<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 [Amendment No. ]
Filed by the Registrant: X
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-12
ADDvantage Technologies Group, Inc.
(Name of Registrant As Specified In Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title to each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ADDvantage Technologies Group, Inc.
1605 East Iola
Broken Arrow, Oklahoma 74012
NOTICE OF ANNUAL MEETING
Date: Thursday, March 2, 2000
Time: 10:00 a.m.
Place: Forest Ridge Golf Club
7501 East Kenosha
Broken Arrow, Oklahoma
Matters to be voted on:
1. Election of six directors.
2. Approval of an amendment to our certificate of incorporation to
increase the number of authorized shares of our common stock,
from 10,000,000 shares to 30,000,000 shares and the number of
authorized shares of our preferred stock, from 1,000,000 shares
to 5,000,000 shares.
3. Ratification of the appointment of Tullius Taylor Sartain &
Sartain LLP as our independent auditors for 2000.
4. Any other business properly brought before the shareholders at
the meeting.
By Order of the Board of Directors,
/s/ Lynnwood R. Moore, Jr.
Lynnwood R. Moore, Jr., Secretary
January 31, 2000
CONTENTS
Page
General Information About Voting 2
Stock Ownership 3
Change of Control 4
Proposal No. 1: Election of Directors 4
Proposal No. 2: Approval of Increase in Authorized
Shares of Capital Stock 10
Proposal No. 3: Appointment of Independent Auditors 12
Shareholder Proposals for 2001 Annual Meeting 12
Other Matters 12
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote
your shares of common stock by completing the enclosed proxy card and
returning it to us in the enclosed envelope. This proxy statement has
information about the annual meeting and was prepared by our management
for the board of directors. This proxy statement was first mailed to
shareholders on February 4, 2000. Please note that our annual report
accompanies this mailing of the proxy statement.
<PAGE>
ADDvantage Technologies Group, Inc.
1605 East Iola
Broken Arrow, Oklahoma 74012
PROXY STATEMENT FOR 2000 ANNUAL MEETING
GENERAL INFORMATION ABOUT VOTING
Who can vote?
You can vote your shares of common stock if our records show that you
owned the shares on January 17, 2000. A total of 9,720,846 shares of common
stock can vote at the annual meeting. You get one vote for each share of common
stock. We do not recognize cumulative voting for the election of our directors.
The enclosed proxy card shows the number of shares you can vote.
How do I vote by proxy?
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy card
and mail it back to us in the enclosed envelope. The proxyholders named on the
proxy card will vote your shares as you instruct. If you sign and return the
proxy card but do not vote on a proposal, the proxyholders will vote for you on
that proposal. Unless you instruct otherwise, the proxyholders will vote for
each of the six directors and for each of the other proposals to be considered
at the meeting.
What if other matters come up at the annual
meeting?
The matters described in this proxy statement are the only matters we
know will be voted on at the annual meeting. If other matters are properly
presented at the meeting, the proxyholders will vote your shares as they see
fit.
Can I change my vote after I return my proxy
card?
Yes. At any time before the vote on a proposal, you can change your
vote either by giving our secretary a written notice revoking your proxy card or
by signing, dating and returning to us a new proxy card. We will honor the
proxy card with the latest date. Attendance at the annual meeting will not, by
itself, revoke your proxy card.
Can I vote in person at the annual meeting rather
than by completing the proxy card?
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and vote
your shares in person.
What do I do if my shares are held in "street
name"?
If your shares are held in the name of your broker, a bank, or other
nominee, that party should give you instructions for voting your shares.
How are votes counted?
We will hold the annual meeting if holders of a majority of the shares
of common stock entitled to vote either sign and return their proxy cards or
attend the meeting. If you sign and return your proxy card, your shares will
be counted to determine whether we have a quorum even if you abstain or fail
to vote on any of the proposals listed on the proxy card. Votes will be
tabulated by an inspector of election appointed by our board of directors.
Abstentions from voting, which you may specify on each proposal except the
election of directors, will have the effect of a negative vote.
If your shares are held in the name of a nominee, and you do not tell
the nominee how to vote your shares (so called "broker nonvotes"), the nominee
cannot vote them on any proposal. Broker nonvotes will be counted as present
to determine if a quorum exists but will not be counted as present and entitled
to vote on the election of directors or to ratify the approval of Tullius Taylor
Sartain & Sartain LLP as our independent auditors. However, broker nonvotes
will have the same effect as a negative vote on the proposal to increase the
number of shares of our authorized capital stock because its approval requires
the vote of a majority of the shares of common stock entitled to vote.
