SECURITIES AND EXCHANGE COMMISSION
Washington, D.C, 20549
FORM S-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):September 6, 1996
ART'S-WAY MANUFACTURING CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 0-5131 42-0920725
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) I.D. No.)
Highway 9 West, Armstrong, Iowa 50514
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (712)864-3131
Not Applicable
(Former name or address, if changed since last report)
FORM 8-K CURRENT REPORT
Item 2. Acquisition or Disposition of Assets
(a) On approximately September 6, 1996, the Registrant completed
the initial steps toward acquisition of certain assets. This
acquisition, which was reported in Registrant's Form 10-K
Annual Report for the year ended May 31, 1996, involved the
acquisition of certain inventories and production tooling for
agricultural equipment. The purchase price, some of which is
payable on a formula basis in installments through October
1, 1997, consists of approximately $650,000 in cash plus
145,000 shares of Registrant's Common Stock. The purchase
price was arrived at through negotiation between Registrant
and the Seller, J. Ward McConnell, Jr. (Including entities
controlled by Mr. McConnell). Mr. McConnell has now been
elected to Registrant's Board of Directors. The principal
source of cash funds to complete the acquisition is
industrial development loans from the State of Iowa and
certain municipalities in the amount of $750,000.
(b) Substantially all of the assets acquired constituted
physical property consisting of agricultural equipment
inventories and production tooling.
Item 7. Financial Statements and Exhibits
Exhibit:
Asset Purchase Agreement
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 and thereunto duly
authorized.
ART'S-WAY MANUFACTURING CO., INC.
By: /s/ William T. Green
Dated: September 19, 1996 William T. Green, Secretary
TABLE OF CONTENTS
Page
ARTICLE I
Purchase and Sale of Assets; Assumption of
No Liabilities
1.1 Agreement to Purchase and Sell 1
1.2 Enumeration of Purchased Assets 1
1.3 Excluded Assets 2
1.4 No Assumption of Liabilities 2
ARTICLE II
Purchase Price; Delivery of Purchased Assets;
Manner of Payment and Closing
2.1 Purchase Price 2
2.2 Delivery of Purchased Assets 3
2.3 Manner of Payment : 3
2.4 Time and Place of Initial Closing 3
2.5 Initial Closing Documents 3
2.6 Allocation of Purchase Pr@ce 3
ARTICLE III
Representations and warranties
3.1 Purchaser's Representations and Warranties 4
3.2 Seller's Representations and Warranties 4
ARTICLE IV
Interim Operations
4.1 General 7
4.2 1996 Production 8
ARTICLE V
Conditions to Closing
5.1 Conditions to Seller's Obligations 8
5.2 Conditions to Purchaser's Obligations 9
5.3 Casualty; Failure to Deliver 9
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements 10
6.2 Inspection of Records 10
6.3 Use of Trademarks; References to Seller 10
6.4 Product Warranties 10
6.5 Covenant to Maintain Logan Business 11
6.6 Disclosure of Confidential Information 11
6.7 Injunctive Relief 11
6.8 Board Representation 12
6.9 Further Assurances 12
Page
ARTICLE VII
Indemnification
7.1 General 12
7.2 Indemnification Obligations of Seller 12
7.3 Limitations on Seller's Indemnification
Obligation 13
7.4 Indemnification Obligations of Purchaser 13
ARTICLE VIII
Miscellaneous
8.1 Publicity 14
8.2 Notices 14
8.3 Expenses 14
8.4 Entire Agreement 15
8.5 Survival; Non-Waiver 15
8.6 Applicable Law 15
8.7 Binding Effect; Benefit 15
8.8 Arbitration 15
8.9 Assignability 15
8.10 Amendments 16
8.11 Headings 16
8.12 Successor in Interest 16
8.13 Execution 16
Exhibit A - Purchased Assets
Exhibit B - Calculation of Cash Portion of Purchase Price
Exhibit C - Promissory note
Exhibit D - Delivery Dates
Exhibit E - Investment Letter
Exhibit F - Allocation of Purchase Price
Exhibit G - Disclosure Schedule
Exhibit H - Opinions of Counsel
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of August 30, 1996 between J. Ward
McConnell, Jr. ("McConnell") , Logan Harvesters, Inc., an Idaho
corporation ("Logan" or "Seller") and Art's-Way Manufacturing
Co., Inc., a Delaware corporation ("Purchaser").
R E C I T A L S
A. Seller is in the business of manufacturing and distributing
potato farming equipment comprising the "Logan" product line. The
business of Seller as described above is referred to herein as the
"Business". McConnell, directly or indirectly, is the sole
shareholder of Logan.
