<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended December 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 0-22716
BOLLINGER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2502577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 W. AIRPORT FREEWAY, IRVING, TEXAS 75062
(Address of principal executive offices)
(Zip Code)
(972) 445-0386
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of December 29, 1996, 4,000,210 shares of the registrant's common
stock, $0.01 par value per share, were outstanding.
<PAGE> 2
BOLLINGER INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
December 29, 1996, and March 31, 1996 3
Consolidated Statements of Earnings -
Third Quarter and Year to Date ended December 29, 1996,
and December 31, 1995 4
Consolidated Statements of Cash Flows -
Third Quarter periods ended December 29, 1996, and
December 31, 1995 5
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES
INDEX TO EXHIBITS AND EXHIBITS
</TABLE>
2
<PAGE> 3
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 29, 1996 March 31, 1996
----------------- --------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash ................................................................ $ 127,754 $ 408,871
Accounts receivable
Trade, net of allowance for doubtful accounts ................... 23,480,779 18,344,827
Other ........................................................... 281,523 229,735
Income tax refund ................................................... 124,690 2,307,235
Inventories (Note C) ................................................ 23,952,792 30,112,934
Current assets of discontinued operations - net ..................... 6,631 1,601,954
Prepaid expenses .................................................... 724,183 525,272
Deferred income taxes ............................................... 66,309 66,309
------------ ------------
Total current assets ............................................ 48,764,661 53,597,137
PROPERTY PLANT AND EQUIPMENT - NET ..................................... 1,936,103 2,015,282
Non current assets of discontinued operations .......................... 109,667 161,999
OTHER ASSETS
Goodwill and other intangibles - net ................................ 1,155,554 1,233,482
Notes receivable and other assets ................................... 1,095,283 1,373,003
Deferred financing fees - net ....................................... 549,728 --
------------ ------------
TOTAL ASSETS ........................................................... $ 53,610,996 $ 58,380,903
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt and other debt (Note D) ......... $ 9,949,195 $ 22,683,575
Accounts payable - trade .......................................... 15,483,957 16,913,821
Federal income tax payable (Note E) ............................... -- 43,847
Other current liabilities ......................................... 1,947,083 1,674,046
Provision for restructuring of operations (Note G) ................ 2,562,102 3,960,000
------------ ------------
Total current liabilities .................................. 29,942,337 45,275,289
LONG-TERM LIABILITIES
Long term debt, net of current portion ............................ 14,285,111 576,777
Deferred income taxes ............................................. 66,309 66,309
------------ ------------
Total long-term liabilities ................................ 14,351,420 643,086
------------ ------------
Total liabilities .......................................... 44,293,757 45,918,375
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock -- $.01 par value; 1,000,000 shares authorized;
none issued
Common stock -- $.01 par value; 8,000,000 shares authorized;
issued and outstanding 4,000,210 at December 29, 1996,
and March 31, 1996 ........................................... 40,002 40,002
Capital in excess of par .......................................... 15,323,058 15,323,058
Retained earnings (accumulated deficit) ........................... (6,045,821) (2,900,532)
------------ ------------
Total stockholders' equity ................................. 9,317,239 12,462,528
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................. $ 53,610,996 $ 58,380,903
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Week Three months Thirty-nine Week Nine months
Period Ended Ended Period Ended Ended
December 29, December 31, December 29, December 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales .......................... $ 24,609,076 $ 31,648,378 $ 66,135,657 $ 65,898,886
Cost of goods sold ................. 21,264,045 24,094,655 54,399,287 49,302,154
------------ ------------ ------------ ------------
Gross profit .................. 3,345,031 7,553,723 11,736,370 16,596,732
Selling expenses ................... 1,798,644 2,621,262 5,295,088 5,674,183
Distribution, general and
administrative expenses ........ 2,846,265 3,249,710 8,305,265 8,553,108
------------ ------------ ------------ ------------
4,644,909 5,870,972 13,600,353 14,227,291
------------ ------------ ------------ ------------
Operating profit (loss) ....... (1,299,878) 1,682,751 (1,863,983) 2,369,441
Other expense (income)
Interest expense .............. 635,539 632,321 1,946,681 1,567,235
Interest income ............... (17,253) (20,548) (53,670) (59,573)
Miscellaneous ................. 74,983 (8,377) 74,986 (22,923)
------------ ------------ ------------ ------------
693,269 603,396 1,967,997 1,484,739
------------ ------------ ------------ ------------
Earnings (loss) before income
taxes ................... (1,993,147) 1,079,355 (3,831,980) 884,702
Income tax (expense) benefit
(Note E) ................ (24,029) (427,836) (24,029) (363,516)
------------ ------------ ------------ ------------
Earnings (loss) from continuing
operations .............. (2,017,176) 651,519 (3,856,009) 521,186
Gain (loss) on disposal of
discontinued Healthcare
operations (Note F) ............. (95,976) -- 710,720 --
(Loss) from discontinued Healthcare
operations net of income tax
benefit ......................... -- (166,185) -- (569,602)
------------ ------------ ------------ ------------
Net earnings (loss) ................ $ (2,113,152) $ 485,334 $ (3,145,289) $ (48,416)
============ ============ ============ ============
Per share data:
earnings (loss) from
continuing operations .......... $ (.50) $ .17 $ (.96) $ .13
============ ============ ============ ============
Net earnings (loss) per common
share .......................... $ (.53) $ .12 $ (.79) $ (.01)
============ ============ ============ ============
Weighted average common and
common equivalent shares
outstanding .................... 4,000,210 3,934,980 4,000,210 3,968,808
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<TABLE>
<CAPTION>
39 WEEK PERIOD NINE MONTHS
ENDED ENDED
DECEMBER 29, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash flow from operating activities
Net earnings (loss) ...................................... $ (3,145,289) $ (48,416)
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities
(Gain) loss on disposal of assets ......................... (710,720) --
Depreciation and amortization ............................. 670,524 481,747
Changes in operating assets and liabilities
Trade accounts receivable ............................ (5,316,823) (10,830,970)
Other receivables .................................... (51,788) (387,480)
Inventories .......................................... 5,472,570 (1,116,632)
Prepaid expenses ..................................... (198,911) 213,441
Income tax receivables ............................... 2,182,545 --
Notes receivable and other assets .................... 396,436 31,060
Accounts payable - Trade ............................. (1,446,326) 12,702,573
Federal income tax payable ........................... (43,847) (132,633)
Other current liabilities ............................ 175,091 491,986
Provision for restructuring of operations ............ (1,397,898) --
Provision for Doubtful Accounts ...................... 30,871 --
Provision for Obsolete Inventory ..................... (17,440) --
Current assets of discontinued operations ............ 1,595,323 --
------------ ------------
Net cash provided by (used in) operating activities.. (1,805,682) 1,404,676
Cash flow from investing activities
Purchases of property and equipment ...................... (349,222) (361,624)
Payments (advances made) on note receivable .............. 81,345 80,041
Proceeds from sale of assets ............................. 1,402,110 --
Non-current assets from discontinued operations ......... 52,332 --
------------ ------------
Net cash provided by (used in) investing activities... 1,186,565 (281,583)
Cash flow from financing activities
Net proceeds from (payments on) long term debt ........... 973,954 (858,577)
Deferred Financing Fees .................................. (635,954) --
------------ ------------
Net cash provided by (used in) financing activities... 338,000 (858,577)
Net increase (decrease) in cash ...................... (281,117) 264,516
Cash at beginning of period ................................... 408,871 116,476
------------ ------------
Cash at end of period ......................................... $ 127,754 $ 380,992
============ ============
</TABLE>
The accompany notes are an integral part of these statements.