Who pays for this proxy solicitation?
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail or in person. None of these
employees will receive any extra compensation for doing this, but they may be
reimbursed for their out-of-pocket expenses incurred while assisting us in
soliciting your proxy.
2
<PAGE>
STOCK OWNERSHIP
The following table shows the number of shares of common stock or
preferred stock beneficially owned (as of January 17, 2000) by:
each person who we know beneficially owns more than 5% of each class of
our outstanding capital stock;
each director;
each named executive officer named in the Summary Compensation Table on
page 8; and
our directors and executive officers as a group.
Except as otherwise indicated, the beneficial owners listed in the table have
sole voting and investment powers of their shares.
<TABLE>
<CAPTION>
Beneficial Ownership
Number of Number of Number of
Number of Shares of Shares of Shares of
Shares of Series A Series B Series C
Common Preferred Preferred Preferred
Stock Percent Stock Percent Stock Percent Stock Percent
Name and Address of Beneficially of Beneficially of Beneficially of Beneficially of
Beneficial Owner Owned (1) Class(1) Owned (2) Class Owned Class Owned Class
- --------------------- ------------ -------- ----------- ------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood 196,300 (3) 2.0% -0- -0- -0- -0- -0- -0-
3254 East 75th Street
Tulsa, OK 74136
Gary W. Young (4) 163,708 (3) 1.7% -0- -0- -0- -0- -0- -0-
1605 E. Iola
Broken Arrow, OK 74012
David E. Chymiak 4,059,000 41.8% 100,000 50.0% 150,000 50.0% -0- -0-
1605 E. Iola
Broken Arrow, OK 74012
Kenneth A. Chymiak (5) 4,000,000 41.2% 100,000 50.0% 150,000 50.0% -0- -0-
1605 E. Iola
Broken Arrow, OK 74012
Stephen J. Tyde 5,000 * -0- -0- -0- -0- -0- -0-
8008 S. Fulton Ave.
Tulsa, OK 74136
Freddie H. Gibson -0- -0- -0- -0- -0- -0- -0- -0-
8008 S. Erie Avenue
Tulsa, OK 74136
Randy L. Weideman (6) -0- -0- -0- -0- -0- -0- 27,211 100%
Highway 136 West
Deshler, Nebraska 68340
All Executive Officers 8,227,708(3) 84.7% 200,000 100% 300,000 100% 27,211 -0-
and Directors as a group
(6 persons)
_____________________________
* Less than one percent.
</TABLE>
(1) Shares which an individual has the right to acquire within 60 days
pursuant to the exercise of options are deemed to be outstanding for the
purpose of computing the percentage ownership of such individual, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table or the
percentage ownership of all officers and directors as a group.
(2) If Proposal No. 2 is approved, each share of Series A Cumulative
Convertible Preferred Stock will become convertible immediately into 10
shares of our common stock.
3
<PAGE>
(3) Includes 25,000 shares subject to a stock option which is fully
exercisable.
(4) 72,000 of the shares beneficially owned by Mr. Young are held of record
by the GWYSEY General Partnership jointly owned by Mr. Young and his
wife. Mr. Young disclaims beneficial ownership of the shares held by
the GWYSEY General Partnership except to the extent of his pecuniary
interest in the shares.
(5) All of the shares beneficially owned by Mr. Chymiak are held of record
50% by him as trustee of the Ken Chymiak Revocable Trust and 50% by his
wife as trustee of the Susan Chymiak Revocable Trust. Mr. Chymiak
disclaims beneficial ownership of the shares held by his wife.
(6) All of the shares beneficially owned by Mr. Weideman are held of record
49.9% by him and 50.1% by his wife. Mr. Weideman disclaims beneficial
ownership of the shares held by his wife. If Proposal No. 2 is
approved, each share of Series C Convertible Preferred Stock will become
convertible immediately into 10 shares of our common stock.
