U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-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) February 13, 2002
ART'S-WAY MANUFACTURING CO., INC.
(Exact Name of Registrant As Specified In Its Charter)
Delaware 0-5131 42-0920725
(State Or Other Jurisdiction Of (Commission (IRS Employer
Incorporation or Organization) File No.) Identification Number)
P.O. Box 288
Armstrong, IA 50514
(Address of Principal Executive Offices) (Zip Code)
(712) 864-3131
(Telephone Number)
Not Applicable
(Former name or former address, if changed since last report.)
Art's-Way Manufacturing Co., Inc.
Form 8-K
February, 2002
Item 5. Other Events and Regulation FD Disclosure.
On February 13, 2002, we entered into an Agreement with J. Ward McConnell
to sell Mr. McConnell 640,000 shares of our common stock at a price of
$1.25 per share. Those shares, along with the 135,200 previously owned
by Mr. McConnell increases his ownership in our Company to approximately
40%. Although the price of the shares was below the current market price
of our common stock, the Board of Directors determined it was in the best
interest of our Company and our shareholders to sell the shares to
Mr. McConnell to raise needed cash to pay down Company payables and bank
debt. We also believe that the additional equity and the pay down of our
overdue payables will enable us to obtain a permanent operating capital
and term loan agreement with UPS Capital Corporation on terms acceptable
to us. Subsequent to the closing of the Agreement, Donald A. Cimpl, a
director who had previously indicated a desire to resign from the Board
of Directors did, in fact, resign, and J. Ward McConnell was elected as
a Director to fill the vacancy. Under the terms of the Agreement with
Mr. McConnell, James L. Koley resigned as Chairman of the Board, and
Mr. McConnell was elected as Chairman of the Board. Mr. Koley will
continue as a director.
As a further part of the Agreement, Mr. McConnell agreed that, without
prior approval of a majority of our Board of Directors, not including
Mr. McConnell or his son, Mr. McConnell will not acquire 50% or more of
the outstanding shares of our common stock or make a proposal to merge
with, acquire control of or purchase all or substantially all of the
assets of our Company or enter into any other transaction which would
constitute a Rule 13e-3 transaction as defined under the Securities
Exchange Act of 1934.
Item 7. Financial Statements and Exhibits.
(c) The following Exhibits are filed with this Form 8-K.
1. Agreement dated February 13, 2002 between Art's-Way Manufacturing
Co., Inc. and J. Ward McConnell.
2. News Release of Art's-Way Manufacturing Co., Inc. dated February 8, 2002.
SIGNATURE
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 thereunto duly authorized.
ART'S-WAY MANUFACTURING CO., INC.
By John C. Breitung
President
February 20, 2002
(Date)
AGREEMENT
THIS AGREEMENT, made this ____ day of February, 2002, by
and between Art's-Way Manufacturing Co., Inc., a Delaware
corporation, hereinafter called "Art's-Way" and J. Ward
McConnell, an individual of Kinston, North Carolina,
hereinafter referred to as "McConnell".
W I T N E S S E T H:
WHEREAS, McConnell presently owns One Hundred Thirty Five
Thousand Two Hundred (135,200) shares of Common Stock of
Art's-Way, same constituting ten and forty one hundredths
percent (10.41%) of the total of One Million Two Hundred
Ninety Eight Thousand One Hundred Seventy Six shares
(1,298,176) shares of Common Stock issued and outstanding; and
WHEREAS, McConnell has previously served on the Board of
Directors of Art's-Way; and
WHEREAS, McConnell's son, Marc H. McConnell, presently serves
on the Board of Directors of Art's-Way; and
WHEREAS, Art's-Way is in need of cash for the purpose of paying
down its debt and reducing its accounts payable; and
WHEREAS, McConnell has offered to purchase Six Hundred Forty
Thousand (640,000) shares of the authorized but unissued Common
Stock of Art's-Way at a price of One Dollar and Twenty Five
Cents ($1.25) per share, subject to certain conditions; and
WHEREAS, Art's-Way desires to sell to McConnell Six Hundred
Forty Thousand (640,000) shares of Common Stock at a price of
One Dollar and Twenty Five Cents ($1.25) per share; and
WHEREAS, prior to such offer, Donald A. Cimpl had indicated to
the Board of Directors of Art's-Way that he did not desire to
stand for re-election to the Board of Directors at the annual
meeting to be held in the year 2002; and
WHEREAS, McConnell has indicated his interest in being elected
to the Board of Directors upon Closing of the purchase of the
additional shares; and
WHEREAS, McConnell has stated his intention that Art's-Way remain
a public company and has agreed that he does not desire to have
control of Art's-Way and that he will not acquire as much as fifty
percent (50%) or more of the outstanding stock of Art's-Way; and
WHEREAS, the parties hereto now desire to enter into an
Agreement to that effect.