5
<PAGE> 6
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - GENERAL
The consolidated interim financial statements include the accounts of
Bollinger Industries, Inc., its wholly owned subsidiaries and Bollinger
Industries, L.P., a partnership wholly owned by Bollinger's subsidiaries
(collectively the "Company").
The consolidated interim financial statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosure
normally included in financial statements prepared in accordance with generally
accepted accounting principals have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these financial statements be read in conjunction with the consolidated
financial statements and notes for the year ended March 31, 1996.
The Company has adopted a 13 week quarter ending on the Sunday nearest
the end of the calendar quarter for Fiscal 1997.
In the opinion of management, the unaudited interim consolidated
financial statements of the Company contains all adjustments, consisting only
of those of a normal recurring nature, necessary to present fairly the
Company's financial position and the results of its operations and cash flows
for the periods presented. The results of operations for the periods presented
are not necessarily indicative of the results to be expected for the full year.
NOTE B - CONSOLIDATED STATEMENTS OF CASH FLOW
Supplemental disclosures:
<TABLE>
<CAPTION>
39 Week Period Nine Months
Ended Ended
December 29, December 31,
------------ ------------
1996 1995
------------ ------------
<S> <C> <C>
Interest paid $ 1,980,220 $ 1,483,786
Income taxes paid -- $ 200,000
Income tax refund received $(2,154,917) --
Noncash financing transactions:
Sale of assets-financed by notes from buyer $ 293,547 --
Sale of assets-paid in escrow by buyer $ 17,328 --
Liabilities assumed by buyer $ 16,843 --
</TABLE>
6
<PAGE> 7
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE C - INVENTORIES
<TABLE>
<CAPTION>
December 29, March 31,
1996 1996
------------ ------------
<S> <C> <C>
Raw materials $ 7,327,024 $ 9,858,597
Work-in-process 314,277 305,777
Finished goods 17,790,431 23,117,280
Reserve for obsolescence (1,478,940) (1,166,766)
------------ ------------
23,952,792 32,114,888
Less: Discontinued Operations - Net -- 2,001,954
------------ ------------
$ 23,952,792 $ 30,112,934
------------ ------------
</TABLE>
NOTE D - NOTES PAYABLE
The Company successfully refinanced its credit facility on August 16, 1996,
with a maximum line of $25 million and a three-year term. Availability,
pursuant to the credit line, is based on the levels of specific current assets,
namely accounts receivable and inventory. The outstanding obligation at
December 29, 1996, was $22 million with undrawn availability of $1.5 million
pursuant to the asset based formula. The Company is in default on certain
financial covenants, specifically the tangible net worth and related total
liabilities to tangible net worth ratio.
NOTE E - INCOME TAXES
The Company's effective income tax rates for the nine months ended
December 31, 1995, and 1996 respectively were 34% and 0%, based on utilization
of a tax loss carryforward.
NOTE F - DISPOSAL OF DISCONTINUED HEALTHCARE OPERATION
During fiscal 1996, the Company decided to discontinue its Healthcare
operations. In connection with the disposal of the discontinued operation, the
Company established a reserve at March 31, 1996, for the anticipated losses of
operation during the sell off period, of $400,000. During the third fiscal
quarter, 1997, the Company concluded an asset sale for the Pacer product
portion of its Healthcare line to SST Acquisition Corporation (SST). SST paid
$173,000 for the assets of which $156,000 was in cash and the remainder in an
escrow account. The year to date losses for the Healthcare division closely
approximate the original reserve.
NOTE G - RESTRUCTURED INVENTORY
In connection with the Company plan for restructuring of
inventory, as disclosed in the Company's annual report and Form 10-K for year
ended March 31, 1996, the Company has implemented measures to reduce inventory
levels of targeted products. Of the approximately $12 million in inventory
designated for liquidation, approximately $6.1 million of inventory was sold
for $4.7 million with a resultant charge to the reserve of $1.3 million. The
original identified inventory and related reserves were as follows:
7
<PAGE> 8
<TABLE>
<CAPTION>
INVENTORY VALUE RESERVE AMOUNT
<S> <C> <C>
Celebrity Endorsed product $ 5,175,000 $ 1,730,000
Other Product 6,625,000 2,028,000
Other Costs -- 202,000
----------- -----------
Total $11,800,000 $ 3,960,000
=========== ===========
</TABLE>
Of the original restructuring reserve of $3,960,000, the remainder at
December 29, 1996, is $2,500,000 on inventory of $5,700,000.
