCEF-6966-4EF3-B0FB-C3AF815A49DD
BUSINESS:

_Nave Communications Company    

FINANCIAL INSTITUTION:

    Vast Bank N.A.    


image_5.jpgBy:     Name: Joseph E Hart     Title: President    


image_6.jpgBy:         Name: Lauren Smith     Title: Vice President        









This BusinessManager® Agreement with Businesses and Professionals has been prepared by the law firm of Ullman & Ullman, P.A. located at 150 East Palmetto Park Road, Boca Raton, Fl. and if you have any questions you may contact either Michael W. Ullman or Jared A. Ullman at 561-338-3535.
2015 Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry & Associates, Inc. 06/2015


BUSINESS LOAN AGREEMENT (ASSET BASED)

PrincipalLoan Date
Maturity
Loan No
Call / Coll
Account
Officer
Initials

$1,500,000.0003-17-2022
03-17-2023
18172002
LNS

References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.

Borrower:
ADDVANTAGE TECHNOLOGIES GROUP INC (TIN: 73-1351610)
ADDVANTAGE TRITON LLC (TIN: 81-3651007)
1430 BRADLEY LANE SUITE 196
CARROLLTON, TX 75007
Lender:
Vast Bank, N.A.
Elgin
110 N Elgin Ave
Tulsa, OK 74120

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated March 17, 2022, is made and executed between ADDVANTAGE TECHNOLOGIES GROUP INC and ADDVANTAGE TRITON LLC ("Borrower") and Vast Bank, N.A. ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of March 17, 2022, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following person or persons are authorized, except as provided in this paragraph, to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC; JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC, Manager of ADDVANTAGE TRITON LLC; and MICHAEL RUTLEDGE, CFO of ADDVANTAGE TECHNOLOGIES GROUP INC. along with Loan Officer's approval.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:
Conditions Precedent to Each Advance. Lender's obligation to make any Advance to or for the account of Borrower under this Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in full force and effect.
(4) All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender, and be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's Accounts, books, records, and operations, and Lender shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.
(7) There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled "Compliance Certificate."
Making Loan Advances. Advances under this credit facility, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day. Under no circumstances shall Lender be required to make any Advance in an amount less than $1,000.00.
Mandatory Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of Borrower's account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower's receipt of any such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender:
Perfection of Security Interests. Borrower agrees to execute all documents perfecting Lender's Security Interest and to take whatever actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any and all chattel paper and


instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and Lender will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender before any change in Borrower's name including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender before any change in Borrower's Social Security Number or Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which records shall be available to Lender or Lender's representative upon demand for inspection and copying at any reasonable time. With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables) are or will be located at . The above is an accurate and complete list of all locations at which Borrower keeps or maintains business records concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender schedules of Accounts and schedules of Eligible Accounts in form and substance satisfactory to the Lender. Thereafter supplemental schedules shall be delivered according to the following schedule:
Representations and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and warrants to Lender: (1) Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the definition of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower's expense to inspect, examine, and audit Borrower's records and to confirm with Account Debtors the accuracy of such Accounts.
MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who are referred to in this Agreement individually, collectively and interchangeably as "Borrower." Unless specifically stated to the contrary, the word "Borrower" as used in this Agreement, including without limitation all representations, warranties and covenants, shall include all Borrowers. Borrower understands and agrees that, with or without notice to any one Borrower, Lender may (A) make one or more additional secured or unsecured loans or otherwise extend additional credit with respect to any other Borrower; (B) with respect to any other Borrower alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (C) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (D) release, substitute, agree not to sue, or deal with any one or more of Borrower's or any other Borrower's sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; (E) determine how, when and what application of payments and credits shall be made on any indebtedness; (F) apply such security and direct the order or manner of sale of any Collateral, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine; (G) sell, transfer, assign or grant participations in all or any part of the Loan; (H) exercise or refrain from exercising any rights against Borrower or others, or otherwise act or refrain from acting; (I) settle or compromise any indebtedness; and (J) subordinate the payment of all or any part of any of Borrower's indebtedness to Lender to the payment of any liabilities which may be due Lender or others.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:
Organization. ADDVANTAGE TECHNOLOGIES GROUP INC is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Texas. ADDVANTAGE TECHNOLOGIES GROUP INC is duly authorized to transact business in all other states in which ADDVANTAGE TECHNOLOGIES GROUP INC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which ADDVANTAGE TECHNOLOGIES GROUP INC is doing business. Specifically, ADDVANTAGE TECHNOLOGIES GROUP INC is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. ADDVANTAGE TECHNOLOGIES GROUP INC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. ADDVANTAGE TECHNOLOGIES GROUP INC maintains an office at 1430 BRADLEY LANE SUITE 196, CARROLLTON, TX 75007. Unless ADDVANTAGE TECHNOLOGIES GROUP INC has designated otherwise in writing, the principal office is the office at which ADDVANTAGE TECHNOLOGIES GROUP INC keeps its books and records including its records concerning the Collateral. ADDVANTAGE TECHNOLOGIES GROUP INC will notify Lender prior to any change in the location of ADDVANTAGE TECHNOLOGIES GROUP INC's state of organization or any change in ADDVANTAGE TECHNOLOGIES GROUP INC's name. ADDVANTAGE TECHNOLOGIES GROUP INC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to ADDVANTAGE TECHNOLOGIES GROUP INC and ADDVANTAGE TECHNOLOGIES GROUP INC's business activities.
ADDVANTAGE TRITON LLC is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Oklahoma. ADDVANTAGE TRITON LLC is duly authorized to transact business in all other states in which ADDVANTAGE TRITON LLC is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which ADDVANTAGE TRITON LLC is doing business. Specifically, ADDVANTAGE TRITON LLC is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. ADDVANTAGE TRITON LLC has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. ADDVANTAGE TRITON LLC maintains an office at 1430 BRADLEY LANE SUITE 196, CARROLLTON, TX 75007. Unless ADDVANTAGE TRITON LLC has designated otherwise in writing, the principal office is the office at which ADDVANTAGE TRITON LLC keeps its books and records including its records concerning the Collateral. ADDVANTAGE TRITON LLC will notify Lender prior to any change in the location of ADDVANTAGE TRITON LLC's state of organization or any change in ADDVANTAGE TRITON LLC's name. ADDVANTAGE TRITON LLC shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to ADDVANTAGE TRITON LLC and ADDVANTAGE TRITON LLC's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.
Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) Borrower's articles of organization or membership agreements, or (c) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.


Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower's balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower's balance sheet and profit and loss statement for the period ended, prepared by Borrower.
All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for the following specific purposes: for business purpose only.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.


Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.
Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note or at the highest rate authorized by law, from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. If Lender is required by law to give Borrower notice before or after Lender makes an expenditure, Borrower agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the expenditure is made is reasonable.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts receivable, except to Lender.
Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge or restructure as a legal entity (whether by division or otherwise), consolidate with or acquire any other entity, change its name, convert to another type of entity or redomesticate, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.
Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.


DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.
FINANCIAL PROJECTIONS REQUIREMENT. Any recast of financial projections should be provided to the Bank. Additionally, if the borrower misses a quarterly projected Net Income by greater than 10%, the Bank will require revised projections.
RESERVE ACCOUNT CROSS UTILIZATION. The reserve accounts for all Business Manager facilities (Fulton Dish-only, Fulton non-Dish, Nave and Triton) may be cross-utilized to minimize reserve deficits.
REDUCTION OF BUSINESS MANAGER LINE. A stipulation will be added to the Business Manager Agreement stating that the Bank has the authority to reduce the face amount of the line(s) if being under utilized.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties. Except as may be specifically set forth in this Agreement, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Borrower's obligations under this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or


insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Oklahoma without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Oklahoma.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Tulsa County, State of Oklahoma.
Joint and Several Liability. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each Borrower signing below is responsible for all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entity's behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. To the extent permitted by applicable law, any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. To the extent permitted by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other person or circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:
Account. The word "Account" means a trade account, account receivable, other receivable, or other right to payment for goods sold or services rendered owing to Borrower (or to a third party grantor acceptable to Lender).
Account Debtor. The words "Account Debtor" mean the person or entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset Based) may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time.
Borrower. The word "Borrower" means ADDVANTAGE TECHNOLOGIES GROUP INC and ADDVANTAGE TRITON LLC and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Borrowing Base. The words "Borrowing Base" mean, as determined by Lender from time to time, the lesser of (1) $1,500,000.00 or (2) 90.000% of the aggregate amount of Eligible Accounts (not to exceed in corresponding Loan amount based on Eligible Accounts $1,500,000.00).
Business Day. The words "Business Day" mean a day on which commercial banks are open in the State of Oklahoma.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also includes without limitation all collateral described in the Collateral section of this Agreement.


Eligible Accounts. The words "Eligible Accounts" mean at any time, all of Borrower's Accounts which contain selling terms and conditions acceptable to Lender. The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts, credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:
(1) Accounts with respect to which the Account Debtor is member, employee or agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or directors.
(3) Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional.
(4) Accounts with respect to which Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower.
(5) Accounts which are subject to dispute, counterclaim, or setoff.
(6) Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor.
(7) Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be unsatisfactory.
(8) Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.
(9) Accounts which have not been paid in full within 120 from the invoice date.
(10) The initial reserve requirement for the line will be 10%. The reserve requirements increase from 10% to 25% if accounts receivable exceed 60 days, increase from 25% to 50% if accounts receivable exceed 90 days, and increase from 50% to 100% if accounts receivable exceed 120 days.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
Expiration Date. The words "Expiration Date" mean the date of termination of Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means Vast Bank, N.A., its successors and assigns.
Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note dated March 17, 2022 and executed by ADDVANTAGE TECHNOLOGIES GROUP INC and ADDVANTAGE TRITON LLC in the principal amount of $1,500,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.
Primary Credit Facility. The words "Primary Credit Facility" mean the credit facility described in the Line of Credit section of this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.



BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED MARCH 17, 2022.
BORROWER:
ADDVANTAGE TECHNOLOGIES GROUP INC

By: _____________________________________________
JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC
ADDVANTAGE TRITON LLC
ADDVANTAGE TECHNOLOGIES GROUP INC, Manager of ADDVANTAGE TRITON LLC

By: _____________________________________________
JOSEPH E HART, President of ADDVANTAGE TECHNOLOGIES GROUP INC
LENDER:
VAST BANK, N.A.

By: _____________________________________________
Lauren Smith, Vice President

LaserPro, Ver. 22.1.0.044 Copr. Finastra USA Corporation 1997, 2022. All Rights Reserved. - OK L:\CFI\LPL\C40.FC TR-12630 PR-62 (M)
DocuSign Envelope ID: B1AE6671-196D-4E70-9F46-1D4D31AA20FB

BUSINESSMANAGER AGREEMENT
WITH BUSINESSES AND PROFESSIONALS (Fixed Service Charge)

TO:    _Vast Bank N.A.        FROM: Triton Datacom

_110 N Elgin Ste 500        1430 Bradley Lane Ste 196    

_Tulsa, Ok 74120        Carrollton, Tx 75007    
(the “Financial Institution”)    (the “Business”)

This BusinessManager® Agreement with Businesses and Professionals (“Agreement”) is between Financial Institution and Business and is intended to govern Business’ sale of Accounts, as defined below, to Financial Institution which Accounts arise from the sale of goods or provision of services to Business’ Customers and which Accounts Financial Institution may purchase pursuant to the terms of the Agreement. The accepted terms are as follows:

SECTION 1: DEFINITIONS

1.1“Accounts” means a right to payment of a monetary Obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, or (ii) for services rendered or to be rendered. The term Account shall include all obligations owing for what is commonly referred to as a receivable.

1.2“Additional Security Documents” means as that term is described in section 4.3.

1.3“Business Judgment” means, in connection with decisions made by Financial Institution, the exercise of such decisions in Financial Institution’s sole and exclusive business judgment and discretion.

1.4“Collateral” means all of Business’s now owned and hereafter acquired Accounts, Chattel Paper, Deposit Accounts, Inventory, Instruments, Documents, Letter of Credit Rights, Commercial Tort Claims, General Intangibles, Supporting Obligations and the Reserve and Reserve Account.

1.5“Complete Termination” occurs upon satisfaction of the following conditions:

1.5.1Payment in full of all Obligations of Business to Financial Institution and Financial Institution’s issuance of a UCC termination statement;

1.5.2If Financial Institution has issued or caused to be issued guarantees, promises, or letters of credit on behalf of Business, acknowledgement from any beneficiaries thereof that Financial Institution or any other issuer has no outstanding direct or contingent liability therein; and

1.5.3Business has executed and delivered to Financial Institution a general release in Section 14 of this document.

1.6“Credit Application” means any Credit Application executed by a Business’ Customer.

1.7“Credit Memo” means a credit memo or similar evidence (whether in written or electronic form) reflecting a deduction to the Face Amount of a Customer’s account with Business, other than a credit arising from a payment.

1.8“Customer” means a person obligated to pay one or more Accounts arising from goods sold or services Business rendered to the Customer, otherwise known as an Account Debtor under the Uniform Commercial Code.

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1.9“Customer Agreement” means any agreement, whether written or verbal, between Business and its Customer evidencing the terms of a sale of goods or rendition of services giving use to an Account.

1.10“Dispute” means any form of Customer Agreement dispute, including, but not limited to, a charge back, act to reject or return goods, alleged deduction, defense, offset, counterclaim or any other act or event in respect to an Account Debtor which may in any way diminish Financial Institution’s ability to fully or timely collect a Purchased Account, whether or not provable or bona fide.

1.11“Exposed Payment(s)” means payments received by Financial Institution from or for the account of a Payor that has become subject to a bankruptcy proceeding, to the extent such payments cleared the Payor’s deposit account within ninety (90) days of the commencement of said bankruptcy case.

1.12“Face Amount” means the outstanding balance of each Account for the price of the sale of goods or provision of services as reflected on an Invoice evidencing an Account offered for sale to Financial Institution.

1.13“Invoice” means each invoice or similar evidence (whether in written or electronic form) of the terms of a non-cash sale of goods or provision of services previously made by Business to a Customer in connection with each Account.

1.14“Net Amount” of an Account means the Face Amount of an Account less the Service Charge.

1.15“Obligations” means all of Business’ monetary and non-monetary Obligations to Financial Institution, whether pursuant to this Agreement, under any note, contract, guaranty, accommodation or otherwise, however and whenever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or later existing or due.
1.16“Purchased Accounts” means all Accounts purchased by Financial Institution under this Agreement.

1.17“Purchase Price” means as that term is described in section 2.2.