B. Seller desires to sell to Purchaser certain designated assets
and inventories and related property rights, as more particularly
identified in Section 1.2 hereof and Exhibits A-1 and A-2 hereto
(collectively, the "Purchased Assets,'); and Purchaser desires to
purchase the Purchased Assets, all on the terms and subject to the
conditions contained in this Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Purchase and Sale of Assets; Assumption of No Liabilities
1.1 Agreement to Purchase and Sell. On the terms and subject
to the conditions contained in this Agreement, Purchaser agrees to
purchase from Seller and Seller agrees to sell to Purchaser,all of
the Purchased Assets. The Purchased Assets shall be sold to
Purchaser free and clear of any liens, title claims, encumbrances
or security interests.
1.2 Enumeration of Purchased Assets. The Purchased Assets
include, without limitation, the following items:
(a) All equipment, fixtures, tools, dies, bills of material,
engineering development information, Intellectual Property
(as defined in Section 3.2(p)) and all computer software and
electronic data of every kind, if any,which is owned by Seller
and which is used or useful in the production of the Logan
product line of potato equipment, as more fully described,
and located as indicated, on Exhibit A-1 hereto (the
"Production Assets"); and,
(b) Subject to the terms of ' Exhibit B, those items of raw
materials, finished goods, goods in process, components,
service parts, spare or replacement parts more fully
described on Exhibit A-2 hereto (the "Inventory") and which
are owned by Seller as of the Delivery Dates shown on
Exhibit D.
1.3 Excluded Assets. Notwithstanding Sections 1.1 and 1.2, the
Purchased Assets shall not include the following assets of
Seller (the "Excluded Assets,,):
(a) Cash and cash equivalents, including investments, accounts
receivable, loans, notes and prepaid expenses, except for
amounts representing customer credits or deposits to which
Purchaser is entitled under Section 4.2; and
(b) Real estate, leasehold interests, leasehold improvements,
office furniture and fixtures; and
(c) Assets not related to the Logan product line of potato
equipment;
(d) All other items of Seller's equipment, inventories and
other property not listed or described in Exhibit A-1 or
A-2; and
(e) Computer hardware.
1.4 No Assumption of Liabilities.
(a) Except as otherwise set forth in this Agreement, Purchaser
shall not assume any of the liabilities or obligations of
Seller or McConnell. Seller shall remain fully responsible
and shall pay and discharge when due all of the liabilities
and obligations of the Business.
(b) Seller acknowledges that Purchaser shall not be obligated
to hire any employees of Seller who are currently or
previously have been employed in connection with the operation
of the Business.
ARTICLE II
Purchase Price; DeliverV of Purchased Assets;
Manner of Payment and Closing
2.1 Purchase Price. The purchase price (the "Purchase Price")
of the Purchased Assets shall consist of:
(a) 145,000 shares of Purchaser's Common Stock, (the "Stock");
and
(b) Cash in an amount calculated in accordance with the
terms set forth in Exhibit B hereto (the "Cash") ,
of which $250,000 shall be paid at the Initial Closing
described below
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and the balance shall be evidenced by Purchaser's
Promissory Note (the "Note") in form and substance
as Exhibit C attached hereto and incorporated herein
by reference.
2.2 Delivery of Purchased Assets. The Purchased Assets shall
be delivered to Purchaser on or before the respective dates
specified in Exhibit D hereto (each a "Delivery Date"). Risk
of loss shall pass from Seller to Purchaser upon the transfer
of such assets to a common carrier for delivery to Purchaser
in Armstrong, Iowa. Purchaser shall pay all transportation
costs. Seller shall arrange for transportation and notify
Purchaser of the Delivery date.
2.3 Manner of Payment.
(a) At the Initial Closing hereinafter identified, and upon
fulfillment of all required closing conditions specified in
Article V hereof, Purchaser shall execute and/or deliver to
Seller, upon delivery of all required instruments of transfer
or other Ancillary Documents, as defined herein:
(i) A certified or cashier's check or bank wire
transfer in the amount of $250,000;
(ii) The Note
(b) On or before September 3, 1996 Purchaser shall deliver
to Seller one or more certificates representing the Stock,
registered in the name of McConnell, provided Seller and
McConnell shall have executed and delivered to Purchaser an
Investment Letter of substantially the form and content as
Exhibit E hereto. Issuance and delivery of the stock shall
not be subject to any conditions or provisions of this
Agreement other than the execution and delivery of certain
documents at closing, including exhibits.
2.4 Time and Place of Initial Closing.The initial transactions
contemplated by this Agreement shall be consummated (the
"Initial Closing") concurrent with the execution hereof at the
offices of Cline, Williams, Wright, Johnson &: oldfather,
one Pacific Place, Suite 720, Omaha, NE 68124, by such means,
including exchange of facsimile signatures, as the parties
shall jointly determine. The date on which the Initial Closing
occurs in accordance with the preceding sentence is referred
to in this Agreement as the "Initial Closing Date".The Initial
Closing shall be deemed to be effective as of 11:59 p.m. at
Omaha, Nebraska on the Initial Closing Date.