NOTE H - CONTINGENCIES
The Company, Glenn D. Bollinger (Chairman and CEO), Bobby D. Bollinger
(President), Curtis D. Logan (former CFO), Michael J. Beck (former CAO), John
L. Maguire (Director), William Blair & Company, Rauscher Pierce Refnes, Inc.
(former underwriters of initial public offering), and Grant Thornton, L.L.P.
(former independent accountants), are defendants (the "Suntrust Defendants") in
a lawsuit filed on March 22, 1996, Case No. 96-02952-C, in the 68th Judicial
District Court, Dallas County, Texas, by shareholder Suntrust Bank Atlanta, as
trustee for Suntrust Retirement Sunbelt Equity Fund, on behalf of themselves,
and all persons similarly situated. The lawsuit was filed as a class action on
behalf of a class/persons who purchased securities through a public offering
that were issued by the Company at prices which allegedly were artificially
inflated and maintained as a result of the scheme and conduct alleged in
violation of the antifraud provisions of the securities law as well as common
law. In addition, the company Glenn D. Bollinger, Bobby D. Bollinger, Curtis D.
Logan, and Michael J. Beck, are defendants (the "STI Defendants"), in a lawsuit
filed on March 22, 1996, Case No. 396-CV0823-R, in the United States District
Court for the Northern District of Texas, Dallas Division, by shareholders STI
Classic Fund and STI Classic Sunbelt, on behalf of themselves and all persons
similarly situated. The lawsuit was filed as a class action on behalf of a class
of persons who purchased securities issued by the Company at prices which
allegedly were artificially inflated and maintained as a result of the scheme
and conduct alleged in violation of the anti-fraud provisions under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. The Plaintiffs seek damages, costs, and expenses. Management of the
Company does not believe either lawsuit has merit. However, if the plaintiffs
should prevail in either lawsuit, it could have a materially adverse effect on
the Company. See legal proceedings.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's Form
10-K and consolidated financial statements for the fiscal year ended March 31,
1996; the Company's Form 10-Q's for the quarters ending June 30, 1995 and June
30, 1996, and for the quarters ending September 30, 1995, and September 29,
1996; and the consolidated financial statements and related notes, for the
quarters ended December 31, 1995 and December 29, 1996, found elsewhere in this
report.
THIRTEEN WEEKS AND THIRTY-NINE WEEKS ENDED DECEMBER 29, 1996, COMPARED WITH
THE THREE MONTH AND NINE MONTH PERIOD ENDED DECEMBER 31, 1995
The Company has adopted a 13 week quarter ending on the Sunday nearest the end
of the calendar quarter for Fiscal 1997. For ease of discussion the thirteen
week period ended December 29, 1996, and the three months ended December 31,
1995, will be referred to as "quarters". Following this same format, the
39-week period ended December 29, 1996, and the nine months ended December 31,
1995, will be referred to as "nine months" or "year to date". As fully
disclosed in the Company's annual report and Form 10-K for the year ended March
31, 1996, the Company has embarked on a restructuring plan whereby it is
focusing on its name brand products, including trampolines, and greatly
reducing its use of celebrity endorsed products. The Company is successfully
implementing this plan as described later in this narrative.
Consolidated net sales for the quarter ended December 29, 1996, decreased by
$7.0 million as compared to the quarter ended December 31, 1995, a decrease of
22%. Net sales for the nine months ended December 29, 1996, increased by $0.2
million compared to the same period in 1995, an increase of 0.4%. Significant
gains in the sales of trampolines were offset by a decline in the sale of the
fitness accessory product line. In the first nine months of the current year,
the Company successfully sold approximately $6.1 million of targeted inventory
as part of the restructuring plan.
8
<PAGE> 9
Gross profit for the quarter ended December 29, 1996, decreased $4.2 million as
compared to the quarter ended December 31, 1995, and decreased as a percentage
of net sales from 24% in 1995 to 14% in 1996 for the same period. Gross profit
for the nine months ended December 29, 1996, decreased $4.9 million and
decreased 7.4% as a percentage of net sales as compared to the nine months
ended December 31, 1995. Of the $4.2 million decline in the third quarter gross
profit, $2.4 million was due to a change in mix from the fitness accessory
products to the trampoline products. The balance of the gross profit decrease
was due to lower margins on fitness product line sales compared to the same
quarter last year. Expressed as a percentage of sales, the unfavorable sales
mix change between fitness products and trampolines accounted for 4.4 % of the
gross profit percentage decline. Another 3.4% of the margin decline was caused
by an increase in the fitness product line cost of sales. The balance of
approximately 2% was attributable to additional sales of restructured
inventory, which was sold with no gross profit. On a year to date basis,
approximately 40% of the $4.9 million decline in gross profit year to date was
due to the change in product mix from fitness product sales to trampoline
product sales. In addition, another 40% of the year to date change in gross
profit was attributable to a deterioration of fitness product profits. This
deterioration included the effect of selling $6.1 million of targeted inventory
at no gross profit. The balance of 20% was due to the sale in the prior year of
$1.8 million that carried an unusually high gross profit of 40%. Analysis of
the percentage of gross margin year to date, compared to last year, indicates
that gross profits in the fitness products declined approximately 6% because of
suppressed margins and lower volume. The restructure of inventory sales lowered
margins another 3%. However, these declines were offset by approximately 2% as
a result of increased trampoline sales volume.
The major thrust of the restructuring plan comprised the liquidation of certain
inventories. The Company's initiative on vendor pricing, which was designed to
significantly reduce purchase prices, will not have a noticeable effect on
gross profit until the inventory is sold.
Selling expenses for the quarter ended December 29, 1996, decreased by $823,000
as compared to the quarter ended December 31, 1995, and decreased as a
percentage of net sales from 8.3% to 7.3%. The dollar decrease in selling
expense, as well as the percentage decrease was directly related to the lower
sales volume and the reduction in celebrity royalty expenses. Selling expenses
for the nine months ended December 29, 1996, decreased by $379,000 as compared
to the same period of 1995, and decreased as a percentage from 8.6% to 8.0%.