1.18“Repurchase Obligations” means the liability of Business to Financial Institution under this Agreement to repurchase any Purchased Account for an amount, on any date, equal to the unpaid Face Amount, plus (if incurred) attorneys’ fees and accrued and unpaid finance charges related to such Purchased Accounts. For the purpose of this Section, any Exposed Payments shall be included as a Repurchase Obligation.

1.19“Reserve” means whatever amount is maintained by Financial Institution in the Reserve Account that may serve to secure Business’ Repurchase Obligations or any other monetary obligations under this Agreement.

1.20“Reserve Account” means an interest bearing Deposit Account maintained by Financial Institution in connection with all Accounts sold to Financial Institution by Business under this Agreement reflecting an amount that is expected to equal the Reserve as established pursuant to Section 2.5 of this Agreement.

1.21“Service Charge” means a discount to the Face Amount of a Purchased Account equal to one and 3/10 percent (1.30%). Business acknowledges that the Service Charge in no event constitutes interest or a similar charge and that the transactions described in this Agreement are not transactions for the use, forbearance or detention of money. The Service Charge has been agreed upon by the parties and represents a reasonable and customary fair market value discount.

Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Uniform Commercial Code (“UCC”).


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SECTION 2: SALE; PURCHASE PRICE; BILLING; RESERVE

2.1Assignment and Sale.

2.1.1Financial Institution hereby agrees to evaluate for purchase from Business and Business hereby irrevocably agrees to offer to assign and sell to Financial Institution, as absolute owner, Business’ entire interest in that portion of its currently outstanding Accounts as are detailed in the attached Exhibit A to this Agreement. In addition, Business will offer for sale all of its hereafter created future Accounts, evidenced by Invoices that Business will simultaneously deliver to Financial Institution in support of such future Accounts.

2.1.2Business acknowledges that its currently outstanding Accounts listed on Exhibit A are not now, nor have they ever been declared to be, in default.

2.1.3Business and Financial Institution each acknowledge and agree that in connection with each Account offered to Financial Institution for sale that: (a) Business will submit to Financial Institution for Financial Institution’s determination as to the eligibility of the Accounts, all Invoices evidencing the terms underlying each Account; (b) the transactions contemplated by this Agreement are account purchase transactions; (c) the Accounts shall at all times be purchased by Financial Institution from Business at a discount in accordance with the Service Charge; (d) the purchase and sale of the Accounts shall vest absolute right, title and ownership of such Purchased Accounts together with all benefits of ownership, including to the right to verify any desired information in connection with Purchased Accounts with Customers; and (e) Business has no right and may not seek to require Financial Institution to authorize Business to reacquire, redeem, or otherwise re-vest title to any Purchased Accounts or any proceeds thereof. In connection with the sale and assignment of Purchased Accounts, Financial Institution shall become subrogated to all of Business’ rights as an unpaid vendor, lienholder, all of its related rights of stoppage in transit, replevin and reclamation, and rights against third parties (all of which will constitute part of the Purchased Accounts) and Business agrees to cooperate with Financial Institution in its exercise of these rights.

2.1.4The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $1,500,000.00, unless agreed to by Financial Institution which decision will be in Financial Institution’s Business Judgment.

2.1.5Business agrees to execute and deliver such further instruments, documents and endorsements to or for the benefit of Financial Institution as may be necessary to accomplish the sale and purchase described herein and to carry out the purposes of this Agreement.

2.2Purchase Price. The Purchase Price payable for Purchased Accounts will be equal to the Net Amount and payment of the Purchase Price, less the Reserve, shall be paid to Business on or before the next banking day after delivery of the Invoices evidencing the Accounts offered to Financial Institution, unless in Financial Institution’s Business Judgment it requires additional time for evaluation.

2.3Documentation.

2.3.1In respect to all Accounts offered for sale, Business will provide Financial Institution with Credit Applications, Customer Agreements, Invoices, payment information and, if applicable, Credit Memos related to all sales of goods and rendition of services, and such other documents and proof of delivery of goods or rendering of services as Financial Institution may reasonably require. As to the currently outstanding Accounts described on Exhibit A that become Purchased Accounts, payment of the Purchase Price by Financial Institution will be conclusive evidence of their assignment and sale to Financial Institution.

2.4Billing.

2.4.1Financial Institution will have authority, unless otherwise agreed to in writing by the parties, to send periodic statements (e.g. monthly) to all Customers itemizing their activity regarding all Accounts during the preceding billing period. All Customers will be instructed by Business (or Financial Institution on behalf of Business) to make payments to, at the sole discretion of Financial Institution, a post office box or electronic lockbox


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controlled exclusively by Financial Institution or through Automatic Clearing House (“ACH”) credit entries. If Financial Institution so requires, any Invoices that Business may later create and issue in connection with a Purchased Account shall clearly indicate that each Purchased Account has been assigned, sold, and is payable exclusively to Financial Institution.

2.4.2All payments received from or for the account of a Customer will be applied to the Obligations of that Customer and payment will be deemed made upon receipt by Financial Institution.

2.4.3All variations, modifications or extensions of indebtedness on Purchased Accounts under this Agreement may only be negotiated and/or authorized by Financial Institution.

2.4.4Nothing in this Agreement authorizes Business nor may Business seek to collect Purchased Accounts sold to Financial Institution. If Business receives payment on any Purchased Account (or any Accounts upon an Event of Default), it will receive those payments in trust for Financial Institution and will remit such payments, if made by Negotiable Instrument, in kind, to Financial Institution; or, if made electronically, will remit an amount equal to the amount of all funds received, both of which shall be completed by no later than the next business day.

2.5Reserve. Financial Institution will be entitled to create and maintain from the Purchase Price payments payable to Business, a Reserve in an amount which Financial Institution may adjust from time to time in its Business Judgment, to provide security for Business’ Repurchase Obligations as described in section 3 below. The Reserve will be held in a separate interest-bearing account for the benefit of the Financial Institution. The Reserve will be maintained in this account which, if not necessary for use by Financial Institution, will be available to Business upon a Complete Termination of this Agreement.

2.5.1The amount of the Reserve in connection with the currently outstanding Accounts will be calculated to equal the sum of a., b., c., and d. below:

a.10% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are less than 60 days from invoice date or less than 30 days past due;
b.25% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 61 and 90 days from invoice date or between 31 and 60 days past due;
c.50% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 91 and 120 days from invoice date or between 61 and 90 days past due;
d.if Financial Institution elects to purchase such Accounts, 100% of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are greater than 120 days from invoice date or greater than 90 days past due.

2.5.2Thereafter, and subject to Financial Institution’s right to adjust the Reserve in its Business Judgment, Financial Institution will establish as a Reserve in the Reserve Account 10% of the Face Amount of all new Purchased Accounts subsequent to its initial purchase of the Purchased Accounts. Financial Institution may require the minimum amount of Reserve, after deduction for required repurchases, to be equal to the sum of e., f., and g. below:

e.10% of the Face Amount of all outstanding Purchased Accounts that are less than 60 days from invoice date or less than 30 days past due;
f.25% of the Face Amount of all outstanding Purchased Accounts that are between 61 and 90 days from invoice date or between 31 and 60 days past due;
g.50% of the Face Amount of all outstanding Purchased Accounts that are between 91 and 120 days from invoice date or between 61 and 90 days past due.

