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, Clayton 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 Clayton 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
Clayton County, Iowa, according to the recorded Platthereof in Book
8,
Land Rats, Page 85 in the office of the Clayton 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 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
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