The decrease in cost was directly related to net sales and commissions for the
nine month period. The decrease as a percent of sales from 1995 to 1996 is
related to lower celebrity royalty expenses.
Distribution, general and administrative expenses for the quarter ended
December 29, 1996, decreased by $403,000 as compared to the quarter ended
December 31, 1995, but increased as a percentage of net sales from 10.3% in
1995 to 11.6% in 1996. Reductions in rent expense as a result of significantly
lower inventory levels and reductions in contract labor partially offset by
increased consulting fees, led to the overall reduction in dollars.
Distribution, general and administrative expenses for the nine months ended
December 29, 1996, decreased $248,000 over the same period in the prior year.
As a percentage, this category of expenses improved from 13.0% of net sales in
the prior year to 12.6% in the current year.
The Company sustained an operating loss of $1,300,000 for the quarter ended
December 29, 1996, as compared to an operating profit of $1,683,000 in the same
quarter last year. The gross profit decline of $4.2 million is partially offset
by lower selling and distribution, general, and administrative
9
<PAGE> 10
expenses for a net decrease of $3.0 million in operating income. Operating
losses for the nine months ended December 1996 were $1,864,000 compared to
operating income of $2,369,000 in the previous year.
Interest expense for the quarter ended December 29, 1996, was $636,000 compared
to $632,000 the previous year. Interest expense for the nine months ended
December 29, 1996, was $1,947,000 compared to $1,567,000 the previous year.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company's principal source of financing has been borrowings from
various financial institutions and its initial public offering. Net cash used
by operating activities for the nine months ended December 29, 1996, was
$1,806,000 compared to cash provided by operating activities for the same
period in the prior year of $1,405,000. Cash generated from the sale of
inventory and the collection of an income tax refund was used to fund higher
trade accounts receivable and operating losses in the third quarter 1997.
The Company successfully refinanced its credit facility on August 16, 1996,
with a maximum line of $25 million and a three-year term. Availability,
pursuant to the credit line, is based on the levels of specific current assets
namely accounts receivable and inventory. The outstanding obligation at
December 29, 1996, was $22 million with undrawn availability of $1.5 million
pursuant to the asset based formula. The Company is in default on certain
financial covenants, specifically the tangible net worth and related total
liabilities to tangible net worth ratio. The Company's ability to utilize the
credit facility is predicated on future levels of accounts receivable and
inventory and the forbearance of the lender regarding covenants. If the loan
were demanded, the Company would seek alternative financing; but there is no
guarantee the Company would be successful in obtaining this financing. This
action would have a materially adverse effect on the Company.
Outstanding balances in the third quarter bore interest at an approximate rate
of 10% compared to a rate of 11.25% for the third quarter last year. The
Company also has a long term note payable, secured by the Irving facility,
which bears interest at 11.25% per annum.
FACTORS THAT COULD AFFECT FUTURE PERFORMANCE
This report contains certain forward looking statements about the business and
financial condition of the Company, including various statements contained in
"Management's Discussions and Analysis of Financial Condition and Results of
Operations." The actual results of the Company could differ materially from
those forward looking statements. The following information sets forth certain
factors that could cause the actual results to differ materially from those
contained in the forward looking statements. The following discussion should be
read in conjunction with the Company's 10-K and consolidated financial
statements for the fiscal year ended March 31, 1996. The inclusion or omission
of certain items previously discussed in those financial statements should not
be construed as changes in those statements.
10
<PAGE> 11
The restructuring plan, as disclosed in the Company's annual report and Form
10-K called for a divestiture of "targeted" inventory, reducing celebrity
royalty payments, and consolidation of inventory thereby reducing warehousing
costs. Each of these initiatives has been undertaken and the positive results
are beginning to show in the decreased inventory levels, the reductions in
selling expense and the reductions in distribution, general and administrative
expenses. Further, trade payables decreased by $1.4 million in third quarter
1997 as compared with a $12.7 million increase in the same period last year.
This improvement in trade payables was achieved despite a reduction of $2.0
million in loan payable.
In the third quarter of fiscal 1997, the Company employed the services of a
consulting company specializing in situational analysis and the formulation of
a forward looking business plan. Several of the initiatives formulated by this
group have already been implemented by the Company and the implementation of
the overall business plan should return the company to profitability in the
upcoming year.
Notwithstanding the aforementioned, the Company continues to suffer losses.
Nothing contained in these financial statements or Management's Discussion and
Analysis of Financial Condition should be interpreted as a guarantee of future
earnings or a turn around of financial condition. The actual results of the
Company could differ materially from the statements found in this section and
elsewhere in this report.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 24, 1996, the United States Securities and Exchange
Commission filed a Civil Injunctive Action in the United States Court for the
District of Columbia naming Bollinger Industries, Inc., Glenn Bollinger and
Ronald Bollinger, Cause No. 96-2257. The Company consented to the entry of an
order of permanent injunction which directs the Company to comply with the
Securities and Exchange Act of 1934 in the future in the conduct of its
business. Glenn Bollinger and Ronald Bollinger also consented to the entry of
orders of permanent injunction, and in addition, Glenn Bollinger agreed to the
payment of a monetary penalty in the amount of $40,000. Ronald Bollinger also
agreed to a bar from holding office as an officer or director of a
publicly-held company.
The Company filed a lawsuit against Denise Austin on December 2, 1996
in the 162nd District Court of Dallas County, Tx and was subsequently removed
to the United States District Court for the Northern District of Texas, Dallas
Division Case Number 3-97-CV-0246-G on February 6, 1997. Subsequently a suit
was filed on December 30, 1996, by Denise Austin in the United States District
Court, Eastern District of Virginia. The suit was filed for payment of royalties
alleged to be due of approximately $655,000. The Company believes the suit
filed by Denise Austin is without merit.
The Company, Glenn D. Bollinger (Chairman and CEO), Bobby D. Bollinger
(President), Curtis D. Logan (former CFO), Michael J. Beck (former CAO), John
L. Maguire (Director), William Blair & Company, Rauscher Pierce Refnes, Inc.
(former underwriters of initial public offering), and Grant Thornton, L.L.P.