2.5 Initial Closing Documents. At the Initial Closing, the
parties shall execute and/or deliver the following:
(a) This Agreement, including all Exhibits thereto;
(b) The Note;
(c) A Bill of Sale;
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(d) Resolutions of the respective Boards of Directors
of Purchaser and Seller,certified by their
respective Secretaries;
(e) Opinions of Counsel for Purchaser and Seller,
respectively; and
(f) Such other certifications and documents as the
parties shall mutually determine.
All documents to be delivered by a party shall be in form and
substance reasonably satisfactory to the other party.
2.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets in the manner required by
Section 1060 of the Internal Revenue Code of 1986, as amended,
and, unless the parties shall mutually agree otherwise, in
accordance with Exhibit F hereto. The parties agree that the
sum allocated to production tooling shall be $250,000 plus
the fair market value of the Stock on the Initial Closing Date
and $400,000 shall be allocated to inventories, subject to
adjustments arising from the final calculations pursuant to
Exhibit B.
ARTICLE III
Representations and Warranties
3.1 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized, existing and
in good standing, under the laws of the State of Delaware.
(b) Purchaser has full corporate power and authority to enter
into and perform this Agreement and to execute all documents
and instruments to be executed by Purchaser pursuant to this
Agreement including, but not limited to, the Note and the
Stock, (collectively, "Purchaser's AncillarV Documents").
This Agreement has been, and Purchaser's Ancillary Documents
will be, duly executed and delivered by duly authorized
officers of Purchaser.
(c) Neither the execution and delivery of this Agreement
and Purchaser's Ancillary Documents by Purchaser, nor the
consummation by Purchaser of the transactions contemplated
hereby, will conflict with or result in a breach of any of
the terms, conditions or provisions of Purchaser's Articles
of Incorporation or By-laws, or any agreement to which
Purchaser is a party, or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or
decree of any court or any governmental authority or of any
arbitration award.
(d) The issuance of the Stock has been duly authorized and
when issued and delivered pursuant to this Agreement, will
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constitute legally issued outstanding shares of Purchaser's
common stock.
(e) Neither Purchaser, nor any of its Affiliates, has dealt
with any person or entity who is or may be entitled to a
broker's commission, finder's fee, investment banker's fee
or similar payment for arranging the transactions contemplated
hereby or introducing the parties to each other. As used
herein, an Affiliate is any person or entity which controls,
is controlled by or is under common control with another
person or entity.
(f) All consents and approvals necessary for Purchaser to
enter into and consummate this transaction have been obtained
from all third parties.
3.2 Seller's Representations and Warranties. Seller represents
and warrants to Purchaser that, except as set forth in
Exhibit G attached hereto and identified as the "Disclosure
Schedule":
(a) McConnell is the sole shareholder of Seller.
(b) Seller is a corporation duly organized, existing and in
good standing, under the laws of the State of Idaho and has
all necessary corporate power and authority to conduct the
Business as the Business is now being conducted.
(c) Seller has full power and authority to enter into and
perform this Agreement and all documents and instruments
to be executed by Seller pursuant to this Agreement
(collectively, "Seller's Ancillary Documents"). This
Agreement has been, and Seller's Ancillary Documents will be,
duly executed and delivered by duly authorized officers of
Seller.
(d) To the best of Seller's knowledge, no consent,
authorization, order or approval of, or filing or registration
with, any governmental authority or other person is required
for the execution and delivery of this Agreement and Seller's
Ancillary Documents and the consummation by Seller of the
transactions contemplated by this Agreement and Seller's
Ancillary Documents.
(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation
by Seller of the transactions contemplated hereby, will
conflict with or result in a breach of any of the terms,
conditions or provisions of Seller's Articles of Incorporation
or By-laws, or any agreement to which Seller is a party, or of
any statute or administrative regulation, or of any order,
writ, injunction, judgment or decree of any court or any
governmental authority or of any arbitration award.
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(f) Seller's books, accounts and records are, and have been,
maintained in Seller's usual, regular and ordinary manner,
in accordance with Generally Accepted Accounting Principals
("GAAP'l) and all transactions with respect to the Purchased
Assets are properly reflected therein. For purposes of
Inventory valuation as set forth on Exhibit B, Seller reflects
the costs of Inventory on its books as material costs plus
labor and overhead at $35.00 per hour.
(g) Seller has good and marketable title to, and the corporate
power to sell, the Purchased Assets, free and clear of any
liens, claims, encumbrances and security interests, except for
liens for non-delinquent taxes. No unreleased mortgage, trust
deed, chattel mortgage, security agreement, financing
statement or other instrument encumbering any of the Purchased
Assets has been recorded, filed, executed or delivered.