NOW, THEREFORE, in consideration of the foregoing, and in
consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Incorporation of Recitals. The foregoing recitals
are specifically incorporated in this Agreement by
this reference.
2. Purchase and Sale.
2.1 Sale and Issuance of Common Stock. Subject to the terms and
conditions of this Agreement, McConnell agrees to purchase
at the Closing, and Art's-Way agrees to sell and issue to
McConnell at the closing, against cash payment, Six Hundred
Forty Thousand (640,000) shares of Common Stock (the "Shares")
of Art's-Way at a purchase price of One Dollar and Twenty Five
Cents ($1.25) per share.
2.2 Closing. The purchase and sale of the Shares being purchased
by McConnell shall take place at the law offices of Cline,
Williams, Wright, Johnson & Oldfather, L.L.P., at 9 o'clock
a.m. on February 12, 2002 or at such other time and place as
Art's-Way and McConnell mutually agree (which time and plac
are designated the "Closing"). At the Closing, Art's-Way shall
deliver to McConnell a certificate representing Six Hundred
Forty Thousand (640,000) Shares against delivery to Art's-Way
by McConnell of cash by Wire Transfer or a certified bank
cashier's check in the amount of One Dollar and Twenty Five
Cents ($1.25) per Share or a total of Eight Hundred Thousand
Dollars ($800,000).
2.3 Use of Proceeds. Art's-Way agrees to use the proceeds from
the sale of the Shares for the repayment of outstanding
obligations and for the reduction of debt.
3. Representations and Warranties of Art's-Way. Except
as set forth on Exhibit 3, Art's-Way hereby represents
and warrants to McConnell that:
3.1 Incorporation. Art's-Way is a corporation duly organized and
validly existing, is in good standing under the laws of the
state or other place of its incorporation, has all requisite
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted, and Art's-Way is
qualified as a foreign corporation in each jurisdiction where
the failure to so qualify would have a material adverse effect
on its business or operations.
3.2 Capitalization. The authorized capital of Art's-Way consists
of Five Million (5,000,000) shares of Common Stock, of which
at Closing not more than One Million Two Hundred Ninety Eight
Thousand One Hundred Seventy Six (1,298,176) shares will be
issued and outstanding and at Closing there shall be options
outstanding to purchase not more than 61,500 shares of the
Company's Common Stock.
3.3 Authorization. All corporate action on the part of Art's-Way,
its officers and Directors, necessary for the authorization,
execution, delivery and performance of all obligations of
Art's-Way under this Agreement and for the authorization,
issuance and delivery of the Shares being sold hereunder,
has been or shall be taken prior to the Closing, and this
Agreement, when executed and delivered, shall constitute a
valid and legally binding obligation of Art's-Way. Issuance
of the Shares is not subject to preemptive rights or other
preferential rights of any present or future stockholders
in Art's-Way.
3.4 Validity of Securities. The Shares to be purchased and sold
pursuant to this Agreement, when issued, sold and delivered
in accordance with the terms of this Agreement, for the
consideration expressed herein, shall be duly and validly
issued.