(former independent accountants), are defendants (the "Suntrust Defendants") in
a lawsuit filed on March 22, 1996, Case No. 96-02952-C, in the 68th Judicial
District Court, Dallas County, Texas, by shareholder Suntrust Bank Atlanta, as
trustee for Suntrust Retirement Sunbelt Equity Fund, on behalf of themselves,
and all persons similarly situated. The lawsuit was filed as a class action on
behalf of a class/persons who purchased securities through a public offering
that were issued by the Company at prices which allegedly were artificially
inflated and maintained as a result of the scheme and conduct alleged in
violation of the antifraud provisions of the securities law as well as common
law. In addition, the company Glenn D. Bollinger, Bobby D. Bollinger, Curtis D.
Logan, and Michael J. Beck, are defendants (the "STI Defendants"), in a lawsuit
filed on March 22, 1996, Case No. 396-CV0823-R, in the United States District
Court for the Northern District of Texas, Dallas Division, by shareholders STI
Classic Fund and STI Classic Sunbelt, on behalf of themselves and all persons
similarly situated. The lawsuit was filed as a class action on behalf of a class
of persons who purchased securities issued by the Company at prices which
allegedly were artificially inflated and maintained as a result of the scheme
and conduct alleged in violation of the anti-fraud provisions under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. The Plaintiffs seek damages, costs, and expenses. Management of the
Company does not believe either lawsuit has merit. However, if the plaintiffs
should prevail in either lawsuit, it could have a materially adverse effect on
the Company.
12
<PAGE> 13
ITEM 5. OTHER INFORMATION
Effective approximately February 17, 1997, the Company's corporate
headquarters will be relocated to 602 Fountain Parkway, Grand Prairie, Texas
75050.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.01 Asset Purchase Agreement dated November 7, 1996, between
Bollinger Industries, L.P. and SST Acquisition
Corporation
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the thirty-nine week
period ended December 29, 1996.
13
<PAGE> 14
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 thereunto duly authorized.
BOLLINGER INDUSTRIES, INC.
Date: February 12, 1997 /s/ Glenn D. Bollinger
----------------- ---------------------------------------------
Glenn D. Bollinger
Chairman of the Board and
Chief Executive Officer
Date: February 12, 1997 /s/ Rose Turner
----------------- ---------------------------------------------
Rose Turner
Senior Vice President - Finance, Chief
Financial Officer, Treasurer and Secretary
Date: February 12, 1997 /s/ Floyd L. DePauw
----------------- ---------------------------------------------
Floyd L. DePauw
Controller and Chief Accounting Officer
<PAGE> 15
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
-------- -----------
<S> <C>
2.01 Asset Purchase Agreement dated November 7, 1996, between
Bollinger Industries, L.P. and SST Acquisition
Corporation
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2.01
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (this "Agreement"), dated as of the
7th day of November, 1996, by and among SST ACQUISITION CORPORATION, an Ohio
corporation ("Purchaser") and BOLLINGER INDUSTRIES, INC., a Delaware
corporation, including Bollinger Healthcare Group ("Seller").
W I T N E S S E T H
WHEREAS, Seller owns certain assets which it uses in its business of
distributing cardiovascular equipment (the "Business") and Seller wishes to
sell certain assets listed on Exhibit A to Purchaser. The assets which Seller
is selling shall be referred to herein as the "Property" (with the completed
goods portion of the Property being referred to herein as the "Inventory").
WHEREAS, Seller is willing to sell the Property to Purchaser, and
Purchaser is willing to purchase the Property from Seller, pursuant to the
terms and provisions hereof;
WHEREAS, also as a condition of the purchase Seller and Purchaser shall
enter into the Assignment and Assumption Agreement in the form attached hereto
as Exhibit B.
NOW THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
Subject to the terms and conditions hereof, Seller hereby agrees to
sell, transfer and convey to Purchaser, and Purchaser hereby agrees to
purchase and accept from Seller, the Property. The Property shall be
transferred pursuant to a bill of sale and assignment in form
substantially similar to that contained on Exhibit C attached hereto.
2. PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") for the
Property is $479,000 increased or decreased on a dollar
for dollar basis by the amount that as of the Closing
Date the value of Inventory (net of obsolete inventory
as reasonably agreed to by the parties) is greater or
less than $479,000.00; provided that, for purposes of
the foregoing, the Inventory is valued based on the
current inventory cost supported by copies of invoices,
freight, labor reports, and overhead
-1-
<PAGE> 2
detail and decreased by $ 259,000.00 representing
Purchaser's assumption of Sellers warranty claims as
described in paragraph 3(b).
(b) Seller and Purchaser acknowledge and agree that the
Purchase Price is allocable entirely to the Inventory.
(c) In consideration of Seller's delivery to Purchaser of
possession of the Property, the Purchase Price shall be
payable to Seller as follows:
(i) $25,000 constituting the earnest money deposit
delivered by Purchaser to Thompson Hine &
Flory LLP ("TH&F"), Purchaser's legal counsel,
in connection with a Letter of Intent executed
by the parties, which deposit shall be
delivered by TH&F to Seller at the Closing.
(ii) funds equal to 10% of the Purchase Price
shall, at the Closing, be deposited by
Purchaser in escrow with PNC Bank, Ohio (the
"Escrow Agent") to be held and disbursed in
accordance with the terms of an Escrow
Agreement among the Escrow Agent, Purchaser
and Seller, substantially in the form attached
hereto as Exhibit D (the "Escrow Agreement").
(iii) The balance of the Purchase Price shall be
paid to Seller at the Closing by wire transfer
in immediately available funds.
3. ASSUMPTION OF LIABILITIES.
(a) Purchaser is not assuming any liabilities or
obligations of Seller of any nature whatsoever,
including without limitation, (i) any expenses,
liabilities or obligations of Seller arising out of the
execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby or
(ii) any liabilities or obligations of Seller relating
to federal, state or local income or franchise taxes,
sales, use or gross receipts taxes, attributable to
Seller's ownership of the Property, the transactions
contemplated hereby or the conduct of Seller's business
prior to the Closing Date. Further, Purchaser will not
assume any employee compensation, employee benefit,
pension, profit sharing or other retirement obligation
with respect to Seller's current or former employees
nor any liability or obligation arising under federal,
state or local laws and regulations that relate to
protection of human health or the environment,
including without limitation the federal Comprehensive
Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq., and analogous state
laws.