2.6Exposed Payments. Upon termination of this Agreement, Business shall pay to Financial Institution (or Financial Institution may retain or hold in the Reserve Account) the amount of all Exposed Payments. Financial Institution may charge the Reserve Account with the amount of any Exposed Payments that Financial Institution may become obligated to pay to a bankruptcy estate of a Customer that made the Exposed Payment to Financial Institution, on account of a claim asserted under Section 547 of Bankruptcy Code. Financial Institution shall


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pay to Business from time to time that balance of the Reserve Account for which a claim under Section 547 of Bankruptcy Code can no longer be asserted due to the passage of the statute of limitations, settlement with bankruptcy estate of the Customer or otherwise. Business shall indemnify Financial Institution from any loss arising out of the assertion of any Avoidance Claim and shall pay to Financial Institution on demand the amount thereof. Business shall notify Financial Institution within two business days of it becoming aware of the assertion of an Exposed Payment. This provision shall survive termination of this Agreement.



2.7Account Stated.

2.7.1Financial Institution, in its Business Judgment, may either provide Business with information on the Purchased Accounts and a monthly reconciliation of the relationship relating to billing, collection and account maintenance such as aging, posting, error resolution and mailing of statements or may instead make such information available electronically through an internet website. Either of the foregoing shall be in a format and in such detail as Financial Institution deems appropriate.

2.7.2Financial Institution’s books and records or all electronically stored information shall be admissible in evidence without objection as prima facie evidence of the status of the Purchased Accounts, non- purchased Accounts and Reserve Account between Financial Institution and Business. Each statement, report, or accounting rendered or issued by Financial Institution to Business and all electronically stored information shall be deemed conclusively accurate and binding on Business unless within fifteen (15) days after the date of issuance or, in the case of electronically stored information, the first of each month, Business notifies Financial Institution to the contrary by registered or certified mail, setting forth with specificity the reasons why Business believes such statement, report, or accounting or electronically stored information is inaccurate, as well as what Business believes to be correct. Business’ failure to receive any monthly statement or access the electronically stored information shall not relieve it of the responsibility to request such information and Business’ failure to do so shall nonetheless bind Business to whatever Financial Institution’s records or electronically stored information report.

SECTION 3: REPURCHASE OF PURCHASED ACCOUNTS

3.1image_03.jpgimage_13.jpgRequired Repurchase. With respect to any Purchased Accounts initially purchased by Financial Institution, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased Accounts remains unpaid following 120 days after its (circle one) invoice date / due date. With respect to any Purchased Accounts purchased after Financial Institution’s initial purchase, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased Accounts remains unpaid following 120 days after its (circle one) invoice date / due date. For purposes of this Agreement, the aging status of Purchased Accounts purchased from Business, as shown on the aging report of Purchased Accounts produced or generated by Financial Institution, will be deemed conclusive (absent manifest error) in determining which Purchased Accounts Financial Institution may require Business to repurchase. Regardless of when purchased, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts from any particular Customer if such Customer is bankrupt or insolvent, or if any Dispute arises with a Customer regarding such Purchased Accounts. Financial Institution may require Business to repurchase any or all outstanding Purchased Accounts (a) upon a Default, as defined in Section 9, or (b) upon the termination of this Agreement. Any decision by Financial Institution to require repurchase of less than the maximum amount permitted by this Agreement will not be deemed a waiver of Financial Institution’s rights to require such repurchase to the maximum extent permitted in this Agreement.

3.2Effecting Repurchase. Should Financial Institution require repurchase of one or more Purchased Accounts, Business will be liable to Financial Institution for payment of the Repurchase Obligation with respect to such Purchased Accounts. Upon an event of Default or termination under this Agreement, the Repurchase Obligation will also include the amount of all indemnities and other Obligations of Business arising under this Agreement. Without notice to or demand on Business, Financial Institution may debit the amount of such Repurchase Obligation (and any amount necessary to bring the Reserve to a level as may be required by Financial Institution in its Business Judgment) against Business’ Reserve Account, or any deposit account of Business maintained with Financial


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Institution. Business agrees to and irrevocably waives any right to withdraw Financial Institution’s authority, block or otherwise seek to preclude or interfere with the debit authority provided herein until section 11.3 is fully satisfied. In the event any deposit account contains insufficient funds for Financial Institution’s debit, or Financial Institution elects not to make such debit, Business agrees to pay any such deficiency or shortfalls on demand. Financial Institution will have no duty to bill or collect any Repurchased Accounts although such accounts shall continue to serve as Financial Institution’s Collateral.



SECTION 4: SECURITY INTEREST.

4.1In order to secure Business’ performance of all Obligations under this Agreement and any other agreement that may now or hereafter be entered into between Business and Financial Institution, Business grants to Financial Institution a continuing first priority ownership interest in the Purchased Accounts and first priority security interest in the Collateral. The priority rights granted by this section are designed to provide Financial Institution with sole rights of enforcement insofar as the collection of all Accounts.

4.2Notwithstanding the creation of this security interest, it is the express intention of the parties that their relationship shall be that of seller and purchaser of Purchased Accounts and once acquired by Financial Institution, Business shall no longer have any rights or title to any Purchased Account pursuant to § 9-318(a) of the UCC.

4.3Business agrees to execute such additional documents and take such further action as Financial Institution may deem necessary or desirable in order to perfect the security interest granted herein and otherwise to effectuate the purposes of the Agreement. In the event that Financial Institution requires additional security for Business’ Obligations under this Agreement, and Business or other party executes additional security agreements, pledge agreements, guaranties and documents of similar significance (collectively, the “Additional Security Documents”), terms used therein such as, but not limited to, “loans,” “indebtedness,” and “obligations,” will be deemed to include the Repurchase Obligations. Despite the provisions of the Additional Security Documents, the Repurchase Obligations secured by those documents will not constitute a loan.

4.4Financial Institution is authorized to have filed any initial financing statements and amendments thereto that: indicate the Collateral as “all assets” of Business or words of similar effect, regardless of whether any particular asset comprising the Collateral falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail; contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including: (i) whether Business is an organization, the type of organization, and any organization identification number issued to Financial Institution and,
(ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted Collateral or timber to be cut, a sufficient description of real property to which the Collateral relates; and (iii) containing a notification that Business has granted a negative pledge to Financial Institution and that any subsequent lienor may be tortiously interfering with Financial Institution’s right and advise third parties that any notification to any of Business’ Account Debtors will interfere with Financial Institution’s collection rights.

SECTION 5: REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1Representations and Warranties. Business represents and warrants to Financial Institution that:
(a) it is fully authorized to enter into and perform under this Agreement, and that this Agreement constitutes its legal, valid and binding obligation; (b) Business is solvent and in good standing in the State of its organization; (c) it is not the present intent of Business to seek protection under any chapter of Title 11 of the United States Financial Bankruptcy Code or under any state insolvency laws or any statutory Assignment for the Benefit of Creditor laws;
(d) its Accounts are currently and were at the time of their creation, bona fide and existing Obligations of Customers of Business arising out of its sales of goods or performance of services to independent and not affiliated Customers, free and clear of all security interests, liens, and claims whatsoever of third parties; (e) the documentation under which the Accounts are payable authorize the charge and collection of interest at the rate provided in such documentation;
(f) all Accounts and all documents and practices related to them comply with all applicable federal and state laws; (g) the Accounts will be paid by Customers prior to the date of required repurchase or will be repurchased by Business


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pursuant to Sections 3.1 and 3.2; (h) the Collateral in which a security interest is granted in Section 4.1 or in any Additional Security Documents is not subject to any other security interest, lien or encumbrance whatsoever (except in favor of Financial Institution), and Business will not permit such Collateral to become so encumbered without Financial Institution’s prior written consent, which consent may be withheld in its Business Judgment; (i) Business’ inventory is not subject to any security interest, lien or encumbrance whatsoever and Business will not permit its inventory to become so encumbered without Financial Institution’s prior written consent.