CHANGE OF CONTROL
On September 30, 1999, David E. Chymiak, Kenneth A. Chymiak, and Susan
C. Chymiak exchanged all their shares of the TULSAT Corporation common stock and
the TULSAT Corporation promissory notes issued to them in the principal amount
of $10 million for 8,000,000 shares of our common stock, 200,000 shares of our
newly issued Series A 5% Cumulative Convertible Preferred Stock (convertible
into 2,000,000 shares of our common stock if Proposal No. 2 is approved) and
300,000 shares of our newly issued Series B 7% Cumulative Preferred Stock. After
this transaction, TULSAT Corporation became our wholly owned subsidiary and the
former shareholders own approximately 83% of our issued and outstanding common
stock and 100% of our issued and outstanding Series A and Series B preferred
stock. David E. Chymiak now serves as Chairman of our board and Kenneth A.
Chymiak is our President and Chief Executive Officer.
PROPOSAL NO. 1
Election Of Directors
Our entire board of directors will be elected at the annual meeting.
The directors will be elected for one-year terms expiring at the next annual
meeting. Our bylaws provide that our board shall consist of not less than one
nor more than nine directors, as determined from time to time by board
resolution. Our board has established the number of directors at six.
Vote Required. The six nominees receiving the highest number of votes
will be elected. Votes withheld for a nominee will not be counted. You get one
vote for each of your shares of common stock for each of the directorships.
Nominations. At the annual meeting, we will nominate the persons named
in this proxy statement as directors. Although we do not know of any reason why
one of these nominees might not be able to serve, our board of directors will
propose a substitute nominee if any nominee is unavailable for election.
Shareholders also can nominate persons to be directors. If you want to
nominate a person, you must make the nomination in person at the annual meeting
and the nominee must have agreed to serve if elected.
General Information About the Nominees. All of the nominees are
currently directors of ADDvantage. Each has agreed to be named in this proxy
statement and to serve as director if elected. The ages listed for the nominees
are as of January 24, 2000.
4
<PAGE>
David E. Chymiak Director since 1999
David E. Chymiak, 54, has been the Chairman of our board since 1999. He
is also the President and a director of TULSAT Corporation which he and Kenneth
A. Chymiak acquired in 1985.
Kenneth A. Chymiak Director since 1999
Kenneth A. Chymiak, 53, has been our President and Chief Executive
Officer since 1999. He is also the Executive Vice President and a director of
TULSAT Corporation which he acquired with David E. Chymiak in 1985.
Freddie H. Gibson Director since 1999
Freddie H. Gibson, 52, has been the President and Chairman of the board
of directors of Heat Transfer and Equipment, a manufacturer of shell and tube
heat exchangers for oil and petroleum industries, since 1992.
Stephen J. Tyde Director since 1999
Stephen J. Tyde, 52, is the owner, President and Chief Executive Officer
of The Pump & Motor Works, Inc., an electric motor and turbo machinery
manufacturing company, which he founded in 1991. He is also the co-owner and
Chief Operating Officer of P&MW Holdings, Inc.
Gary W. Young Director since 1990
Gary W. Young, 58, has been our Executive Vice President - Finance and
Administration since 1990. He is also the owner and President of Young Ideas
Inc., a financial consulting and investment company, he founded in 1987.
Randy L. Weideman Director since 1999
Randy L. Weideman, 43, founded Diamond W Investments, Inc. in 1985 and
has served as its President since that time. We acquired Diamond W Investments,
Inc. in 1999 and changed its name to Lee CATV Corporation.
Committees of the Board. The board of directors has two principal
committees. The following chart describes the function and membership of each
committee and the number of times it met during our fiscal year ended September
30, 1999:
Audit Committee - 1 Meeting
Function Members
Reviews qualifications of our independent auditors and John W. Condon
makes recommendations to our board about our independent
auditors Stephen G. Smith
Reviews scope and results of audits with independent
auditors, compliance with any of our written policies
and procedures and the adequacy of our system of internal
accounting and controls
Oversees quarterly reporting
5
<PAGE>
Compensation Committee - 1 Meeting
Function Members
Reviews and monitors performance of our Charles H. Hood
officers
J Larre Barrett
Approves compensation and benefits programs
of our officers John W. Condon
The committee members listed above all resigned from our board effective
September 30, 1999. In October 1999, Freddie H. Gibson, Stephen J. Tyde and
Kenneth A. Chymiak became members of the Audit Committee and Freddie H. Gibson
and Stephen J. Tyde became members of the Compensation Committee.