- 2 -
<PAGE> 3
(b) The parties understand that when Seller has sold
inventory, it has provided a warranty of repair to its
customers, (the "Warranties"). Purchaser has agreed to
service the Warranties and has reduced the Purchase
Price in accordance with paragraph 2(a).
4. THE CLOSING.
The Closing of the sale and purchase of the Property (the
"Closing") shall take place at such time and date as the parties
may mutually agree (the "Closing Date") but no later than
November 15, 1996. The location shall be as mutually agreed.
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Purchaser as of the
date hereof and as of the Closing Date as follows:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware, has power and authority to own the
Property and to carry on its business as it is now
being conducted, and is duly qualified to do business
and in good standing in all jurisdictions in which the
conduct of its business or the ownership of the
Property requires it to so qualify.
(b) The execution, delivery and performance of this
Agreement have been duly and effectively authorized by
Seller's shareholders and Board of Directors. No other
proceedings on the part of Seller are necessary to
authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement is a
valid and binding obligation of Seller and enforceable
against Seller in accordance with its terms.
(c) Seller has good and marketable title to all of the
Property, free and clear of all liens, pledges, charges
and encumbrances other than those of Seller's lender
that will be released for the Closing.
(d) All of the Property is in good and marketable operating
condition and all of the Inventory is new.
(e) Seller has the right and authority to use Seller's
intangible property listed on Exhibit E, ("Intangible
Property") in the manner presently conducted, and to
the best of the Seller's knowledge, Seller's current
use does not conflict with, infringe upon or violate
any rights of any other person, firm or corporation.
(f) There is no (i) action, dispute, claim, litigation,
proceeding, labor
- 3 -
<PAGE> 4
dispute, arbitration, investigation or other proceeding
at law or in equity pending, or to the knowledge of
Seller threatened, against Seller with respect to the
Property, or otherwise relating to the transactions
contemplated by this Agreement, and Seller neither
knows nor has reasonable grounds to know of any basis,
for any such action relative to the Property; and (ii)
there are no decrees, injunctions or orders of any
court or governmental department or agency outstanding
against Seller with respect to the Property.
(g) To the best knowledge of Seller, Seller substantially
has complied with and currently is in substantial
compliance with all applicable statutes, regulations,
orders, ordinances and other laws (including common
law) of the United States of America and all state and
local governments, and agencies of any of the
foregoing, and administrative or judicial
interpretations thereof, as they relate in any respect
to the Property. Seller has not received any notice to
the effect that, or otherwise been advised that, Seller
is not in compliance with any of such statutes,
regulations, orders, ordinances or other laws as they
relate in any respect to the Property.
(h) Except for possible notices to creditors required by
any state's Bulk Transfer Act, no consents of, or
notices to, creditors or other parties to contracts or
agreements with Seller with respect to the Property are
required with respect to the consummation of the
transactions contemplated by this Agreement, except
those relating to Seller's primary lender Foothill
Capital Corporation ("Foothill").
(i) All of the Property has been and is being adequately
insured by Seller, and Seller also maintains adequate
products liability insurance which will cover products
liability claims on products sold by Seller even if
such claim is made after any termination of such
insurance. All insurance policies owned by Seller are
in full force and effect, and Seller has not received
notice of and is not otherwise aware of any
cancellation or threat of cancellation of such
insurance. Within the past two years, no insurance
company has cancelled any insurance (of any type)
maintained by Seller.
(j) To the extent Seller has retained the services of any
broker, finder or agent in connection with the
transaction contemplated by this Agreement, Seller
shall be responsible for payment of any fees
attributable thereto.
(k) All of Seller's financial information has been prepared
in accordance with Generally Accepted Accounting
Principles subject to normal year end adjustments.
- 4 -
<PAGE> 5
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to Seller as of the
date hereof and as of the Closing Date as follows:
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Ohio, has corporate power and authority to own
its properties and assets and to carry on its business
as it is now being conducted, and is duly qualified to
do business and in good standing in all jurisdictions
in which the conduct of its business or the ownership
of its properties requires it to so qualify.
(b) The execution, delivery and performance of this
Agreement have been duly and effectively authorized by
Purchaser's board of directors. No other corporate
proceedings on the part of Purchaser are necessary to
authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement is a
valid and binding obligation of Purchaser, enforceable
in accordance with its terms.
(c) Purchaser has not retained the services of any broker,
finder or agent in connection with the transaction
contemplated by this Agreement.
7. DISPOSITION OF THE PROPERTY PENDING CLOSING.
Seller agrees that, from the date hereof to the Closing Date,
except to the extent otherwise permitted by this Agreement or
consented to in advance and in writing by Purchaser, Seller:
(a) will maintain in full force and effect adequate and
customary policies of insurance with respect to the
Property;
(b) will promptly advise Purchaser in writing of any
material adverse change in the condition of the
Property;
(c) will not permit, create or assume any lien, pledge,
charge or encumbrance materially affecting the Property
other than those to Foothill which will be released for
the Closing;
(d) will not willfully fail to comply with any applicable
statutes, regulations, orders, ordinances or other laws
relating to the Property;
(e) will not take or omit to take any action which would
constitute the breach, default or result in the
acceleration of, or cause (after lapse of time, notice
or both) the breach, default or acceleration of any
right,
- 5 -
<PAGE> 6
contract, commitment or other obligation of Seller with
respect to the Property;
(f) will not make any agreement or commitment to do any of
the foregoing; and
(g) will not negotiate with any party other than Purchaser
with respect to a sale of the Property.