5.2Covenants.

5.2.1Business covenants that: (i) it will allow Financial Institution to review and inspect during reasonable business hours, and Business will supply all financial information, financial records, and documentation on Business, any guarantors, or any Customer, that Financial Institution may request; (ii) with respect to each Purchased Account as it arises: (a) Business will have made delivery of the goods and/or will have rendered the services represented by the Invoice, and the goods and/or services will have been accepted; (b) Business will have preserved and will continue to preserve any liens and any rights to liens available by virtue of the sales and/or services;
(c) the Customer will not be an affiliate of Business (e.g., parent, subsidiary, etc.); (d) Financial Institution’s copy of the Invoice will be genuine and will comply with this Agreement; (e) Business will have no knowledge of any Dispute that may impair the validity of the transaction or the Customer’s Obligation to pay Purchased Accounts in accordance with the terms; (f) Business will have the right to render the services and/or to sell the goods creating the Purchased Accounts, and will do so in compliance with all applicable laws; (g) Business will have paid or provided for the payment of all taxes arising from the transaction in respect to all Purchased Accounts; (h) the Purchased Accounts will not be subject to any deduction, offset, defense, or counterclaim; and (i) Business will notify Financial Institution immediately of any upgrades and/or changes to its accounting software; (iii) the transactions described in Section 2.1 are account purchase transactions, and Business will reflect such transactions in its accounting books and records as absolute sales of Purchased Accounts to Financial Institution; Business will reimburse and indemnify Financial Institution for all loss, damage and expenses, including reasonable attorneys’ fees, incurred in defending such transactions as absolute sales of Purchased Accounts, or as a result of the recharacterization of such transactions; and
(iv) in the event of the commencement of any case under any bankruptcy or insolvency laws by or against Business, Business will not oppose or object and will consent to any motion by Financial Institution seeking relief from the automatic stay provisions of such laws with respect to the Reserve or the Reserve Account, or to any motion by Financial Institution with respect to any Purchased Account or the Collateral.

5.2.2Business shall not, without the prior written consent of Financial Institution in each instance: (a) grant any extension of time for payment of any Purchased Accounts, (b) compromise or settle any Purchased Accounts for less than the full amount thereof, (c) release in whole or in part any Customer, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any Purchased Account.

5.2.3From time to time as requested by Financial Institution, at the sole expense of Business, Financial Institution or any designees shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default, to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default) any of the Collateral, including Business’ books and records, and Business shall permit Financial Institution to make copies of such books and records or extracts therefrom as Financial Institution may request. Without expense to Financial Institution, Financial Institution may use any of Business’ business premises, personnel and equipment, including computer equipment, programs, printed output and computer readable media, supplies for the collection of Accounts and realization on other Collateral as Financial Institution deems appropriate in its Business Judgment. Business hereby irrevocably authorizes all accountants and third parties, upon written or verbal request, to promptly disclose and deliver to Financial Institution at Business’ expense all financial information, books and records, work papers, management reports and other information in their possession relating to Business.

5.2.4Before sending any Invoice to a Customer, Business shall mark same with a notice of assignment in compliance with 9-406 of the UCC in the form and manner as may be required by Financial Institution in the event Financial Institution deems it advisable for Business to do so, Financial Institution deems itself insecure or Business commits any Event of Default.


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5.2.5Business shall cause to be paid when due all payroll and other taxes, and shall provide proof thereof to Financial Institution in such form as Financial Institution shall reasonably require. Business hereby irrevocably authorizes and will direct each of its bookkeeping staff as well as any outside accounting firm, in whatever form is requested by Financial Institution, to openly communicate with Financial Institution with regard to all bookkeeping functions and accounting aspects of Business’ business and each shall have a continuing duty to fully and accurately report to Financial Institution information pertaining to any and all bookkeeping, accounting and payroll functions and reporting.

SECTION 6: FORMS AND PROCEDURES; RESPONSIBILITY FOR USE

6.1Forms and Procedures. Business will use only forms, agreements, and advertising materials supplied to or approved by Financial Institution in connection with the Purchased Accounts, and will follow all procedures that are satisfactory to Financial Institution in connection with the use of such forms, agreements, and advertising materials. Financial Institution does not desire to manage or operate Business but to insure that Business is properly representing the billing terms to its Customers.

6.2Responsibility for Use. Business shall provide to Financial Institution all information used to create the form of Credit Application and Customer Agreement and other documentation. Business is solely responsible for the adequacy, completeness, delivery and accuracy of the raw data relating to the Purchased Accounts, its preparation in the form required by Financial Institution, and its transmission to Financial Institution. Business understands that these documents should be reviewed by Business’ counsel, as Financial Institution makes no representation or warranty as to their enforceability in Business’ state or their compliance with applicable federal and state laws. Financial Institution and Business agree that Financial Institution is the owner of all Accounts purchased by Financial Institution, and that all activities of Financial Institution in connection with the purchase of Accounts, receipt of payments for the Purchased Accounts, generation of information, and processing of data, is for the account of Financial Institution’s own affairs, and that the information generated in connection with those activities is the property of Financial Institution. Financial Institution shall at no time perform as a collection agency under this Agreement.

SECTION 7: POWER OF ATTORNEY

7.1Business appoints Financial Institution as its attorney-in-fact for all appropriate purposes under this Agreement including: to receive, open, and dispose of all mail addressed to Business relating to Accounts; to endorse Business’ name upon any notes, acceptances, checks, drafts, money orders, and other evidences of payment of Accounts that may come into Financial Institution’s possession, and to deposit or otherwise handle the same; and to do all other acts and things necessary to carry out the terms of this Agreement. This power, being coupled with an interest, is irrevocable while any Purchased Account owned by Financial Institution remains unpaid or any Obligation remains outstanding.

7.2As permitted by applicable state law, if the Repurchase Obligation is not paid in full after demand, Business authorizes any attorney to appear for Business in any court of record in the United States, and to confess judgment for such amount as may appear to be unpaid, together with any allowable fees for collection of the judgment.

SECTION 8: APPLICABLE LAW

This Agreement will be governed by, construed and enforced according to the laws of the State of Oklahoma.