3.5 Governmental Consents. All consents, approvals, orders,
authorizations or registration, qualification, designation
and declaration or filing with and federal or state
governmental authority on the part of Art's-Way required in
connection with the consummation of the transactions
contemplated herein shall have been obtained prior to, and
be effective as of, the Closing or will be timely filed
thereafter.
4. Representations and Warranties of McConnell.
McConnell represents and warrants to Art's-Way as follows:
4.1 Authorization. When executed and delivered by McConnell,
this Agreement will constitute the valid and legally binding
obligation of McConnell.
4.2 Accredited Investor. McConnell is an "accredited investor"
as that term is defined in Rule 501 promulgated under the Act.
5. Securities Act of 1933.
5.1 Investment Representation.
(a) This Agreement is made with McConnell in
reliance upon his representations to
Art's-Way that the Shares to be received
will be acquired for investment for an
indefinite period for his own account and
not with a view to the sale or distribution
of any part thereof, and that he has no
present intention of selling or otherwise
distributing the same. By executing this
Agreement, McConnell further represents tha
he does not have any contract, undertaking,
agreement or arrangement with any person to
sell or transfer to such person any of the
Shares.
(b) McConnell understands that the Shares are
not and may never be registered under the
Act on the ground that the sale provided
for in this Agreement and the issuance of
securities is exempt pursuant to Section
4(2) of the Act and Rule 506 of Regulation D
thereunder, and that Art's-Way's reliance
on such exemption is predicated on
McConnell's representations set forth herein.
(c) McConnell agrees that in no event will he
make a disposition of any of the Shares,
unless the Shares shall have been registered
under the Act, or unless and until (i)
McConnell shall have notified Art's-Way with
a statement of the circumstances surrounding
the proposed disposition and (ii) McConnell
shall have furnished Art's-Way with an
opinion of counsel reasonably satisfactory
to Art's-Way to the effect that (A) such
disposition will not require registration
of such securities under the Act, and (B)
that appropriate action necessary for
compliance with the Act has been taken.
(d) McConnell represents that he is able to
fend for himself in the transactions
contemplated by this Agreement, has such
knowledge and experience in financial and
business matters as to be capable of
evaluating the merits and risks of his
investment, has the ability to bear the
economic risks of his investment and has
been furnished with and has had access to
such information as would be made available
in the form of a registration statement
together with such additional information
as is necessary to verify the accuracy of
the information supplied and to have all
questions which have been asked by McConnell
answered by Art's-Way.
(e) McConnell understands that if a registration
statement covering the Securities under the
Act is not in effect when he desires to sell
any of the Shares, he may be required to hold
such Shares for an indeterminate period.
McConnell also acknowledges that he understand
that any sale of the Securities which might be
made by him in reliance upon Rule 144 under
the Act may be made only in limited amounts
in accordance with the terms and conditions
of that Rule.
5.2 Legend. All certificates for the Shares shall bear
substantially the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED BY THE ISSUEE FOR INVESTMENT PURPOSES. SAID SHARES
MAY NOT BE SOLD OR TRANSFERRED UNLESS (A) THEY HAVE BEEN REGISTERED
UNDER SAID ACT, OR (B) THE TRANSFER AGENT (OR THE COMPANY IF THEN
ACTING AS ITS TRANSFER AGENT) IS PRESENTED WITH EITHER A WRITTEN
OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY OR A "NO-ACTION"
OR INTERPRETIVE LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
CIRCUMSTANCES OF SUCH SALE OR TRANSFER."
5.3 Rule 144. Art's-Way covenants and agrees that: (i) at all
times while it is subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934 it will use its
best efforts to comply with the current public information
requirements of Rule 144(c)(1) under the Act; and (ii) it will
furnish McConnell upon request with all information about Art's-Way
required for the preparation and filing of Form 144.
6. Conditions to McConnell's Obligations at Closing.
The obligations of McConnell under paragraphs
2.1 and 2.2 of this Agreement are subject to the
fulfillment at or before the Closing of each of
the following conditions:
6.1 Representations and Warranties. The representations and
warranties contained in paragraph 2 hereof shall be true
on and as of the Closing.