(h) Section 3.2(i) of the Disclosure Schedule (Exhibit G)
contains a true and correct list and description (including
coverages, deductibles and expiration dates) of all insurance
policies which are owned by Seller or which name Seller as an
insured and which pertain to the Purchased Assets, including,
without limitation, all general liability and product
liability insurance policies. All such insurance policies are
in full force and effect, and Seller has not received notice
of termination or non-renewal of any such insurance policies.
(i) Seller has not suffered or been threatened with any
material adverse change in the normal course of Seller's
business, operations, assets (including the Purchased Assets),
liabilities, or prospects of the Business, including, without
limiting the generality of the foregoing, any material adverse
change in, or loss of, any relationship between Seller and any
of its customers or suppliers.
(j) Seller is not a party to, or bound by, any unexpired,
undischarged or unsatisfied written or,to the best of Seller's
knowledge, oral contract, agreement, indenture, mortgage,
debenture, note or other instrument under the terms of which
performance by Seller according to the terms of this Agreement
will be a default or an event of acceleration, or whereby
timely performance by Seller according to the terms of this
Agreement may be prohibited, prevented or delayed.
(k) Attached to Section 3.2(m) of the Disclosure Schedule
(Exhibit G) is a copy of every license, permit, registration
and governmental approval, agreement and consent applied for,
pending by, issued or given to Seller and used in connection
with the Purchased Assets.
(1) All Inventory constituting a part of the Purchased Assets
consists of items of a quality useable and saleable in
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the normal course of Seller's business. Such Inventory is
free from defects in materials and/or workmanship.
(m) There is no litigation or proceeding, at law or in equity,
and there are no proceedings or governmental investigations
before any commission or other administrative authority,
pending, or, to the best of Seller's knowledge, threatened,
against Seller or its Affiliates which relate to the
consummation of the transactions contemplated hereby, or the
use of the Purchased Assets (whether used by Purchaser after
the appropriate Delivery Date or by Seller prior thereto).
(n) There are no claims pending or, to the best of Seller's
knowledge, anticipated or threatened against Seller with
respect to the quality of or absence of defects in products
or services which Seller has sold or performed.
(o) Seller is not a party to, or bound by, any decree, order
or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding with any
governmental authority) with respect to the Purchased Assets.
(p) With respect to the "Logan" product line, all (i)
trademarks, slogans, trade names, and the like (collectively
with the associated goodwill of each, if any, "Trademarks"),
together with information regarding all registrations and
pending applications to register any such rights; (ii) common
law Trademarks, if any; (iii) proprietary formulations,
manufacturing methods, know-how and trade secrets, if any,
which are material; (iv) patents on and pending applications
to patent any technology or design, if any; (v) registrations
of and applications to register copyrights, if any; and (vi)
Trademarks, patents, copyrights, unpatented formulations,
manufacturing methods and other know-how, whether to or by
Seller, if any, (referred to herein collectively as the
"Intellectual Property"), are identified in Exhibit A-1.
(q) (i) With respect to such Intellectual Property, if any,
Seller is the owner of or duly licensed to use each Trademark
and its associated goodwill; (ii) each Trademark registration
exists and has been maintained in good standing; (iii) each
patent and application included in the Intellectual Property
exists, is owned by or licensed to Seller, and has been
maintained in good standing; (iv) each copyright registration
exists and is owned by Seller; (v) to the best of Seller's
knowledge, no other firm, corporation, association or person
claims the right to use in connection with similar or closely
related goods any mark which is identical or confusingly
similar to any of the Trademarks; (vi) Seller has no knowledge
of any claim, and have no reason to believe that any third
party asserts ownership rights to any of the Intellectual
Property; (vii) Seller has no knowledge of any claim and have
no reason to believe that Seller's use of any
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Intellectual Property infringes any right of any third party;
and (viii) Seller and McConnell have no knowledge or any
reason to believe that any third party is infringing any of
Seller's rights in any of the Intellectual Property.
(r) To the best of Seller's knowledge, the representations and
warranties of Seller in this Agreement do not omit to state
a material fact necessary in order to make the
representations, warranties or statements contained herein
not misleading.
(s) To the best of Seller Is knowledge, the copies of all
documents furnished by Seller to Purchaser pursuant to the
terms of this Agreement or otherwise are complete and
accurate.
(t) Neither Seller, McConnell, nor any of their respective
Affiliates, has dealt with any person or entity who is or
may be entitled to a broker's commission, finder's fee,
investment banker's fee or similar payment for arranging
the transaction contemplated hereblr'or introducing the
parties to each other.
ARTICLE IV
Interim Operations
4.1 General. Between the date hereof and the final Delivery
Date specified on Exhibit D:
(a)Seller shall give Purchaser reasonable access during normal
business hours to all of the properties, books, contracts,
documents and records which relate to the Purchased Assets
and shall furnish to Purchaser such information as Purchaser
may from time to time reasonably request.