Our board had one meeting during fiscal 1999 (all other action being
taken by unanimous written consent). Each director attended all meetings of the
board and the committees on which he served.
Compensation of Directors
Beginning in the second quarter of 1998, we began paying the outside
directors at a rate of $12,000 annually for their services on the board of
directors. During 1998, payments totaling $15,000 for the second and
third quarters were paid. Fees for the fourth quarter of 1998 totaling $12,000
were accrued, but not paid in cash.
During the nine-month period ended September 30, 1999, each of the four
non-employee directors then serving received a director's fee of $12,000, which
included the amount that was accrued but unpaid for the fourth quarter of 1998.
All or a portion of the fee was applied to the option exercise price payable
under the terms of options previously granted to the directors in connection
with the exercise of those options as described below under "Certain
Relationships and Related Party Transactions." Directors who were employees of
ADDvantage received no additional compensation for their services on the board
of directors.
Beginning in 2000, we began paying our outside directors at a rate of
$500 for each board meeting and $250 for each committee meeting the director
attends. In addition, directors are eligible to receive awards of stock
options to purchase 1,000 shares of our common stock each year. We reimburse
all directors for out-of-pocket expenses incurred by them in connection with
their service on our board and any board committee.
6
<PAGE>
Certain Relationships and Related Party Transactions
Prior to September 30, 1999, the executive officers and directors
exercised their outstanding options by canceling the indebtedness we owed to
them for unpaid salary or fees in amounts equal to the purchase price payable
upon exercise of the options. Except as noted in the table below, any remaining
amounts due to them were satisfied by issuing shares of our common stock to them
at a price of $1.25 per share, the approximate trading price of the stock on
September 16, 1999. Below is a table reflecting the amounts owed the officers
and directors and the shares issued in satisfaction of that indebtedness.
<TABLE>
<CAPTION>
Accrued Option Shares Total
Accrued Directors Exercise Net Issued Option Shares
Name Payroll Fees Total Cost(1) Liability(2) @$1.25 Shares(1) Issued
---- --------- ---------- --------- --------- ------------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood $ 79,500 $ -0- $ 79,500 $ 60,313 $19,187 15,350 70,000 85,350
Gary W. Young 79,500 -0- 79,500 71,251 8,249 6,600 82,500 89,100
J. Larre Barrett -0- 12,000 12,000 13,126 -0- -0- 15,000 15,000
John W. Condon -0- 12,000 12,000 7,657 4,343(3) -0- 8,750 8,750
Steven C. Oden -0- 12,000 12,000 8,751 3,249(3) -0- 10,000 10,000
Stephen G. Smith -0- 12,000 12,000 10,938 1,062(3) -0- 12,500 12,500
--------- ---------- --------- --------- ------------- ------- ---------- -------
Total $159,000 $48,000 $207,000 $172,036 $36,090 21,950 198,750 220,700
</TABLE>
_______________
(1) Represents number of shares and aggregate exercise price for the outstanding
options exercised prior to September 30, 1999. The outstanding options are
summarized below:
<TABLE>
<CAPTION>
1991 Plan 1998 Plan Options Outside Plans Total
--------- --------- --------------------- -----
Name Shares Cost Shares Cost Shares Cost Shares Cost
---- -------- --------- --------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood 47,500 $40,625 22,500 $19,688 -0- $ -0- 70,000 $ 60,313
Gary W. Young 60,000 51,563 22,500 19,688 -0- -0- 82,500 71,251
J. Larre Barrett -0- -0- -0- -0- 15,000 13,126 15,000 13,126
John W. Condon -0- -0- -0- -0- 8,750 7,657 8,750 7,657
Steven C. Oden 10,000 8,751 -0- -0- -0- -0- 10,000 8,751
Stephen G. Smith -0- -0- -0- -0- 12,500 10,938 12,500 10,938
------ ------ ------ ------ ------ ------- ------- ------
Total 117,500 $100,939 45,000 $39,376 36,250 $31,721 198,750 $172,036
</TABLE>
(2) Amount of indebtedness remaining after option exercise.
(3) Net liability paid in cash.
In fiscal 1999, Chymiak Investments, L.L.C., which is owned by David E.
