Exhibit 10.10
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 2nd day of August, 2006 by
and among Arts-Way Manufacturing Co., Inc., a Delaware corporation ("Buyer"),
and Freedom Bank, a bank organized and existing under the laws of the State
of Iowa ("Seller").
RECITALS
Seller is presently the owner as the secured party transferee of certain
assets and properties formerly used by Techspace, Inc., in the business of the
design, manufacture, and installation of custom research or diagnostic
facilities for laboratory animal research, for biocontainment, public
health and general laboratory requirements that are distributed to third
party purchasers (the "Subject Business") which assets were voluntarily
surrendered to Seller who was the holder of a security interest therein.
Buyer desires to purchase the Subject Business, including the assets
connected therewith, from Seller all on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, agreements and other good and valuable consideration
hereinafter set forth, the receipt and legal sufficiency of which are
hereby acknowledged, the parties do hereby promise and agree as follows:
1. ASSETS TO BE PURCHASED AND EXCLUDED.
(a) Personal Property. Subject to the terms and conditions set forth
in this Agreement, Seller agrees to sell, convey, assign and deliver to Buyer
and Buyer agrees to purchase from Seller at the Closing (as defined in
Section 6) the following assets owned as provided above by Seller and used by
Techspace, lnc%, in the operation of the Subject Business as they exist
on the Closing Date (collectively, the "Subject Assets"):
(i) all machinery, equipment, furniture and fixed assets surrendered
by Techspace, Inc. to Seller including without limitation those items
identified or described, on attached Exhibit A and incorporated herein.
(ii) all inventories of raw materials, work in process, and finished
goods (including all such inventory at Techspace, Inc.s facility in
Monona, Iowa); (the "Inventory");
(iii) all purchase orders, order backlog, engineering, all drawings,
designs, specifications, process information, performance data, software,
programs, backlog, contracts, proprietary designs and other information,
and data relating to the Subject Business and related equipment listed;
(iv) all sales and customer lists and records, personnel and payroll
records, purchasing, supplier and sale records (the "Subject Business
Records");
(v) all supplies, packaging materials, marketing and sales literature,
consumable materials and other miscellaneous items of similar character;
and,
(vi) any and all intellectual property, trademarks, patents, phone
numbers, website, e-mail addresses, and any other goodwill of the
Subject Business.
(vii) all accounts receivable that are less than 91 days old arising
in the ordinary course of Techspace, Inc.s business from the sale of
products to customers.
(viii) all other property located at Techspace, Inc.s facility in
Monona, Iowa.
(b) Real Property. The real property previously occupied by Techspace, Inc.,
was deeded to Freedom Bank and is being transferred to Arts Way
Manufacturing Company, Inc. by Freedom Bank. The real property being
transferred to Arts Way Manufacturing Company, Inc. is legally
described as follows:
Lot One (1) of Lot One (1) of Lot Nine (9) in the Northeast Quarter
(NEI/4) of the Southeast Quarter (SE1/4) of Section Fourteen (14),
Township Ninety-five (95) North, Range Five (5), West of the 5th P.M.,
in the City of Monona, ▇▇▇▇▇▇▇ County, Iowa, according to Plat recorded
in Book 8, Plats, Page 85; EXCEPT Lot One (1) of Lot One (1) of Lot One
(1) of Lot Nine (9) thereof;
AND
Lot One (1) of Lot One (1) of Lot One (1) of Lot Nine (9) in the
Northeast Quarter (NE1/4) of the Southeast Quarter (SE1/4) of Section
Fourteen (14), Township Ninety-Five (95) North, Range Five (5), West
of the P.M., in the City of Monona, in ▇▇▇▇▇▇▇ County, Iowa, according
to Plat recorded in Book 14, Plats, Page 49.
AND
Lot Two (2) of Lot One (1) of Lot Nine (9) of the Northeast
Quarter (NE1/4) of the Southeast Quarter (SE1/4) of Section Fourteen (14),
Township Ninety-Five (95) North, Range Five(s), West of the hh1 P.M., in
▇▇▇▇▇▇▇ County, Iowa, according to the recorded Platthereof in Book 8,
Land Rats, Page 85 in the office of the ▇▇▇▇▇▇▇ County Recorder.