SECTION 9: DEFAULT

9.1Events of Default. The following events will constitute a default (an “Event of Default”) under the terms of this Agreement: (a) Business fails, on demand, to pay any Repurchase Obligations or any other monetary Obligation under this Agreement, or Business fails to perform any non-monetary duty Business owes to Financial Institution under this Agreement, or the Business fails to pay any indebtedness of the Business owed to the Financial Institution according to its terms; (b) Business breaches the representations set forth in Section 5.1(d) or fails to turn over payments on Purchased Accounts to Financial Institution, as set out in Section 2.4.4; (c) except for the Obligations described in Sections 9.1(a), and 9.1(b) hereof, Business fails to perform any Obligation, covenant or liability in


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connection with this Agreement within ten (10) days after the date that written notice is given to Business; (d) any warranty, representation or statement whenever made by Business in connection with this Agreement proves to be false in any material respect when made, or Business fails to disclose to Financial Institution that any such warranty, representation or statement has become false in any material respect; (e) dissolution or termination of Business if Business is a corporation, partnership, or other entity, or if Business is an individual, the death or incompetency of such individual; (f) without prior written consent by Financial Institution, a transfer occurs of more than 25% of the equity ownership or assets of Business, whether Business is a corporation, partnership or other entity; (g) Business’ insolvency; (h) the institution of any Assignment for the Benefit Creditors, the appointment of a receiver or trustee for its assets, the commencement of any proceeding under any bankruptcy or insolvency laws by or against Business, or any proceeding for the dissolution or liquidation, settlement of claims against or winding up of its affairs; (i) the attempted termination or withdrawal of any guaranty executed by any person in respect to Business’ Obligations; (j) Business fails to pay when due any tax imposed on it, or any tax lien is filed against Business or any of its assets; (k) any judgment against Business remains unpaid, or has not been stayed on appeal, discharged, bonded or dismissed, for a period of 30 days; (l) Business discontinues its business as a going concern; or (m) Financial Institution, in good faith, believes the prospect of Business’ payment or performance of its Obligations have been impaired.

9.2Effect of Default. Upon the occurrence of any Event of Default, Business irrevocably authorizes Financial Institution at Business’ expense, to exercise at any time any one or more of the following powers until all of the Obligations have been paid in full:

9.2.1Receive, take, endorse, assign, deliver, accept and deposit, in the name of Financial Institution or Business, any and all proceeds of any Collateral securing the Obligations or the proceeds thereof;

9.2.2Take or bring, in the name of Financial Institution or Business, all steps, actions, suits or proceedings deemed by Financial Institution necessary or desirable to effect collection of or other realization upon Financial Institution’s Accounts;

9.2.3Pay any sums necessary to discharge any lien or encumbrance which may become senior to Financial Institution’s security interest in any Collateral, which sums shall be included as Obligations hereunder, and in connection with which sums a late charge shall accrue and shall be due and payable;

9.2.4Communicate directly with Business’ Customers to, among other things, verify the amount and validity of any Account created by Business;

9.2.5In order to satisfy any of the Obligations, Business authorizes Financial Institution to initiate electronic debit or credit entries through the ACH system to any deposit account maintained by Business.
9.2.6Change the address for delivery of mail to Business and to receive and open mail addressed
to Business;
9.2.7Notify any Customer obligated with respect to any Account, that the underlying Account
has been assigned to Financial Institution by Business and that payment thereof is to be made to the order of and directly and solely to Financial Institution;
9.2.8Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts and discharge or release any Customer (including filing of any public record releasing any lien granted to Business by such account debtor), without affecting any of the Obligations.
9.2.9Financial Institution shall be entitled to any form of equitable relief that may be appropriate without having to establish any inadequate remedy at law or other grounds other than to establish that its Collateral is subject to being improperly used, moved, dissipated or withheld from Financial Institution. Financial Institution shall be entitled to freeze, debit and/or effect a set-off against any fund or account Business may maintain with any Financial Institution and so notify such financial institution without regard to any draft that may have been issued and have not cleared. In the event as a result of an Event of Default, Financial Institution deems it necessary to seek equitable relief, including, but not limited to, injunctive or receivership remedies, Business waives any requirement that Financial Institution post or otherwise obtain or procure any bond. Alternatively, in the event Financial Institution, in its sole and exclusive discretion, desires to procure and post a bond, Financial Institution may procure and file with


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the court a bond in an amount up to and not greater than $10,000.00 notwithstanding any common or statutory law requirement to the contrary. Upon Financial Institution’s posting of such bond it shall be entitled to all benefits as if such bond was posted in compliance with state law. Business also waives any right it may be entitled to, including an award of attorney’s fees or costs, in the event any equitable relief sought by and awarded to Financial Institution is thereafter, for whatever reason(s), vacated, dissolved or reversed. All post-judgment interest shall bear interest at either the contract rate or such higher rate as may be allowed by law.
9.2.10All of Business’ rights of access to any online, internet services that Financial Institution makes available to Business, shall be provisional pending Business’ curing of all such Events of Default. During such period of time, Financial Institution may limit or terminate Business’ access to Financial Institution’s online services. Business acknowledges that the information Financial Institution makes available to Business constitutes and satisfies any duty to respond to a Request for an Accounting or Request regarding a Statement of Account that is referenced in
§ 9-210 of the UCC.

9.2.11The Parties acknowledge that it shall be presumed commercially reasonable and Financial Institution shall have no duty to undertake to collect any Account or Purchased Account including those in which Financial Institution receives information from an Account Debtor that a Dispute exists. Furthermore, in the event Financial Institution undertakes to collect from or enforce an Obligation of an Account Debtor or other person obligated on Collateral and ascertains that the possibility of collection is outweighed by the likely costs and expenses that will be incurred, Financial Institution may at any such time cease any further collection efforts and such action shall be considered commercially reasonable. Before Business may, under any circumstances, seek to hold Financial Institution responsible for taking any uncommercially reasonable action, Business shall be required to first notify Financial Institution, in writing, of all reasons why Business believes Financial Institution has acted in any uncommercially reasonable manner and advise Financial Institution of the action that Business believes Financial Institution should take.

SECTION 10: NON-LIABILITY OF FINANCIAL INSTITUTION; RELEASE; INDEMNITY; WAIVER

10.1 Except for a breach by Financial Institution of this Agreement, Business releases, discharges, and acquits Financial Institution, its officers, directors, employees, participants, agents, successors and assigns from any and all claims, demands, losses, and liability of any nature which Business ever had, now or later can, will or may have in connection with, or arising out of, the transactions described in this Agreement and the documentation thereof. Financial Institution will not be liable for any indirect, special or consequential damages, such as loss of anticipated revenues or other economic loss in connection with, or arising out of, any default in performance or other matter arising under this Agreement. Nor will Financial Institution be liable for any errors of judgment or mistake of fact when acting as Business’ attorney-in-fact, pursuant to Section 6, or liable for delay in the performance of Financial Institution’s duties caused by strike, lawsuit, riot, civil disturbance, fire, shortage of supplies or materials, or any other cause reasonably beyond Financial Institution’s control. Business indemnifies and holds Financial Institution, its officers, directors, employees, participants, agents, successors and assigns harmless from (and will pay all reasonable attorneys’ fees with respect to) any loss or claim involving breach of warranty or representation by Business, any claim or liability sustained by virtue of acting in reliance upon data or information furnished by Business to Financial Institution, and any loss or claim by any Customer relating to goods and/or services (or the manner or type of their sale or provision) giving rise to Accounts purchased by Financial Institution hereunder. IF ANY FORM OF LITIGATION IS INSTITUTED BY BUSINESS AGAINST FINANCIAL INSTITUTION FOR VIOLATION OF THIS AGREEMENT, OR ANY WRONGFUL CONDUCT ASSOCIATED WITH THIS AGREEMENT, BUSINESS HEREBY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL. BUSINESS FURTHER AGREES THAT ITS DAMAGES WILL BE LIMITED, IN ANY CASE, TO THE AMOUNT OF THE SERVICE CHARGE PAID BY BUSINESS TO FINANCIAL INSTITUTION DURING THE PRECEDING TWELVE (12) MONTH PERIOD.