Chymiak and Kenneth A. Chymiak, purchased from TULSAT Corporation on September
30, 1999 the real estate and improvements comprising the headquarters and a
substantial portion of the other office and warehouse space of TULSAT
Corporation for a price of $1,286,000. The price represents the appraised value
of the property less the sales commission and other sales expenses that would
have been incurred by TULSAT Corporation if it had sold the property to a third
party in an arm's-length transaction. TULSAT Corporation has entered into a
five-year lease commencing October 1, 1999 with Chymiak Investments, L.L.C.
covering the property under which the annual rental due to Chymiak Investments,
L.L.C. is $180,000. TULSAT Corporation is leasing other property from Chymiak
Investments, L.L.C. and paid that company $50,500 in 1998 and $63,000 in fiscal
1999 as rental under those leases. The annual rentals due under those leases
(not including the lease of the recently purchased headquarters building
discussed above) are $92,900 for calendar year 1999, $72,000 for calendar years
2000, 2001 and 2002 and $30,500 in 2003.
7
<PAGE>
Chymiak Investments, Inc., which is owned by Kenneth A. Chymiak and his
wife, Susan C. Chymiak, recently constructed three other properties which have
been leased to TULSAT Corporation for five-year terms (all ending in 2003) at
rentals of $3,000 per month each (aggregate rentals per year of $108,000 for all
three buildings).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of our
common stock to report their initial ownership of our common stock and any
subsequent changes in that ownership to the Securities and Exchange Commission
or the SEC and to furnish us with a copy of each of these reports. SEC
regulations impose specific due dates for these reports, and we are required to
disclose in this proxy statement any failure to file by these dates during
fiscal 1999.
To our knowledge, based solely on the review of the copies of these
reports furnished to us and written representations that no other reports were
required, during and with respect to fiscal 1999, all Section 16(a) filing
requirements applicable to our executive officers, directors and more than 10%
shareholders were complied with, except that J Larre Barrett, John W. Condon,
Steven C. Oden and Stephen G. Smith were delinquent in filing Forms 5 reporting
their acquisition of shares pursuant to option exercises.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation(2)
------------------- -------------------------
Number
Other of Shares
Annual Restricted Under- Long-Term
Compen- Stock lying Incentive
Name and Salary Bonus Sation Awards Options Payouts
Principal Position Year ($) ($) ($)(1) ($) Granted ($)
- ------------------ ---- ---------- ------- ------ --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood 1999 33,000(2) -0- 2,830 79,500(2) -0- 127,254(3)
President and 1998 175,000 -0- 5,964 -0- 57,500 -0-
Chairman 1997 150,000 150,000 6,688 -0- -0- -0-
1996 125,000 125,000 4,500 -0- 45,000 -0-
Gary W. Young 1999 33,000(2) -0- 980 79,500(2) -0- 127,254(3)
Executive Vice 1998 175,000 -0- 5,626 -0- 70,000 -0-
President 1997 150,000 150,000 6,684 -0- -0- -0-
1996 106,250 125,000 4,500 -0- 45,000 -0-
____________________
</TABLE>
(1) Other annual compensation represents, in 1999, 1998, 1997 and 1996, our
contributions on behalf of each of the individuals to our 401(k) Plan and
payments of non-accountable expense allowances. Amounts do not include the
value of perquisites or other personal benefits because the amount of such
compensation, if any, does not exceed the lesser of $50,000 or 10% of the
total amount of annual salary and bonus.
(2) $79,500 of the salary paid to each of Messrs. Hood and Young was in the
form of credit towards their exercise price obligation in connection with
the exercise of all of their previously granted options in September of
1999 and in the form of additional shares of common stock valued for these
purposes at $1.25 per share. See "Certain Relationships and Related Party
Transactions."
8
<PAGE>
(3) Represents the cash surrender values of the life insurance policies paid to
Messrs. Hood and Young during 1999. The policies were maintained under an
amendment adopted in 1998 to our Supplemental Executive Retirement Plan.
Messrs Hood and Young waived any further rights in under that plan in
connection with the acquisition of TULSAT Corporation on September 30,
1999. Part of the consideration for the waiver was the agreement to issue
to each of them options to acquire 25,000 shares of our common stock at a
price of $4.00 per share. These options were granted as of October 31,
1999 and are exercisable in full at any time prior to their expiration at
the end of 10 years from the date of grant.