6.2 Performance. Art's-Way shall have performed and complied
with all agreements and conditions contained herein
required to be performed or complied with by it on or
before the Closing.
6.3 State Securities Laws. Art's-Way will have complied with
all requirements under all applicable State Securities
laws with respect to the offer and sale of the Shares.
6.4 Compliance Certificate. There shall have been delivered
to McConnell a certificate, dated the Closing Date, signed
by Art's-Way's President, certifying that the conditions
specified in paragraphs 6.1, 6.2 and 6.3 have been fulfilled.
6.5 Opinion of Counsel. There shall have been delivered to
McConnell an opinion of Cline, Williams, Wright, Johnson
& Oldfather, L.L.P., counsel for Art's-Way, to the effect
that (i) Art's-Way is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Delaware, (ii) this Agreement has been duly authorized,
executed, and delivered by Art's-Way and constitutes a
valid and enforceable obligation of Art's-Way in accordance
with its terms (subject to normal bankruptcy and principles
of equity exceptions), (iii) the Shares have been duly
authorized, issued and delivered and are validly outstanding,
(iv) upon issuance and sale of the Shares, Art's-Way shall
have outstanding an aggregate of not more than One Million
Nine Hundred Thirty Eight Thousand One Hundred Seventy Six
(1,938,176) shares of Common Stock, (v) based upon the
representations of McConnell, the offer, sale, and delivery
of the Shares under the circumstances contemplated by this
Agreement constitutes an exempt transaction under the Act
and applicable State Securities laws, (vi) the Shares shall
be freely transferable by McConnell, subject only to the
restrictions contained in the letter from Cline, Williams,
Wright, Johnson & Oldfather, L.L.P. to McConnell dated
January 28, 2000, a copy of which is attached hereto and
incorporated herein by reference (said letter refers to
other stock of Art's-Way owned by McConnell, but the
restrictions are the same based upon Rule 144 as it stands
today), and (vii) upon request of McConnell at any time
after one year from the date of Closing, Cline, Williams,
Wright, Johnson & Oldfather, L.L.P., as counsel to
Art's-Way, and at the expense of Art's-Way, shall furnish
such opinions as may be required to be furnished to
Art's-Way as a prerequisite to a sale or other disposition
of any of the Shares by McConnell under paragraph 5.1(c)
of this Agreement; Provided, that McConnell shall provide
such information concerning the Shares to be sold and the
terms of sale as Cline, Williams, Wright, Johnson &
Oldfather, L.L.P. may require in connection with rendering
such an opinion, which opinion shall be based upon the
then current law and regulations,
6.5 Securities Filings. Art's-Way shall cause to be prepared
any and all securities forms to be filed by McConnell in
connection with the transaction.
7. Conditions of Art's-Way's Obligations at Closing.
The obligations of Art's Way under paragraphs 2.1
and 2.2 of this Agreement are subject to the
fulfillment at or before the Closing of each of
the following conditions:
7.1 Warranties True on the Closing Date. The representations
and warranties of McConnell contained in paragraphs 4 and
5 hereof shall be true on and as of the Closing with the
same effect as though said representations and warranties
had been made on and as of the Closing.
8. Corporate Changes at Closing. Inasmuch as
Donald A. Cimpl has informed Art's Way that he
does not desire to stand for re-election to the
Board of Directors of Art's-Way, and inasmuch as
McConnell has expressed his desire to be elected
to the Board of Directors of Art's-Way effective
at the Closing, it is agreed that immediately
following Closing of the purchase of Shares by
McConnell, Donald A. Cimpl will submit his
resignation as a Director of Art's Way to the
Board of Directors. The Board of Directors shall
accept such resignation, and shall elect
McConnell to serve the remaining term of
Donald A. Cimpl on the Board of Directors.
Immediately following the election of McConnell
to the Board of Directors, James L. Koley will
resign his position as Chairman of the Board,
while retaining his position as a Director. The
Board of Directors shall elect McConnell to serve
as Chairman of the Board of Directors of Art's Way.