(c) Excluded Assets. Except as provided, the Subject Assets shall not
include any of the following (collectively, the "Excluded Assets"):
(i) any cash, or cash equivalent assets of Subject Business;
(ii) Techspace, Inc.s corporate minute book, financial statements
and records, stock records or tax returns;
(iii) any personal effects of the shareholders, directors, officers
and employees of the Techspace, Inc. described on the attached Exhbit B; and
(iv) a certain Kyocera Mita KM3035 copier with Base, Finisher, Print
Controller and Document Feeder that are subject to a lease with Great
America Leasing Corporation lease number 330332 of Cedar Rapids, Iowa.
2. NO ASSUMPTION OF LIABILITIES. Buyer shall assume no obligations
or liabilities of Seller or Techspace, Inc., whatsoever, of any kind or
nature, whether they are accrued, absolute, contingent or otherwise.
Arts-Way Manufacturing Company, Inc. shall be liable for any road use
taxes payable in connection with the purchase of vehicles contemplated
herein. The transfer taxes on the real estate shall be charged against
the purchase price to be received by Seller at closing. Seller assumes
no liability for any and all taxes, accounts payable, claims (both known
and unknown), and debts incurred by, assessed against, and/or in the
name of Techspace, Inc.
3. PURCHASE PRICE; ADJUSTMENT; PAYMENT; ALLOCATION.
(a) Purchase Price for Personal Property. Subject to the
adjustments in Section 3(b), the purchase price for the Subject Assets
is One Million Four Hundred Fifty One Thousand Eight Hundred Fifty Nine
Dollars ($1,451,859). Buyer has deposited with Techspace, Inc.s broker,
Equity Partners, Inc. the sum of $145,000 as ▇▇▇▇▇▇▇ money (herein
"▇▇▇▇▇▇▇ Money") which ▇▇▇▇▇▇▇ Money, together with any interest
thereon, shall be applied to the purchase price at closing.
(b) Adjustments to Purchase Price. The Purchase Price shall be
adjusted upward or downward by the sum of the following adjustments:
(i) Accounts Receivable Adjustment. The purchase price shall be
calculated as a percentage of their face amount according to age
as follows:
those less than 30 days old shall be valued at 90% of the
face amount
thereof;
those 31 to 60 days old shall be valued at 80% of the face amount
thereof; and,
those 61 to 90 days old shall be valued at 70% of the face amount
thereof.
No accounts receivable more than 90 days old shall be purchased.
The valuation of the currently existing accounts receivable is
calculated as set forth in the following table:
Age Less Than 31-60 Days 61-90 Days Total
30 Days Valuation
Face Amount* 360,749.20 1,181.21 295.00 $362,225.38
Percentage 90% 80% 70%
of Face
Amount
Valuation 324,674.28 944.97 206.50 $325,825.75
No account receivable shall be given a value in making such calculation
that is not an account receivable from a customer arising from the sale
of goods by Techspace, Inc., in the ordinary course of business. In
applying the foregoing valuation, the face amount of all accounts
receivable shall be net of all offsets and applicable discounts. No
account receivable which is contested in whole or in part by the debtor
thereon shall be included as an account receivable in determining the
foregoing valuation nor shall it be transferred to Buyer but shall be
retained by Seller.
No account receivable shall be given a value in making such calculation
with respect to which the debtor on such account receivable is also a
creditor of Techspace, Inc.
(ii) Inventory Valuation. The purchase price of the inventory shall
be calculated as a percentage of such inventorys original cost or its
current market value if lower than original cost (hereinafter "Inventory
Cost") according to age as follows:
Inventories (including both Work in Process (WIP) and other inventory
less than six months old shall be valued at 75% of the Inventory Cost
thereof,
Inventories (including both Work in Process (WIP) and other inventory
six month old or more than six months old shall be valued at 0% of
the Inventory Cost thereof (Note a shrink factor was determined to be
3.13% based on a sampling of inventory counted by Buyer and Techspace,
Inc. representatives and has been taken into account in calculating
the current inventory value shown in the table below),
Obsolete inventory that is useable in existing orders shall be valued
at 10% of the Inventory Cost thereof.