The persons shown below are our new executive officers who took office
immediately following the end of our 1999 fiscal year. They were the owners of
TULSAT Corporation prior to our acquisition of that company on September 30,
1999. The amounts shown are the compensation paid to those persons by TULSAT
Corporation during the periods indicated. Because the TULSAT Corporation owners
gained control of ADDvantage in connection with the transaction, TULSAT
Corporation has been treated as the surviving corporation and our historical
financial statements reflect the historical operating results of TULSAT
Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
New Executive Officers
Annual Compensation Long-Term Compensation
------------------- ----------------------
Number
Other of Shares
Annual Restricted Under- Long-Term
Compen- Stock Lying Incentive
Name and Salary Bonus sation Awards Options Payouts
Principal Position Year ($)(1) ($) ($) ($) Granted ($)
- ------------------ ----- --------- ----- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
David E. Chymiak 1999 94,000 -0- 4,680 -0- -0- -0-
Chairman 1998 95,516 -0- 2,920 -0- -0- -0-
1997 71,658 -0- 1,791 -0- -0- -0-
Kenneth A. Chymiak 1999 94,000 -0- 4,680 -0- -0- -0-
President and 1998 95,516 -0- 2,920 -0- -0- -0-
Chief Executive Officer 1997 71,658 -0- 1,791 -0- -0- -0-
___________________
</TABLE>
(1) These amounts represent the salaries paid to these officers by TULSAT
Corporation but do not reflect distributions made to them as shareholders.
TULSAT Corporation was an S corporation for tax purposes before it was
acquired by ADDvantage and distributions were routinely made to the
shareholders in at least the amounts necessary for them to pay the federal
income tax liability they incurred personally as a result of the net
income realized by TULSAT Corporation.
Option Exercises and Year-End Value Table
The following table sets forth information regarding the exercise of stock
options and the value of unexercised stock options held by each of the named
executive officers as of the year ended September 30, 1999.
<TABLE>
<CAPTION>
Number of Number of Shares of Common Value of Unexercised In-
Shares Stock Underlying Unexercised the-Money Options at
Acquired on Value Options at September 30, 1999 September 30, 1999
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Hood 70,000 $123,437 -0- -0- -0- -0-
Gary W. Young 82,500 $145,312 -0- -0- -0- -0-
</TABLE>
9
<PAGE>
PROPOSAL NO. 2
Increase In the Authorized Shares Of Capital Stock
At the annual meeting, you will be asked to vote to approve the amendment
to our certificate of incorporation to increase the number of authorized shares
of our common stock and preferred stock. The Board Of Directors Unanimously
Recommends A Vote For The Proposed Increase In The Number Of Authorized Shares
Of Common Stock And Preferred Stock.
Vote required. If a majority of the shares of common stock entitled to
vote at the meeting are voted for the amendment to our certificate of
incorporation, the amendment will be approved.
Description of the Amendment. Our board has approved and recommends that
the shareholders approve and adopt a proposal to amend our certificate of
incorporation to increase the number of authorized shares of our common stock
from 10,000,000 shares to 30,000,000 shares and our preferred stock from
1,000,000 shares to 5,000,000 shares. The proposed amendment will amend the
first sentence of Article IV of our certificate of incorporation to read as
follows:
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 35,000,000, of which
30,000,000 shall be common stock of the par value of $0.01 per share and
5,000,000 shall be preferred stock of the par value of $1.00 per share.
Background and Reasons for Proposed Amendment. On September 30, 1999, we
issued the former shareholders of TULSAT Corporation eight million shares of our
common stock. As a result, there are now approximately 9.7 million shares of our
common stock outstanding. With only 10 million shares of our common stock
currently authorized, we do not have enough authorized to accomplish any
significant acquisitions or to raise significant amounts of equity capital
without prior shareholder approval.
Although we have no specific plans at this point, we expect to continue
raising additional capital and acquiring other companies in the future as part
of our growth strategy. We also expect to grant stock options or make other
types of stock grants as part of the incentive compensation plans for key
employees. Our board believes that it is important to have additional
authorized capital available for these purposes in order to avoid the delay and
expense of obtaining shareholder approval at a later date and to provide greater
flexibility in our future capital raising, business acquisition and employee
compensation efforts.
In addition, we recently issued shares of our Series A preferred stock and
Series C preferred stock in connection with our acquisitions of TULSAT
Corporation and Lee CATV Corporation (then named Diamond W Investments, Inc.).
