Exhibit 10.9
ASSET PURCHASE AGREEMENT
THIS AGREEMENT
is made and entered into this 4 day, of October, 2005 by
and among Art's-Way Manufacturing Co., Inc., a Delaware corporation
("Buyer"),
and Premier 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 Vessel Systems, Inc., in the
business
of the design, manufacture, and distribution to third party
purchasers of
steel pressure tanks and vessels and related parts and accessories
(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
Vessel Systems, inc., 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 Vessel Systems, Inc. to Seller including without
limitation those items identified or described, on attached Exhibit
A
and incorporated herein. It is understood that the following
property
formerly owned by Marke, LLC will be transferred to Buyer at
closing:
paint booth; blast booth; 4 overhead cranes; and 2 hydro tanks
located
outside the building; also conveyed are all warranties,
instructions,
operating manuals, service records and software associated with
any
of the foregoing.
(ii) all inventories of raw materials, work in process, and
finished goods (including all such inventory at Vessel Systems,
lnc.'s
facility in Dubuque, Iowa); (the "Inventory");
(iii) 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 arising in the ordinary course
of Vessel Systems, Inc.'s business from the sale of products to
customers.
(viii) all other property located at Vessel Systems, Inc's
facility in Dubuque, Iowa.
(b) 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) Vessel System's lnc.'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 Vessel Systems, Inc. described on
the
attached Exhbit B; and,
(iv) a certain Tital 10 MG-Messer Global Control High
Definition Lasar burning table subject to a lease with BBC
Community
Leasing Service, Inc. of Madison, Wisconsin..
2. NO ASSUMPTION OF LIABILITIES. Buyer shall assume no obligations
or
liabilities of Seller or Vessel Systems, Inc., whatsoever, of any
kind
or nature, whether they are accrued, absolute, contingent or
otherwise.
Vessel Systems, Inc. shall be liable for any sales or transfer
taxes
payable in connection with consummation of the transactions
contemplated
herein.
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 Two Hundred Fifty Thousand Dollars ($1,250,000). Buyer
has
deposited with Vessel Systems, Inc.'s broker, Equity Partners, Inc.
the sum of
$150,000 as earnest money (herein "Earnest Money") which Earnest
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 increased by the amount that the value of the accounts
receivable
transferred at closing shall be more than $339,317.11, or shall
be
decreased by the amount that the value of the accounts
receivable
transferred at closing shall be less than $339,317.11. In
calculating
the foregoing adjustment the accounts receivable transferred shall
be
valued 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 85% of the face
amount thereof;
those 61 to 90 days old shall be valued at 75% of the face
amount thereof; and those more than 90 days old shall be
valued at 44% of the face amount thereof.
To illustrate, the valuation of the currently existing accounts
receivable (as represented by Vessel Systems, Inc.) valued using
the
foregoing schedule, would be calculated as set forth in the
following
table:
Age Less
Than 31-60
Days 61-90 Days
Over 90
Total
30 Days
Days
Valuation
Face 125,370.00
71,527.00
6,084.00 366,189.00
Amount*
Percentage 0.90
0.85
0.75
0.44
of Face Amount
Valuation 112,833.00 60,797.95 4,563.00
161,123.16
339,317.11
*The foregoing table is for illustration only and does not
constitute Buyers
agreement that any amount shown therein is properly included in
the
calculation of the value ofthe accounts receivable under the
requirements
of this paragraph.
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 Vessel Systems, 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.
(ii) Inventory Adjustment. The purchase price shall be
increased by the amount that the value of the inventory
(including
work in process (WIP) and other inventory) transferred at
closing
shall be more than $423,800.00, or shall be decreased by the
amount
that the value of the inventory transferred shall be less than
$423,800.00. In calculating the foregoing adjustment the
inventories
transferred shall be valued as a percentage of such inventory's
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 88% 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 40% of
the
Inventory Cost thereof,
The
valuation of the currently existing Inventory valued using the
foregoing schedule, is illustrated in the following table:
Age
WIP Less than Other inventory
Inventory
over 6 Total
Value
6 months old
Less than 6
months old
months old
Inventory
Cost
45,000.00
385,000.00
113,500.00
Percentage of
Inventory Cost 0.88
0.88
0.40
Totals
39,600.00
338,800.00
45,400.00
423,800.00
*The foregoing table
is for illustration only and does not constitute Buyer's
agreement that any
amount shown therein is properly included in the
calculation of the
value of the inventory under the requirements of this
paragraph.
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
Pressure Systems, Inc.'s current product line shall be given a
value of
zero
and shall be retained by Seller.
Three (3) days immediately preceding the Closing, Seller and Buyer
shall
take
a physical inventory and the inventory figures so determined
shall
be
used to make the adjustment to purchase price called for
herein.
(c) Payment of Purchase Price. At the Closing, Buyer shall pay
the Purchase Price via cashier's 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 at closing. Payment of the Purchase
Price in
accordance with said Schedule shall constitute full payment of the
Pur