The valuation of the currently existing Inventory valued using the
foregoing schedule, is illustrated on Exhibit "C".
Any item of inventory that is not new, is damaged, is otherwise unusable
for the purpose intended, is in excess of a 6 month supply at current
production rates, or is not used in the production of products in
Techspace, Inc.s current product line shall be given a value of zero
with the exception of the useable old inventory referred to above.
(iii) Adjustment for Customer Deposits. The purchase price shall be
reduced by the amount of any customer deposits or prepayments for future
delivery of goods that are not turned over to purchaser.
(c) Purchase Price for Real Property. At the closing, Buyer shall pay
Seller the sum of $539,030 for the real property deeded to it as is legally
described in paragraph 1(b) above subject to adjustments for real estate
closing costs as are set forth on Exhibit C attached.
(d) Paymentof Purchase Price. AttheClosing, Buyershall paythe Purchase
Price via cashiers check or wire transfer, as the parties shall agree. Seller
agrees that certain lien, lease, tax, commissions or other payments with
respect to the Subject Assets and the property subject to the lease provided
for in Paragraph 4. shall be made out of the purchase price and that the
purchase price shall be distributed to those persons and in those amounts
shown on the Schedule of Distribution of Purchase Price attached hereto
as Exhibit C-I at closing. Payment of the Purchase Price in accordance
with said Schedule shall constitute full payment of the Purchase Price
by Buyer.
(e) Allocation of Purchase Price. The Purchase Price shall be
allocated among the Subject Assets as follows:
Item Amount
Real Property 539,030.00
Rental Buildings 325,525.00
Equipment and Machinery 105,937.00
Intellectual Property and Intangibles
Accounts Receivable 11,573.00
Vehicles 33,428.00
WIP 94,040.00
Inventories 28,074.00
Total $1,137,606.00
The parties hereto agree to report the amounts payable under this
Agreement and under the documents and agreements executed in connection
herewith in a manner consistent with the intentions of the parties as
indicated in such documents and agreements. In addition, the parties hereto
agree not to take any position on their respective federal income tax
returns (including Internal Revenue Service form 8594) which is inconsistent
with such allocations. The allocations above contain the allocation of purchase
price among whole categories of Assets. Buyer may at any time up to the date
of closing make further allocations of the amount designated for each category
of Assets to the specific items within each such category.
(f) Good Faith Deposit Buyer has deposited with Techspace, Inc.s broker,
Equity Partners, Inc. $145,000.00 representing a Good Faith Deposit. Said Good
Faith Deposit, together with all accrued interest, shall be applied against
payment of the purchase price set forth above at Closing.
4. REAL ESTATE. Subject to and in accordance with the terms of this
Agreement, Freedom Bank shall deed the real property formerly owned by
Techspace, Inc. located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇, legally
described in Paragraph 1(b) above to Buyer via Warranty Deed in
substantially the form of Exhibit D and incorporated herein.
5. CLOSING.
(i) Time and Place of Closing. The closing of the purchase and sale
contemplated herein (the "Closing") shall take place on August 1, 2006
or as soon thereafter after as Buyer shall be satisfied with Sellers
ability to deliver clear title to the assets being sold. Closing shall
take place at the offices of Freedom Bank, in Monona, Iowa or such other
time and place as Seller and Buyer may agree. The effective time of the
Closing shall be deemed to 12:01 a.m. CDT on the Closing Date.
(b) Sellers Deliveries. At the Closing, Seller shall deliver to Buyer
the following:
(i) a transfer statement pursuant to Section 554.9619 of the Iowa
Code, together with any bills of sale, assignments, certificates of title
and such other instruments of conveyance as Buyer shall reasonably require,
in a form reasonably satisfactoryto Buyer and Buyers counsel, duly
executed, conveying to Buyerthe Subject Assets, free and clear of all
liens, claims and encumbrances;
(ii) a certificate from the Secretary of Seller, in a form reasonably
satisfactory to Buyer and Buyers counsel, setting forth the resolutions
adopted by the board of directors of Seller authorizing the execution of
this Agreement and all documents to be executed in connection herewith and
the taking of any and all actions deemed necessary and advisable to
consummate the sale of the Subject Assets;
(iii) actual or constructive possession of the Subject Assets and the
Subject Business Records;
(iv) duly executed satisfactions, termination statements and/or releases
in form and substance reasonably satisfactory to Buyer and its counsel
sufficient to release any and all liens, claims or encumbrances of Seller
affecting the Subject Assets;
(v) such other instruments as Buyer may reasonably request to vest in
Buyer, full and unencumbered title to the Subject Assets.