8. ACCESS TO INFORMATION.
Prior to the Closing Date, Purchaser may, through its employees,
agents and representatives, make or cause to be made such
investigation of the Property (including without limitation the
supervision and verification of all physical inventories taken
by or on behalf of Seller) as it deems reasonably necessary or
advisable. Such investigation shall not affect Seller's
representations and warranties hereunder. Seller shall permit
Purchaser and its employees, agents and representatives, on
reasonable prior notice, to have access at times reasonably
agreeable to the parties to its premises and to all maintenance
and other records relating to the Property (including customer
lists, costed inventory reports, and Seller's financial
information pertaining to Pacer Protec) and to furnish such
other Information with respect to the Property as Purchaser
shall from time to time reasonably request, so long as such
investigation shall not unreasonably interfere with or disrupt
the business of Seller.
- 6 -
<PAGE> 7
9. CONFIDENTIALITY.
(a) All information (the "Information") relating to Seller
which Purchaser and its authorized representatives
obtain prior to the Closing pursuant to Section 8
hereof or otherwise in connection with the transactions
contemplated hereby shall be kept confidential by
Purchaser prior to the Closing and shall not be used by
it for any purpose other than to evaluate the
transactions contemplated hereby and shall be kept
confidential and not used by Purchaser after the
Closing Date if the purchase and sale is not
consummated; provided, however, that the foregoing
shall not apply to (i) any Information generally
available to the public on the date hereof or which
becomes generally available to the public through no
fault of Purchaser, but only from and after the date
such Information becomes so available, (ii) any
Information obtained by Purchaser from a third party
having the right to disclose the same, (iii) any
Information not first given to Purchaser by Seller or
any of their agents, that was known to Purchaser as of
the date of this Agreement or developed independently
by Purchaser after the date hereof, or (iv) any
Information Purchaser is required by law to disclose.
(b) In the event no Closing occurs, at the written request
of Seller, Purchaser shall promptly return all such
written Information, and all copies thereof, to Seller.
10. COVENANT NOT TO COMPETE.
(a) For a period of three years from and after the Closing
Date, Seller will not in any manner, directly or
indirectly, by ownership of equity interests in other
corporations or business enterprises or otherwise,
engage in or serve as a director of a business which is
competitive with, comparable or substantially similar
to the sale and marketing of the Business. The
geographic scope of this restriction will be the United
States of America or such lesser geographic scope as is
found by a court of competent jurisdiction to be
reasonably necessary for the protection of Purchaser.
The foregoing restrictions shall not apply to the
motorized treadmills and the non-motorized treadmills
selling for less than $1,000.
(b) Seller agrees that the remedy at law for any breach of
Section 10(a) hereof may be inadequate, and that
Purchaser will be entitled to injunctive relief with
respect to any such breach, and to specific performance
of these covenants.
- 7 -
<PAGE> 8
11. ADDITIONAL COVENANTS OF SELLER AND PURCHASER.
(a) Seller and Purchaser agree that, except as otherwise
provided herein, or unless otherwise required by any
applicable federal, state or local laws, without the
prior written consent of the other, neither Seller nor
Purchaser shall release any Information with respect to
the transactions contemplated by this Agreement, except
that the foregoing shall not apply to any release by
the parties to their respective employees, officers and
directors, professional advisors and banking
relationships.
(b) Purchaser waives compliance by Seller with any and all
applicable bulk transfer laws and Purchaser shall be
indemnified pursuant to Section 15 hereof from and
against all liabilities, claims losses, damages,
deficiencies or expenses suffered or incurred by
Purchaser as a consequence of Seller's failure to so
comply.
(c) The parties acknowledge that the Property includes
property or materials that contain or utilize the
Bollinger name, including but not limited to product
literature, inventory instruction sheets, dealer
materials, and sales agent and dealer information.
Purchaser agrees that its use of the Bollinger name is
limited to these materials and its use shall not extend
longer than twelve (12) months after the Closing.
12. CONDITIONS TO OBLIGATIONS OF PURCHASER.
The obligation of Purchaser to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or
prior to the Closing Date, of the following conditions, any of
which may be waived in whole or in part by Purchaser in a
writing delivered to Seller prior to or at the Closing.
(a) To the knowledge of Seller, the representations and
warranties of Seller contained in this Agreement, or
any other document or instrument delivered by Seller
prior to or at the Closing, shall have been true and
correct when made and, except as contemplated herein or
therein, shall continue to be true and correct on the
Closing Date with the same effect as though made at
such date; Seller shall have performed all obligations
and complied with all covenants required by this
Agreement or such other document or instrument to be
performed or complied with by them on or prior to the
Closing Date; and Purchaser shall have received a
Certificate of Seller, executed by any officer
authorized to execute such Certificate, dated the
Closing Date and certifying as to the foregoing.
(b) No action, suit or proceeding relating to the
consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
- 8 -
<PAGE> 9
(c) Seller shall have title to all of the Property, free
and clear of all claims, liens, security interests,
charges and encumbrances. The instruments of
conveyance and transfer shall have been duly and
validly executed and delivered and shall effectively
vest in Purchaser title to all of the Property free and
clear of any lien, security interest or encumbrance.
(d) Purchaser shall have completed its legal and financial
review of the Property and all physical inventories
taken by or on behalf of Seller, and the results of
such review shall have been satisfactory to Purchaser.
(e) No material adverse change shall have occurred in the
Property.
(f) Glenn Bollinger shall have executed the Non-Competition
Agreement in the form attached hereto as Exhibit F.
13. CONDITIONS TO OBLIGATIONS OF SELLER.
The obligation of Seller to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or
prior to the Closing Date, of the following conditions, any of
which may be waived in whole or in part by Seller in a writing
delivered to Purchaser prior to or at the Closing:
(a) The representations and warranties of Purchaser
contained in this Agreement, or any other document or
instrument delivered by Purchaser prior to or at the
Closing, shall have been true and correct when made
and, except as contemplated herein or therein, shall
continue to be true and correct on the Closing Date
with the same effect as though made at such date;
Purchaser shall have performed all obligations and
complied with all covenants required by this Agreement
or such other document or instrument to be performed or
complied with by it on or prior to the Closing Date;
and Seller shall have received a Certificate of
Purchaser, executed by any officer of Purchaser
authorized to execute such Certificate and dated the
Closing Date, certifying as to the foregoing.