McConnell shall be nominated for re-election to
the Board at the annual meeting to be held in 2002.
9. Standstill Agreement. McConnell's agreement that
Art's Way shall remain a publicly-owned company and
that McConnell shall not acquire fifty percent (50%)
or more of the issued and outstanding shares of
Common Stock of Art's Way are a material inducement
to Art's Way entering into this Agreement. In
furtherance thereof, McConnell agrees as follows:
(a) Following the Closing of the purchase of Shares pursuant to
this Agreement, McConnell will not, directly or through any
third party or affiliate, purchase or acquire additional
Art's Way Common Stock in the open market, by private
transaction or by tender offer or make a proposal to merge
with, acquire control of or purchase all or substantially
all of the assets of Art's Way if, as a result of such
purchase, tender offer, merger or acquisition, McConnell
and his affiliates would (i) own fifty percent (50%) or
more of the issued and outstanding shares of Common Stock
of Art's Way; or (ii) if such purchase, acquisition,
tender offer or merger proposal would constitute a "Rule
13e-3 Transaction" as that term is defined in Rule 13e-3
of the Rules and Regulations of the Securities and
Exchange Commission. For this purpose, the term
"affiliate" shall have the same meaning as under the Act
and the Securities Exchange Act of 1934, as amended.
McConnell further agrees that in the event that he, or
his affiliates, violate this covenant, and acquire shares
which result in McConnell owning fifty percent (50%) or
more of the issued and outstanding shares of Common Stock
of Art's Way, then McConnell agrees that any such shares
acquired in violation of the foregoing covenant shall, for
all purposes, be deemed to be non-voting shares, and
McConnell agrees that Art's-Way may disregard any votes
attributable to such shares to the extent that such shares
equal or exceed fifty percent (50%) of the outstanding
shares of Common Stock of Art's Way.
(b) Art's Way and McConnell agree that notwithstanding any of
the foregoing provisions to the contrary, no purchase,
acquisition, tender offer, merger, or Rule 13e-3
Transaction shall be prohibited if such purchase,
acquisition, tender offer, merger or Rule 13e-3
Transaction is approved in advance by a majority of the
Board of Directors of Art's Way.
(c) The parties agree that Art's-Way shall be entitled to
injunctive relief in the event that McConnell shall
violate or propose any action that would violate the
provisions of this paragraph 9.
10. Miscellaneous
10.1 Agreement is Entire Contract. Except as specifically
referenced herein, this Agreement constitutes the
entire contract between the parties hereto concerning
the subject matter hereof and no party shall be liabl
or bound to the other in any manner by any warranties,
representations or covenants except as specifically
set forth herein. Any previous agreement among the
parties related to the transactions described herein
is superseded hereby. The terms and conditions for
this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of
the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any party,
other than the parties hereto, and their respective
successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided herein.
10.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
10.3 Counterparts. This Agreement shall be executed in two
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
10.4 Title and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience and
are not to be considered in construing this Agreement.
10.5 Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed
effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered
or certified mail, addressed to a party at its address
hereinafter shown below its signature or at such other
address as such party may designate by ten (10) days
advance written notice to the other party.
10.6 Legal Fees and Expenses. Art's-Way agrees upon the
Closing to pay the legal fees and expenses of Cline,
Williams, Wright, Johnson & Oldfather, L.L.P., incurred
in connection with the negotiation and execution of
this Agreement and related documents and with obtaining
any governmental consents and taking such compliance
actions, including, without limitation, securities law
filings as are required in connection therewith.
10.7 Survival of Warranties. The warranties and
representations of Art's-Way contained in or made
pursuant to this Agreement shall survive the execution
and delivery of this Agreement and the Closing hereunder.
10.8 Amendment of Agreement. Except as expressly provided
herein, any provision of this Agreement may be amended
or waived on behalf of McConnell by a written
instrument signed by McConnell and by a majority of the
Board of Directors of Art's Way.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
ART'S-WAY MANUFACTURING CO., INC.
By: /s/ John C. Breitung
President
/s/ J. Ward McConnell