(c) Buyers Deliveries. At the Closing, Buyer shall deliver to Seller
the Purchase Price in the manner specified pursuant to Section 3(a).
6. WARRANTIES AND REPRESENTATIONS OF SELLER. Seller hereby warrants and
represents to Buyer, which warranties and representations shall survive
the Closing as hereinafter set forth, as follows:
(a) Corporate Matters.
(i) Seller is a corporation duly incorporated and validly existing under
the laws of the State of Iowa and has the authority and power, corporate
and otherwise, to carry on all business activities currently or
previously conducted by it. Seller has the corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
agreements and instruments relating hereto and the consummation of the
transactions contemplated hereby have been approved by the board of
directors of Seller and are and shall constitute valid and legally
binding obligations of Seller, enforceable against it in accordance with
their respective terms.
(ii) The execution of this agreement and the consummation hereof, do not
conflict, or result in the breach of, or constitute a default under, the
articles of incorporation or bylaws of Seller or any material agreement or
instrument affecting the Subject Assets of which Seller has knowledge and
to which Seller is a party or by which it is bound.
(b) No Consent. No consent, approval, order or authorization of,
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign, is required to be obtained or made by or with respect to the
Subject Assets as a condition to the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(c) Title to Subject Assets. Seller owns as hereinbefore provided,
and shall at closing assign, transfer and convey to Buyer all of Techspace,
Inc.s rights to legal and beneficial ownership of all of the Subject
Assets free and clear of all liens or encumbrances whatsoever.
(d) Compliance with Law. Seller has complied in all material respects
with applicable Iowa Law concerning obtainment of the Subject Assets and
transfer of same to Buyer.
(d) Location of Assets: All of the Subject Assets are located at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ unless they are on assignment to a project in the state
of Iowa.
(e) Notice Regarding Changes: Seller shall promptly inform Buyer in
writing of any change in facts and circumstances that will render any of
the representations or warranties made herein by Seller inadequate or
misleading if such representations and warranties had been made upon the
occurrence of the fact or circumstance in question.
7. CONDITIONS TO CLOSING. The obligations of the Buyer to close this
transaction are specifically conditioned upon the occurrence of, or
satisfaction of, the following events and conditions:
(a) Techspace, Inc. and Buyer shall have conducted a physical
inventory on or before closing which results are satisfactory to Buyer
and approved and accepted by Techspace, Inc. for purposes of determining an
adjustment to the purchase price under paragraph 3(b);
(b) All representations and warranties of Seller as contained in this
agreement shall be true and correct in all material respects at and as of the
closing as if such representations and warranties were made at and as of the
closing (except for changes contemplated by the terms of this agreement), and
Seller shall have performed and satisfied in all material respects all
covenants and agreements required by this agreement to be performed and
satisfied by it at or prior to closing.
(c) There shall not have occurred any damage, destruction or loss of any
of the Subject Assets (whether or not covered by insurance).
8. CONDUCT SUBSEQUENT TO CLOSING.
(a) Execution and Delivery of Further Instruments by Seller. Seller
shall as reasonably necessary upon the request of Buyer or its
successors or assigns, execute, acknowledge and deliver to Buyer or its
successors or assigns such further instruments of conveyance,
assignment, transfer, powers of attorney, consents and assurances and
shall take such other action as Buyer or its successors or assigns may
reasonably request in order to convey, assign, transfer and deliver any
of the Subject Assets to Buyer.
(b) Execution and Delivery of Further Instruments by Buyer. Buyer shall
at anytime, and from time to time after the Closing upon the request of Seller,
or its successors or assigns, execute, acknowledge and deliver to the
requesting party such further instruments and take such other actions as Seller
may reasonably request in order to more effectively consummate the transactions
contemplated by this Agreement.