SECTION 11: EFFECTIVE DATE; TERMINATION; BINDING EFFECT

11.1This Agreement will be effective when accepted by Financial Institution, and will continue in full force and effect until the earlier of: (a) one year after the effective date of this Agreement, or (b) sixty (60) days after written notice of termination has been given by one party to the other (in each case subject to immediate termination upon a Default); and the term of this Agreement will automatically be extended for periods of one year each following


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its otherwise scheduled termination, subject to Section 9.2 above, and to the parties’ rights to terminate this Agreement under clause (b) of this Section 11.1.

11.2Upon termination of this Agreement, Business will pay all of its Obligations to Financial Institution, and in any event, Business will remain liable to Financial Institution for any deficiency remaining after liquidation of any Collateral. Financial Institution may withhold any payment to Business unless supplied with an indemnity satisfactory to Financial Institution. This Agreement will bind Business and Business’ heirs, executors, successors and assigns and will inure to the benefit of Financial Institution and Financial Institution’s successors and assigns. Business agrees that Financial Institution may assign this Agreement or delegate its duties under this Agreement, but that Business may not do so without Financial Institution’s prior written approval.

11.3In recognition of Financial Institution’s right to have its attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Business, Financial Institution shall not be required to record any terminations or satisfaction of Financial Institution’s security interest in the Collateral or its ownership interest in the Purchased Accounts unless and until Complete Termination has occurred. Business understands that this provision constitutes a waiver of its rights under § 9-513 of the UCC.

SECTION 12: ATTORNEY’S FEES; PAST-DUE OBLIGATIONS; WAIVER; SEVERABILITY; HEADINGS; ENTIRE AND CONTROLLING AGREEMENT; NOTICES; COUNTERPARTS; SAVINGS AND MISCELLANEOUS PROVISIONS

12.1Business will pay all reasonable expenses incurred by Financial Institution in connection with the execution of this Agreement, including expenses incurred in connection with the filing of financing statements, continuation statements and record searches. All past-due Obligations of Business arising under this Agreement will bear interest at the maximum nonusurious rate permitted under applicable state or federal law. Business hereby waives grace, demand (other than demand pursuant to Section 3.2 hereof), presentment for payment, notice of dishonor or default, notice of intent to accelerate, notice of acceleration, protest and notice of protest, and bringing of suit against Business. Upon liquidation of any Collateral, settlement or prosecution of a dispute with any Customer, or enforcement of any Obligations of Business under this Agreement, Business will pay to Financial Institution, and Financial Institution may charge to Business’ account, all costs and expenses incurred, including reasonable attorneys’ fees, and such costs, expenses and fees will constitute part of Business’ Obligations. No delay or failure on Financial Institution’s part in exercising any right, privilege, or option will operate as a waiver of such, or of any other right, privilege, or option, and no waiver, amendment or modification of any provision of this Agreement will be valid unless in writing signed by Financial Institution, and then only to the extent stated. Should any provision of this Agreement be prohibited by or invalid under applicable law, the validity of the remaining provisions will not be affected. The section headings are for convenience only, and will not define or limit the scope, extent, meaning or intent of this Agreement. This Agreement embodies Business’ entire agreement as to its affiliation with Financial Institution’s BusinessManager program, although Business anticipates that Financial Institution will subsequently outline certain depository and other Financial Institution procedures. In the event of any inconsistency between this Agreement and any other agreement signed by Business and Financial Institution in connection with this Agreement, including but not limited to, any Additional Security Documents, the terms and provisions of this Agreement will control, and the terms and provisions of any such other document will be ineffective to the extent of any such inconsistency. Any notice, request or demand to be given will be deemed given when deposited with a delivery service addressed to, or sent by registered or certified mail to, the address of the recipient listed at the beginning of this Agreement or to subsequent addresses which have been properly noticed to the other party. This Agreement may be executed in multiple counterparts, which when taken together, will constitute one and the same Agreement.

12.2The parties acknowledge that the transactions contemplated by this Agreement are account purchase transactions; however, if they should ever be recharacterized by any court, nothing contained in this Agreement or in any Additional Security Documents will be construed, or will operate in any event, so as to require Business to pay interest at a rate greater than the highest lawful rate of interest permitted by the laws then in force and governing this Agreement. In no event, whether by reason of acceleration of the maturity of the Obligations due or otherwise, will Service Charges contracted for, charged, received, paid or agreed to be paid to Financial Institution, exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, Service Charges would otherwise be payable to Financial Institution in excess of the maximum lawful amount, the Service Charges will be


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reduced to the maximum amount permitted under applicable law, and if from any circumstance Financial Institution will have received anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excess will be applied to the reduction of the principal amount of Obligations and not to the payment of Service Charges. If such excess interest exceeds the unpaid balance of the principal amount of Obligations, such excess will be refunded to Business. All Service Charges paid or agreed to be paid to Financial Institution, to the extent permitted by applicable law, will be amortized, prorated, allocated and spread throughout the full term of the Agreement until payment in full of all principal Obligations owing by Business, so that the Service Charges for such full term will not exceed the maximum amount permitted by applicable law.

12.3This Agreement shall be deemed to be one of financial accommodation and not assumable by Business as debtor or debtor-in-possession, or any trustee in any bankruptcy proceeding without Financial Institution’s express written consent and may be suspended in the event a petition in bankruptcy is filed by or against Business.

12.4In the event Business’ principals, officers or directors, directly or indirectly, form a new entity, whether corporate, partnership, limited liability company or otherwise, similar to that of Business during the term of this Agreement, such newly formed entity shall be deemed to have expressly assumed the Obligations due Financial Institution by Business under this Agreement. Upon the formation of any such newly formed entity, Financial Institution shall be deemed to have been granted an irrevocable power of attorney with authority to execute, on behalf of the newly formed entity, one or more financing statements and have each filed with the appropriate secretary of state or UCC filing office. Financial Institution shall be held-harmless and be relieved of any liability statement or the resulting perfection of a security interest in any of the newly formed entity’s assets. In addition, Financial Institution shall have the right to notify the new formed entity’s account debtors of Financial Institution’s security interest rights, its right to collect all Accounts, and to notify any new factor or lender who has sought to procure a competing lien of Financial Institution’s rights in such newly formed entity’s assets.

12.5Business’ principal(s) acknowledge that the duty to accurately complete each form of Exhibit A transmitted to Financial Institution is critical to this Agreement and as such all Obligations with respect thereto are non-delegable. Each of Business’ principal(s) acknowledge that he/she shall remain fully responsible for the accuracy of each form of Exhibit A transmitted to Financial Institution regardless of who is delegated the responsibility to prepare and/or complete such Exhibit A.

12.6Business shall fully complete and execute, as taxpayer, prior to or immediately upon the execution of this Agreement, IRS Form 8821 supplied by the Department of the Treasury, Internal Revenue Service or such other forms as may be requested by Financial Institution, irrevocably authorizing Financial Institution to inspect or receive tax information relating to any type of tax, tax form, years or periods or otherwise desired by Financial Institution on an ongoing basis.

12.7Business will cooperate with Financial Institution in obtaining a control agreement in form and substance satisfactory to Financial Institution with respect to Collateral consisting of a Deposit Account, if such Deposit Account is maintained with any financial institution besides Financial Institution.

12.8As to any Account proceeds that do not represent payment of any Purchased Accounts and notwithstanding Financial Institution’s security interest therein, so long as Business has not committed an Event of Default, Financial Institution shall be deemed to have received such proceeds of Accounts as a pure pass-through for and on account of Business unless Financial Institution asserts any rights to such proceeds as is authorized by this Agreement.