(b) No party shall intentionally perform any act which if
performed, or omit to perform any act which, if omitted to
be performed, would prevent or excuse the performance of this
Agreement by such party.
4.2 1996 Production.The Purchaser acknowledges that the Seller
will produce 75 bulk beds, all windrowers and all harvesters
for the 1996 season. In that regard, following the Initial
Closing, the Purchaser acknowledges that the Seller will use
certain assets listed on Exhibit A-1 and A-2 with respect to
meeting these 1996 production standards. Purchaser further
acknowledges that the Seller has scheduled an additional
thirtyfive (35) bulk beds for the 1996 production season
(hereinafter the "additional bulk beds") . At Purchaser's
request, Seller has ordered certain inventory necessary for
the production of the additional bulk beds and Purchaser
hereby agrees to pay to Seller the invoice cost of all
inventory ordered by Seller for the additional bulk beds
within five (5) days upon receipt by Purchaser
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of the Inventory in Armstrong, Iowa provided such payment by
Purchaser shall be net of any customer credits or deposits
relative thereto. Risk of loss shall pass from Seller to
Purchaser upon the transfer of such assets to a common carrier
for delivery to Purchaser in Armstrong, Iowa. Purchaser shall
pay all transportation costs. Purchaser further acknowledges
and agrees that its production forthe fulfillment of additional
bulk beds shall not go towards or be a part of any Initial
Production Run as described and set out on Exhibit B to this
Agreement. Further, Purchaser acknowledges and agrees that
Seller shall have no responsibility under any section,
paragraph or provision of this Agreement with respect to
Purchaser's production of the additional bulk beds for the
1996 season. Purchaser further acknowledges and agrees that
Seller shall have no obligation to deliver any assets listed
on Exhibit A-1 and A-2 necessary for Seller to produce and
fulfill its 1996 production obligations as described in this
Article until October 15, 1996. The Inventory used by Purchaser
for the additional bulk beds shall not constitute part of the
Inventory for purposes of Exhibit B, it being expressly
understood that the additional bulk bed Inventory shall be
paid for pursuant to this Section 4.2 and not pursuant to
Exhibit B.
ARTICLE V
Conditions to Closing
5.1 Conditions to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is
subject to the fulfillment of all of the following conditions
on or prior to the Initial Closing Date:
(a) All obligations of Purchaser to be performed hereunder
through, and including on, the Initial Closing Date shall
have been performed.
(b) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or
private person on any grounds to restrain, enjoin or hinder,
or to seek material damages on account of, the consummation
of the transactions contemplated hereby.
(c) Purchaser shall have made the deliveries specified
in Section 2.3(a)(i) and (ii).
(d) Purchaser shall have delivered corporate resolutions,
certified by the Secretary of Purchaser, authorizing the
transactions contemplated by this Agreement, including
issuance of the Stock.
(e) Purchaser shall have delivered a certificate of good
standing from the State of Delaware.
(f) Purchaser shall have delivered to Seller the written
opinion of Cline, Williams, Wright, Johnson & Oldfather,
counsel to
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Purchaser, dated as of the Initial Closing Date, in
substantially the form as Exhibit H-1 attached hereto.
5.2 Conditions to Purchaser, s Obligations. The obligation
of Purchaser to consummate the transactions contemplated
hereby is subject to the fulfillment of all of the
following conditions on or prior to the Initial Closing Date:
(a) All obligations of Seller to be performed hereunder
through, and including on, the Initial Closing Date shall
have been performed.
(b) (Intentionally omitted]
(c) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority
or private person on any grounds to restrain, enjoin or
hinder, or to seek material damages on account of,
the consummation of the transactions contemplated hereby.
(d) This Agreement, including the issuance of the Stock
and Delivery of the Note, shall have been approved by the
Board of Directors of Purchaser, as evidenced by the
resolutions identified in Section 5.1(d) above.
(e) Seller and McConnell shall have delivered a Bill of
Sale transferring the Purchased Assets to Purchaser free
and clear of all liens and encumbrances and Seller and
McConnell shall have delivered the Investment Letter set
forth in Exhibit E.
(f) Seller shall have delivered to Purchaser the written
opinion of White & Allen, P.A., counsel to Seller, dated
as of the Initial Closing Date, in substantially the form
of Exhibit H-2 attached hereto.
5.3 Casualty; Failure to Deliver. If prior to any Delivery
Date, any damage to or loss of any of the Purchased Assets
listed on Exhibit A-1 not yet delivered to Purchaser occurs
due to fire, flood, riot, theft, Act of God or other casualty,
or if Seller shall fail to deliver any of the Purchased Assets
listed on Exhibit A-1 on the appropriate Delivery Date, the
Purchase Price, and the corresponding Payments required on
the Note shall be reduced by an amount equal to the reasonably
estimated total cost necessary to repair or replace such
Purchased Assets or, alternatively, Purchaser shall receive
such insurance proceeds for those Purchased Assets damaged
or destroyed as may be payable from any insurance coverage
on the damaged or destroyed assets not to exceed the cost
of repair or replacement.