The Series A and Series C preferred stock will be convertible into 2,000,000
shares (Series A) and 272,110 shares (Series C) of our common stock if this
proposal is approved. We believe that it is in the best interests of our
company and our shareholders if the holders of these preferred shares are able
to exercise their conversion rights. All of the Series A preferred stock is
owned beneficially by David E. Chymiak, Chairman of the board, and Kenneth A.
Chymiak, President and Chief Executive Officer.
Description of Capital Stock
Authorized Capital. Our authorized capital currently consists of
10,000,000 shares of common stock, par value $0.01 per share, and 1,000,000
shares of preferred stock, par value $1.00 per share. At January 17, 2000, we
had outstanding (1) 9,720,846 shares of common stock, (2) 200,000 shares of
Series A 5% Cumulative Convertible Preferred Stock, (3) 300,000 shares of Series
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B 7% Cumulative Preferred Stock and (4) 27,211 shares of Series C Convertible
Preferred Stock.
Common Stock. The holders of our common stock are entitled to one vote
per share on all matters voted on by shareholders, including the election of
directors. Common shareholders exclusively possess all voting power, except as
otherwise required by law or provided in any resolution adopted by our board of
directors for any series of preferred stock establishing the powers,
designations, preferences and relative, participating, option or other special
rights of the series. Our certificate of incorporation does not provide for
cumulative voting for directors.
Subject to any preferential rights of any outstanding series of our
preferred stock, our common shareholders are entitled to distributions as may
be declared from time to time by our board from funds available for
distribution.
Upon liquidation, our common shareholders are entitled to receive pro rata all
of our assets available for distribution to the shareholders, subject to any
preferential rights of our preferred shareholders.
Preferred Stock. Additional shares of preferred stock to be authorized
under Proposal No. 2 are what is commonly known as "blank check" preferred
stock. We believe that the authorization of the additional shares of preferred
stock is in our best interests and our shareholders. We believe it advisable
to authorize these shares to have them available for possible issuance in
connection with public or private offering of shares for cash, dividends payable
in our stock, acquisitions of other companies, implementation of employee
benefit plans and pursuit of financing opportunities.
The term "blank check" preferred stock refers to stock for which the
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof are determined by the board
of directors of a company. These shares may be issued in one or more series
with limitations and restrictions as may be determined in the sole discretion
of our board of directors without further approval of our shareholders.
Any preferred stock issued would have priority over our common stock upon
liquidation and might have priority rights as to dividends, voting and other
features. Accordingly, the issuance of preferred stock could decrease the
amount of earnings and assets allocable to or available for distribution to
holders of our common stock and adversely affect their rights and powers,
including their voting rights.
Generally, except in connection with a shareholder rights or "poison pill"
plan, preferred stock would be issued to investors in connection with raising
additional equity capital, and would typically contain terms and conditions
intended to protect the interests of investors. The terms and conditions
typically would include preference over the holders of common stock in the
proceeds of a sale or our liquidation (including the distribution of assets
upon a sale of substantially all of our assets and businesses) and priority
dividend rights (which may include cumulative dividends), and might include
special voting rights, special conversion rights and redemption rights. These
rights, either alone or in combination under particular circumstances, can
provide the holders of preferred stock with a disproportionate share of current
distributions or earnings by way of dividends, or of the proceeds of a sale or
liquidation, or disproportionate rights of approval with respect to certain
kinds of transactions, compared to those of the holders of our common stock.
Our board does not believe that the approval of Proposal No. 2 will have
an anti-takeover effect. Our board and management believe that it is in our
best interests and our shareholders to have the flexibility to raise additional
capital or to pursue acquisitions to support our business plan, including the
ability to authorize and issue preferred stock having terms and conditions
satisfactory to investors or to acquisition candidates, including preferred
stock which contains some features which could be viewed as having an anti-
takeover effect or a potentially adverse effect on the holders of our common
stock.
While we may consider issuing preferred stock in the future for the
purpose of raising additional capital or in connection with acquisition
transactions, we presently have no agreements or understandings with any person
to effect any issuance and we may never issue any preferred stock. Therefore,
the terms of any preferred stock subject to Proposal No. 2 cannot be stated or
predicated with respect to any or all of the securities authorized.
Rights of Existing Holders of Preferred Stock. Under the terms of the
currently outstanding shares of our preferred stock, our board cannot authorize
the issuance of additional shares of preferred stock that are senior in powers,
preferences or special rights to the rights held by the holders of the shares of
our Series A, Series B or Series C preferred stock without the respective
approval of the holders of those shares.