12.9Any claim or cause of action that Business may have or seek to assert against Financial Institution, whether predicated on this Agreement or otherwise, shall neither constitute a defense nor serve as any basis to excuse non-performance of the Business’ duty to hold in trust and turn over all proceeds of Accounts to Financial Institution as provided in Section 2.4.4. Business’ duties and Obligations contained herein shall at all times be deemed independent covenants such that Business’ duty to honor the provisions of this Section may at no time be excused or otherwise adversely affected due to, inter alia, any breach that Business may assert against Financial Institution.


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12.10Any claim, dispute or controversy arising out of or relating to this Agreement must be brought in Business’ individual capacity and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding (collectively, “Class Action”). Accordingly, Business expressly waives any right in respect to any such claim, dispute or controversy to initiate, join or maintain any Class Action in any form.

12.11In the event this Agreement is duly terminated in accordance with section 11, and for whatever reason, after such termination, any claim in connection with, related to or arising under this Agreement is asserted or made against Financial Institution by any person, including Business, Financial Institution shall be entitled to treat all protections afforded to Financial Institution under this Agreement as revived, including, but not limited to, the protections contained in sections 4, 8 and 12.1.
SECTION 13: ACKNOWLEDGMENT

THE UNDERSIGNED ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS AND WAIVERS OF CERTAIN RIGHTS, AND THAT THIS AGREEMENT HAS BEEN FULLY UNDERSTOOD PRIOR TO EXECUTION. BUSINESS FURTHER REPRESENTS AND WARRANTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH ITS OWN LEGAL COUNSEL REGARDING THIS AGREEMENT AND ITS FULL LEGAL EFFECT, AND THAT IT IS NOT RELYING UPON ANY ORAL REPRESENTATIONS ON THE PART OF FINANCIAL INSTITUTION, ITS EMPLOYEES OR AGENTS IN ENTERING INTO THIS AGREEMENT.

SECTION 14: GENERAL RELEASE

Business agrees that pursuant to section 11.3, the following release language shall be effective upon the termination of this Agreement and Financial Institution shall have the right, but not the obligation, to require Business to reaffirm and acknowledge the effectiveness of this release at the time of termination pursuant to section 11:

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, the undersigned and each of them (collectively “Releasor”) hereby forever releases, discharges and acquits Vast Bank N.A. (“Releasee”), its parent, directors, shareholders, agents and employees, of and from any and all claims of every type, kind, nature, description or character, and irrespective of how, why, or by reason of what facts, whether heretofore existing, now existing or hereafter arising, or which could, might, or may be claimed to exist, of whatever kind or name, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as though fully set forth herein at length, to the extent that they arise out of or are in any way connected to or are related to this Business Manager Agreement with Businesses and Professionals.

Releasor agrees that the matters released herein are not limited to matters which are known or disclosed, and the Releasor waives any and all rights and benefits which it now has, or in the future may have.

Releasor acknowledges that factual matters now unknown to it may have given or may hereafter give rise to claims which are presently unknown, unanticipated and unsuspected, and it acknowledges that this Release has been negotiated and agreed upon in light of that realization and that it nevertheless hereby intends to release, discharge and acquit the Releasee from any such unknown claims.

Acceptance of this Release shall not be deemed or construed as an admission of liability by any party released.

Releasor acknowledges that either (a) it has had advice of counsel of its own choosing in negotiations for and the preparation of this release, or (b) it has knowingly determined that such advice is not needed.


SECTION 15: SPECIAL STIPULATIONS

image_21.jpgimage_21.jpgimage_21.jpg




DocuSign Envelope ID: B1AE6671-196D-4E70-9F46-1D4D31AA20FB



ACCEPTANCE:

This Agreement is accepted this     day of March, 2022.


DocuSign Envelope ID: B1AE6671-196D-4E70-9F46-1D4D31AA20FB
BUSINESS:

ADDvantage Triton LLC    

FINANCIAL INSTITUTION:

_Vast Bank N.A.    


image_51.jpgBy:     Name: _Joseph E Hart     Title: Manager    


image_61.jpgBy:         Name: _Lauren Smith     Title: Vice President        









This BusinessManager® Agreement with Businesses and Professionals has been prepared by the law firm of Ullman & Ullman, P.A. located at 150 East Palmetto Park Road, Boca Raton, Fl. and if you have any questions you may contact either Michael W. Ullman or Jared A. Ullman at 561-338-3535.
2015 Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry & Associates, Inc. 06/2015

DocuSign Envelope ID: 17F8BA49-DF8F-479E-98E0-F7BAD57EDB20







MODIFICATION ADDENDUM TO THE BUSINESSMANAGER®AGREEMENT WITH BUSINESSES AND PROFESSIONALS
Upon signature by both parties, the BusinessManager Agreement with Businesses and Professionals entered into as of the 16th_day of March, 2022, by and between Vast Bank N.A. (the “Financial Institution”) and Fulton Technologies Inc (the “Business”) shall hereby be modified to provide the following:

Section 2.1.4 Assignment and Sale shall be deleted and replaced with the following:

The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $2,000,000.00, unless agreed to by Financial Institution which decision will be in Financial Institution’s Business Judgment.


This Modification Addendum shall be effective as of the 16th day of March, 2022.

All other terms and provisions of the BusinessManager Agreement with Businesses and Professionals shall remain in full force and effect.






Financial Institution    Business
image_0.jpg            image_1.jpg


_Vice President        _President    
Title    Title


3/17/2022    3/17/2022
Date    Date








2015 Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry & Associates, Inc.

DocuSign Envelope ID: A42C0F3C-9D05-4223-B7E1-67A411449A11







MODIFICATION ADDENDUM TO THE BUSINESSMANAGER®AGREEMENT WITH BUSINESSES AND PROFESSIONALS
Upon signature by both parties, the BusinessManager Agreement with Businesses and Professionals entered into as of the 16th day of March, 2022, by and between Vast Bank N.A. (the Financial Institution”) and Fulton Technologies Inc Dish Only (the “Business”) shall hereby be modified to provide the following:

Section 2.1.4 Assignment and Sale shall be deleted and replaced with the following:

The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $6,500,000.00, unless agreed to by Financial Institution which decision will be in Financial Institution’s Business Judgment.


This Modification Addendum shall be effective as of the 16th day of March, 2022.

All other terms and provisions of the BusinessManager Agreement with Businesses and Professionals shall remain in full force and effect.






Financial Institution    Business
image_0a.jpg                image_1a.jpg


_Vice President        _President    
Title    Title


3/17/2022    3/17/2022
Date    Date








2015 Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry & Associates, Inc.

Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph E. Hart, certify that:
1.I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
May 12, 2022
/s/ Joseph E. Hart
Joseph E. Hart
President and Chief Executive Officer

Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael A. Rutledge, certify that:
1.I have reviewed this quarterly report on Form 10-Q of ADDvantage Technologies Group, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
May 12, 2022
/s/ Michael A. Rutledge
Michael A. Rutledge
Chief Financial Officer

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of ADDvantage Technologies Group, Inc. (the “Company”) for the fiscal quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Joseph E. Hart, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Joseph E. Hart
Name:Joseph E. Hart
Title:President and Chief Executive Officer
Date:
May 12, 2022

Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of ADDvantage Technologies Group, Inc. (the “Company”) for the fiscal quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Michael A. Rutledge, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Michael A. Rutledge
Name:Michael A. Rutledge
Title:Chief Financial Officer
Date:
May 12, 2022