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ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements. From and af ter the Initial
Closing, the parties shall have the respective rights and
obligations which are set forth in the remainder of this
Article VI.
6.2 Inspection of Records. Seller shall retain and make
available to Purchaser for inspection its books and records
relating to the Purchased Assets (including work papers
in the possession of its respective accountants) for
reasonable business purposes at all reasonable times
during normal business hours until the final Payment Date.
As used in this Section 6.2. the right of inspection includes
the right to make extracts or copies.
6.3 Use of Trademarks; References to Seller. Subject to the
provisions of Section 4.2, Seller shall cease to use (except
with Purchaser's consent) and shall not license or permit any
third party to use the name "Logan" or any name, slogan, logo
or trademark which is similar or deceptively similar to any
of the Trademarks.
6.4 Product Warranties. Seller shall be responsible for
accepting and handling product returns or warranty claims
for finished goods manufactured by Seller after March 1, 1996
through the 1996 production season which finished goods are
sold to third parties, excluding Purchaser. Seller's
responsibility hereunder shall expire at the close of
business on January 31, 1997. Seller understands that
Purchaser may inform dealers and users that Seller's
responsibility hereunder expires at such time.
6.5 Covenant to Maintain Logan Business. Seller and Purchaser
agree that, from and after the execution of this Agreement:
(a) The parties will conduct their affairs in such a manner
as will not cause detriment to the "Logan" brand nor to the
business formerly conducted under, and to be conducted in the
future under such "Logan" brand.
(b) Seller will use its best efforts to cause all former
or prospective Logan customers to be directed to Purchaser
and all sales orders for the 35 additional bulk beds described
in Section 4.2 and sales orders subsequent to the 1996 sales
season for Logan products to be delivered to Purchaser.
(c) Seller covenants that for a period of one year from the
Initial Closing Date, or during the period of any arbitration
proceeding commenced under Section 8.8 within one year after
the Initial Closing Date, Seller will maintain its corporate
existence and will not sell, assign, transfer, hypothecate or
otherwise encumber the Note, provided this
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covenant shall not restrict the disposition by Seller of
amounts paid to Seller under the Note, including payments
by Seller to a shareholder.
6.6 Disclosure of Confidential Information. As a further
inducement for Purchaser to enter into this Agreement, Seller
and McConnell agree that from and after the execution of this
Agreement, and subject to Article IV, they shall hold in
confidence and shall not without the prior written consent
of Purchaser, use for their benefit or the benefit of any
third party or disclose to any person or f irm any
Confidential Information (as herein def ined) regarding
the Logan product line. "Confidential Information" means
all information, and all documents and other tangible items
which record information, which is protectible as a
trade secret under applicable law, including, without
limitation: (a) product development and marketing plans;
(b) unpublished drawings, manuals, know-how, production
techniques, proprietary formulas, research in progress,
and the like; (c) proprietary software and business records.
The preceding portions of this Section 6.6 shall not apply
to (x) information which was in the public domain or
independently received from a third party with a right
to disclose such information, or (y) to the extent that
disclosure is required by law.
6.7 Injunctive Relief. Seller specifically recognizes
that any breach of Sections 6.5 and 6.6 will cause irreparable
injury to Purchaser and that actual damages may be difficult
to ascertain, and in any event, may be inadequate. Accordingly
(and without limiting the availability of legal or equitable,
including injunctive, remedies under any other provisions of
this Agreement) , Seller agrees that in the event of any such
breach, Purchaser shall be entitled to injunctive relief in
addition to such other legal and equitable remedies that may
be available.
6.8 Board Representation. On or before September 3, 1996,
Purchaser will cause McConnell to be appointed to Purchaser's
Board of Directors and will present McConnell as a
management-endorsed nominee for election by the shareholders
at the next annual meeting.
6.9 Further Assurances. The parties shall execute such
further documents, and perform such other acts, as may
be necessary to transfer, convey or assign the Purchased
Assets to Purchaser, on the terms herein contained, and to
otherwise comply with the terms of this Agreement and
consummate the transactions contemplated hereby.
ARTICLE VII
Indemnification
7.1 General. From and after the Initial Closing, the parties
shall indemnify each other as provided in this Article VII.
As used in this Agreement, the term "Damages" shall mean all
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liabilities, claims, causes of action, legal proceedings
or investigations, losses, fines, penalties, judgements,
costs and expenses, including, without limitation:
(i) reasonable attorneys', accountants', investigators',
and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any such
claim and (ii) costs and expenses reasonably incurred to
bring the Purchased Assets into compliance with Environmental
Laws.