Under the terms of the agreement, pursuant to which we acquired Lee CATV
Corporation (then named Diamond W Investments, Inc.), if our certificate of
incorporation has not been amended to increase the number of authorized shares
of common stock by November 22, 2000 to allow for the conversion of the
outstanding shares of Series C preferred stock, we must pay the holders of those
shares $7.35 per share (20% of the stated value per share). We must make
another payment in that amount if the authorized capital is not increased by
November 22, 2001. Finally, we must offer to buy back the shares at a price of
$44.01 per share (120% of the stated value per share) if we do not increase the
authorized capital by November 22, 2002.
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PROPOSAL NO. 3
Appointment Of Independent Auditors
We recommend that you vote for the ratification of the appointment of
Tullius Taylor Sartain & Sartain LLP.
We have appointed the accounting firm of Tullius Taylor Sartain & Sartain
LLP as our independent auditors to examine our financial statements for the
fiscal year ending September 30, 2000. Tullius Taylor Sartain & Sartain LLP
have been our independent auditors since 1994. A resolution to ratify their
appointment will be presented at the annual meeting. A majority of the votes
cast must vote in favor to ratify the appointment. If the shareholders do not
ratify the appointment, we will reconsider our selection of Tullius Taylor
Sartain & Sartain LLP. Although your ratification of the appointment of our
independent auditors is not required, we are submitting the appointment of
Tullius Taylor Sartain & Sartain LLP for your ratification as a matter of good
corporate practice.
A representative of Tullius Taylor Sartain & Sartain LLP will be present
at the annual meeting. The representative will have the opportunity to make a
statement if he or she desires to do so and will be available to answer
questions.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you want to include a shareholder proposal in the proxy statement for
the 2001 annual meeting, it must be delivered to our executive offices, 1605
East Iola, Broken Arrow, Oklahoma 74012, on or before October 9, 2000. In
addition, if you wish to present a proposal at the 2001 annual meeting that
will not be included in our proxy statement and you fail to notify us by
December 21, 2000, then the proxies solicited by our board for the 2001 annual
meeting will include discretionary authority to vote on your proposal in the
event that it is properly brought before the meeting.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
discussed above. If other proposals are properly brought before the meeting,
any proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of our Annual Report on Form 10-KSB for the year
ended September 30, 1999 at no charge by writing to us at 1605 East Iola, Broken
Arrow, Oklahoma 74012.
By Order of the Board of Directors
/s/ Lynnwood R. Moore, Jr.
Lynnwood R. Moore, Jr., Secretary
Tulsa, Oklahoma
February 4, 2000
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PROXY
ADDVANTAGE TECHNOLOGIES GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenneth A. Chymiak, and David E. Chymiak, as
proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Common Stock of ADDvantage Technologies Group, Inc. (the "Company") held
of record by the undersigned on January 17, 2000 at the Annual Meeting of
Shareholders of the Company to be held on March 2, 2000, and at any and all
adjournments or postponements thereof.
1. Election of directors.
[ ] FOR all nominees listed below (except as indicated to the contrary below
and subject to the discretion of the proxies as provided herein).
Kenneth A. Chymiak David E. Chymiak Stephen J. Tyde Freddie H. Gibson
Gary W. Young Randy L. Weideman
[ ] WITHHOLD AUTHORITY to vote for all the nominees above.
Instructions: To withhold authority for any individual nominee or
nominees, write their name(s) here:
(Continued and to be signed on the reverse side)
2. Proposal to approve the amendment to the certificate of incorporation to
increase the number of authorized shares of common stock from 10,000,000
shares to 30,00,000 shares and the number of authorized shares of
preferred stock from 1,000,000 shares to 5,000,000 shares as described
in the accompanying proxy statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the appointment of Tullius Taylor Sartain & Sartain,
LLP as our independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will be voted at the Annual Meeting or any
adjournments or postponements thereof as directed herein by the undersigned
shareholder. If no specifications are made, this Proxy will be voted For
Proposals 1, 2 and 3. This Proxy is revocable at any time before it is
exercised.
IMPORTANT: Please date this and sign this Proxy exactly as name appears to
the left. If shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Dated: _____________________, 2000
Signature(s) ___________________
Signature(s) ___________________
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