(c) Access to Business Records. From and after the Closing Date, the
Buyer shall use ordinary care to maintain the business records of Techspace,
Inc. acquired by it pursuant hereto and, damage by fire or other casualty or
accident excepted, shall not for a period of seven (7) years after the Closing
Date destroy or dispose of any such records unless it shall first have notified
Seller of its intention to do so in writing and shall have afforded Seller an
opportunity to take possession thereof. For the seven calendar years
following closing, Seller, Techspace, Inc. and its owners shall have
access to business records of Techspace, Inc., as needed, on all normal
business days provided that Seller, Techspace, Inc., or either of its
owners, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, provide 48 hour written notice to Buyer
or its assigns. The obligation contained herein to provide access to
business records shall survive the closing and shall be an obligation of
any successor in interest to Buyer.
(d) Survival of Obligations. Unless otherwise provided, the
representations and obligations contained in this Agreement will survive
the consummation of the transactions contemplated by this Agreement. Any
investigation made at any time by Buyer or Buyers representatives shall
not constitute a waiver of Buyers rights under any representation set
forth in this Agreement.
9. BUYERS RIGHT OF TERMINATION: Buyer shall have the right and option to
terminate this contract immediately upon the happening of any of the
following:
a. Upon breach by Seller of any representation or warranty
made by Seller herein.
b. Upon Sellers ceasing, prior to closing, operations of its
business in the normal course and as a going concern.
c. Upon the failure of Seller to satisfy any condition precedent to
Buyers obligation to close hereunder set forth in this agreement
In the event Buyer shall elect to terminate this agreement pursuant to the
option to terminate contained in this Paragraph 9, upon written notice
of such election by Buyer to Seller, this contract shall be deemed
terminated.
10. MISCELLANEOUS.
(a) Expenses. The parties hereto shall pay their own expenses,
including, without limitation, accountants and attorneys fees incurred
in connection with the negotiation and consummation of the transactions
contemplated by this Agreement.
(b) Notices. All notices or other communications required or permitted
to be given hereunder to either party shall be in writing and shall be
considered to be given and received in all respects when personally
delivered or sent by prepaid telex, cable or telecopy or sent by
reputable overnight courier service or three days after deposited in the
United States mail, certified mail, postage prepaid, return receipt
requested, addressed as follows, orto such other address as shall be
designated by notice duly given:
IF TO BUYER: Arts-Way Manufacturing Co., Inc.
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
P0 ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇, ext. 222
fax (▇▇▇) ▇▇▇-▇▇▇▇
e-mail ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
fax (▇▇▇) ▇▇▇-▇▇▇▇
e-mail wootencolevearthlink. net
IF TO SELLER: Freedom Bank
c/o ▇▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Attorneys at Law
▇▇▇ ▇. ▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(c) Public Announcements. The parties shall mutually agree as to
what, if any, public announcements are to be made after the sale. Except
as may be required by law there shall be no announcement of the Purchase
Price by either party.
(d) Entire Agreement This Agreement, and the agreements executed and
delivered simultaneously herewith constitute the entire agreement between
the parties hereto relating to the subject matter hereof, and all prior
agreements, correspondence, discussions and understandings of the parties
(whether oral or written) are hereby superseded, it being the intention of
the parties hereto that this agreement shall serve as the complete and
exclusive statement of the terms of their agreement together. No amendment,
waiver or modification hereto or hereunder shall be valid unless in writing
signed by an authorized signatory of the party or parties to be affected
thereby.
(e) Binding Effect. This Agreement shall be binding upon the parties
hereto, their respective legal representative, successors, and assigns.
(f) Paragraph Headings. The headings in this Agreement are for purposes
of convenience and ease of reference only and shall not be construed to limit
or otherwise affect the meaning of any part of this Agreement.
(g) Severability. The parties agree that if any provision of this
Agreement shall under any circumstances be deemed invalid or
inoperative, this Agreement shall be construed with the invalid or
inoperative provision deleted, and the rights and obligations of the
parties shall be construed and enforces accordingly.
(h) Applicable Law. This Agreement and all questions arising in
connection herewith shall be governed by and construed in accordance with the
laws of the State of Iowa.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day, month and year first above written.
SELLER: BUYER:
Freedom Bank Arts-Way Manufacturing Co., Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇, President J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Chairman of
the Board