7.2 Indemnification obligations of Seller. Subject to
Section 7.3 hereof, Seller shall defend, indemnify, save
and keep harmless Purchaser and its successors and permitted
assigns against and from all Damages sustained or incurred by
virtue of:
(a) any inaccuracy in or breach of any representation
and warranty in this Agreement or in any of Seller's Ancillary
Documents delivered to Purchaser in connection with this
Agreement; provided, that any matter arising out of a product
liability claim by a third party shall be subject to the
terms and limitations of Section 7.2(d) below.
(b) any breach by either of them, or failure by either of
them to comply with, any of their respective covenants or
obligations under this Agreement (including, without
limitation, the obligations under this Article VII);
(c) the failure to discharge when due any liability or
obligation of Seller set forth in Section 1.4 hereof; or
(d) any product liability claims by parties other than
Purchaser to the extent caused solely by acts or omissions
of Seller, including, without limitation, claims for Damages
which arise by virtue of Seller's ownership of any of the
Purchased Assets on or prior to the appropriate Delivery Date
for the Purchased Assets in question, provided that if Seller
shall forthwith obtain product liability insurance coverage
against product liability claims in the aggregate amount
of at least $500,000 then Seller's obligation to provide
indemnification under this Section 7.2(d) shall be limited
to the amount, payable under such insurance, plus the amount
of the deductible, if any.
7.3 Limitations on Seller's Indemnification Obligation.
Purchaser shall not be entitled to indemnification under
Section 7.2(a) unless a claim for Damages has been asserted
by written notice specifying the details of the alleged
misrepresentation or breach of warranty delivered to Seller
on or prior to the expiration of the applicable statute of
limitations period.
7.4 Indemnification Obligations of Purchaser. Purchaser
shall defend, indemnify, save and keep harmless Seller
against and from all Damages sustained or incurred by either
of them resulting from or arising out of or by virtue of:
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(a) any inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in
any of Purchaser's Ancillary Documents delivered to
Seller in connection with this Agreement;
(b) any breach by Purchaser of, or failure by Purchaser
to comply with, any of its covenants or obligations under
this Agreement (including, without limitation, its
obligations under this Article VII); or
(c) any claims by third parties to the extent caused
solely by the acts or omissions of Purchaser after the
Initial Closing Date and not constituting a liability
of Seller, including, without limitation, claims for
Damages which arise solely out of Purchaser's use of
any of the Purchased Assets after the appropriate
Delivery Date for the Purchased Assets in question.
ARTICLE VIII
Miscellaneous
8.1 Publicity. Except as otherwise required by law,
press releases concerning this transaction shall be
made only with the prior agreement of the Seller and
Purchaser. Seller and McConnell acknowledge that
Purchaser is publicly owned and must comply with
disclosure requirements under the Federal securities laws.
8.2 Notices. All notices required or permitted to
be given hereunder shall be in writing and may be
delivered by hand, by facsimile, by nationally recognized
private courier, or by United States mail. Notices
delivered by mail shall be deemed given three (3) business
days after being deposited in the United States mail,
postage prepaid, registered or certified mail. Notices
delivered by hand by facsimile, or by nationally recognized
private carrier shall be deemed given on the first business
day following receipt; provided, however, that a notice
delivered by facsimile shall only be ef f ective if such
notice is also delivered by hand, or deposited in the
United States mail, postage prepaid, registered or certified
mail, on or before two (2) business days after its delivery
by facsimile. All notices shall be addressed as follows:
If to Seller or McConnell
Addressed to:
J. Ward McConnell, Jr.
McConnell Acquisitions, Inc.
P.O. Box 6246
Kinston, N.C. 28501
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If to Purchaser
Addressed to:
J. David Pitt, President
Art's-Way Manufacturing Co., Inc.
P.O. Box 288
Armstrong, Iowa 50514-0288
and/or to such other respective addresses and/or addressees
as may be designated by notice given in accordance with the
provisions of this Section 8.2.
8.3 Expenses. Except as otherwise provided herein, each
party hereto shall bear all fees and expenses incurred by
such party in connection with, relating to or arising out
of the execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated hereby,
including, without limitation, attorneys,, accountants I and
other professional fees and expenses.
8.4 Entire Agreement. This Ag-r@eement and the instruments
to be delivered by the parties pursuant to the provisions
hereof constitute the entire agreement between the parties.
Each exhibit, including the Disclosure Schedule, shall be
considered incorporated into this Agreement. Any amendments,
or alternative or supplementary provisions to this Agreement,
must be made in writing and duly executed by an authorized
representative or agent of each of the parties hereto.
8.5 Survival; Non-Waiver. All representations and warranties
shall survive the Closing, until one year thereafter,
regardless of any investigation or lack of investigation
by any of the parties hereto. The failure in any one or
more instances of a party to insist upon performance of
any of the terms, covenants or conditions of this Agreement,
to exercise any rightor privilege in this Agreement conferred,
or the waiver by said party of any breach of any of the terms,
covenants or conditions of this Agreement, shall not be
construed as a subsequent waiver of any such terms, covenants,
conditions, right or privileges, but the same shall continue
and remain in full force and effects if no such forbearance
or waiver had occurred. No waiver shall be effective unless
it is in writing and signed by an authorized representative
of the waiving party.
8.6 AP-plicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of Iowa applicable to contracts made in
that State.
8.7 Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and
their successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer on any
person other than the parties hereto, and their respective
successors and permitted
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assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
8.8 Arbitration. If any dispute should arise under this
Agreement, the parties agree to negotiate in good faith
to resolve such dispute. After ten (10) days have elapsed
after the receipt by one party of a notice of dispute, given
in accordance with Section 8.2 hereof, either party may
request arbitration of the dispute. In that event, the
matter shall be submitted to arbitration pursuant to the
commercial arbitration rules of the American Arbitration
Association although the parties need not use the services
or facilities of said Association unless such use is mutual
agreeable. The arbitration panells decision in such matter
shall be final and binding on all parties.
8.9 Assignability. This Agreement shall not be assignable
by either party without the prior written consent of the other
party, except that Purchaser may, subject to the terms and
conditions of this Agreement, assign its rights under this
Agreement to lenders for collateral security purposes.
No such assignment shall relieve Purchaser of any of its
liabilities-@under this Agreement.
8.10 Amendments. This Agreement shall not be modified
or amended except pursuant to an instrument in writing
executed and delivered on behalf of each of the parties
hereto.
8.11 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
8.12 Successor in Interest. The parties hereto acknowledge
that Purchaser shall not be deemed to be the successor in
interest to Seller or the Business.
8.13 Execution. The Agreement:
(a) may be executed by each party hereto upon a separate
copy in which event all of such copies shall constitute
a single counterpart to this Agreement;
(b) shall become effective when each of the parties has
signed the same or a separate copy hereof; and
(c) may be executed in two (2) or more counterparts in
which event it shall not be necessary in making proof of
this Agreement to produce or account for more than one
(1) counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement
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on the date first above written.
MCCONNELL:
/s/ J. Ward McConnell, Jr.
J. Ward McConnel1, Jr.
SELLER:
Attest: Logan Harvesters, Inc.
/s/ Linda McConnell By:/s/ J. Ward McConnell, Jr.
Secretary Its:President
(Seal)
PURCHASER:
Attest: Art's-Way Manufacturing Co., Inc.
/s/ William Green By:/s/ J. David Pitt
Secretary J. David Pitt, President
(Seal)
NORTH CAROLINA
Ss.
Lenoir COUNTY
I , Sadie M. Mitchell, certify that Linda McConnell
personally came before me this day and acknowledged that she
is the Secretary of Logan Harvesters, Inc., a corporation, and
that by authority duly given and as the act of the corporation,
the foregoing instrument was signed in its name by its President,
sealed with its corporate seal, and attested by herself as its
secretary.
Witness my hand and notarial seal, this 30th day of August, 1996.
/s/ Sadie M. Mitchell
Notary Public
My commission expires 11-20-2000 on the date first above written.
MCCONNELL:
J. Ward McConnell, Jr.
SELLER:
Attest: Logan Harvesters, Inc.
By:
Secretary Its:
(Seal)
PURCHASER:
Attest: Art's-Way Manufacturing Co., Inc.
/s/ William Green By: /s/ J. David Pitt
Secretary J. David Pitt, President
(Seal)
NORTH CAROLINA
Ss.
COUNTY
I ___________________________certify that ________________
personally came before me this day and acknowledged that
___ is the __________ Secretary of Logan Harvesters, Inc.,
a corporation, and that by authority duly given and as the
act of the corporation, the foregoing instrument was signed
in its name by its President, sealed with its corporate seal,
and attested by ______self as its Secretary.
Witness my hand and notarial seal, this _ day of August, 1996.
Notary Public
My commission expires:
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STATE OF IOWA
Ss.
COUNTY OF Emmet
I ,Margaret Anderson, certify that William T. Green personally
came before me this day and acknowledged that he is the Secretary
of Art's-Way Manufacturing Co., Inc., a corporation, and that by
authority duly given and as the act of the corporation, the
foregoing instrument was signed in its name by its President,
sealed with its corporate seal, and attested by himself as its
Secretary.
Witness my hand and notarial seal, this 30th day of August, 1996.
/s/ Margaret Anderson
Notary Public
My commission expires:5/14/99