(b) No action, suit or proceeding relating to the
consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
(c) Purchaser shall have duly executed and delivered to
Seller the Assignment and Assumption Agreement.
14. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All statements contained in any Schedule or Exhibit attached
hereto or in
- 9 -
<PAGE> 10
any certificate or instrument of conveyance delivered by or on
behalf of Seller or Purchaser pursuant to this Agreement or in
connection with the transactions contemplated hereby shall be
deemed representations and warranties by Seller or Purchaser, as
the case may be, hereunder. All representations and warranties
of the parties shall survive the Closing and continue in full
force and effect for a period of three years thereafter.
15. INDEMNIFICATION.
(a) Seller agrees to indemnify and hold harmless Purchaser
from and against all liabilities, claims, losses,
damages, fines, penalties, deficiencies and expenses in
respect of:
(i) Any breach or default in the
representations and warranties made by
Seller in this Agreement;
(ii) Any non-fulfillment of any obligations of
Seller or Glenn Bollinger under any
provision of this Agreement or any
Exhibit;
(iii) Any liabilities not required to be assumed
by Purchaser under this Agreement, which
are transferred to or become obligations
of Purchaser, or give rise to a security
interest, lien or encumbrance against any
of the Property as a result of the
transactions contemplated by this
Agreement, and all other liabilities and
obligations of Seller not required to be
assumed by Purchaser under this Agreement;
(iv) Any claims with respect to products sold
by Seller in its business on or prior to
the Closing Date; and
(v) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments,
costs and expenses (including legal
expenses, attorneys' fees and consultant's
fees) incident to any of the foregoing.
In no event will Purchaser be required, prior to making a claim
against Seller, or becoming entitled to recovery hereunder from
Seller, to commence litigation or to take any other action
(other than reasonable efforts to file claims to obtain
insurance recoveries) against any third party with respect to a
matter for which Purchaser may have a claim against Seller under
this Agreement.
In the event Purchaser receives notice of any claim against it
or Seller under the foregoing indemnity, Purchaser shall
promptly notify Seller in writing and Seller shall compromise or
defend same, with Seller further agreeing to
- 10 -
<PAGE> 11
inform Purchaser in writing from time to time as is reasonable
regarding the status of such claim. However, if Seller does not
undertake to compromise or defend same to the satisfaction of
Purchaser, Purchaser may notify Seller in writing of Purchaser's
dissatisfaction and if not corrected within thirty (30) days,
Purchaser may undertake to compromise or defend such claim, at
which point Purchaser may seek indemnity from Seller under this
Agreement. This indemnity is in no way limited to the amounts
held in escrow pursuant to Exhibit D.
(b) Purchaser agrees to indemnify and hold harmless Seller
from and against all liabilities, claims, losses,
damages, fines, penalties, deficiencies and expenses in
respect of:
(i) Any breach or default in the
representations and warranties made by
Purchaser in this Agreement;
(ii) Any non-fulfillment of any obligations of
Purchaser under any provision of this
Agreement, including, but not limited to
the obligations set forth in paragraph 9
of this Agreement;
(iii) Any claims with respect to products sold
by Purchaser subsequent to the Closing
Date, with such indemnity by Purchaser to
include an indemnity for claims related to
Purchaser's use of product literature,
Inventory instruction sheets, dealer
materials, and other similar materials
delivered to Purchaser hereunder provided
that such claim is not for an infringement
of intellectual property rights; and
(iv) Any and all actions, suits, proceedings,
claims, demands, assessments, judgments,
costs and expenses (including legal
expenses and attorneys' fees) incident to
any of the foregoing.
In no event will Seller be required, prior to making a claim
against Purchaser or becoming entitled to recovery hereunder
from Purchaser, to commence litigation or to take any other
action (other than reasonable efforts to file claims to obtain
insurance recoveries) against any third party with respect to a
matter for which Seller may have a claim against Purchaser under
this Agreement.
In the event Seller receives notice of any claim against it or
Purchaser under the foregoing indemnity, Seller shall promptly
notify Purchaser in writing and Purchaser shall compromise or
defend same, with Purchaser further agreeing to inform Seller in
writing from time to time as is reasonable
- 11 -
<PAGE> 12
regarding the status of such claim. However, if Purchaser does
not undertake to compromise or defend same to the satisfaction
of Seller, Seller may notify Purchaser in writing of Seller's
dissatisfaction and if not corrected within thirty (30) days,
Seller may undertake to compromise or defend such claim, at
which point Seller may seek indemnity from Purchaser under this
Agreement.
16. FIRE OR OTHER CASUALTY.
If, after the date hereof and prior to the Closing, a material
part of the Property is damaged or destroyed by fire or other
casualty, Purchaser shall have the right to terminate this
Agreement by giving written notice to Seller within ten days
after receipt by Purchaser of written notice of such occurrence,
and the Closing shall be delayed to the extent necessary to give
Purchaser such ten day period within which to terminate this
Agreement. If Purchaser fails to terminate this Agreement
within such ten day period, this Agreement and the transactions
contemplated hereby shall be performed and consummated according
to the terms and provisions hereof; provided however, that in
the event of any such damage or destruction, Purchaser shall be
entitled to the amount of any insurance proceeds collected by
Seller with respect to the Property (after deduction of any
reasonable expenses incurred by it in connection with the
collection thereof), and Seller shall assign to Purchaser all
rights of Seller under any policies of insurance covering such
damage or destruction of the Property.
17. TERMINATION; REMEDIES.
This Agreement and the transactions contemplated hereby may be
immediately terminated at any time prior to Closing by written
notice delivered by Seller to Purchaser or by Purchaser to
Seller, as the case may be, in the following instances:
(a) (i) By Purchaser, if there has been (i) a
material misrepresentation, a material
breach of warranty or a material failure
to comply on the part of Seller with
respect to any of the representations,
warranties, covenants or other provisions
set forth herein (or delivered in any
other document pursuant hereto), including
without limitation any misrepresentation,
breach or failure to comply that is
evidenced in any Certificate or Exhibit
delivered by Seller or which is discovered
in Purchaser's due diligence investigation
of Seller, the Property and such
misrepresentation, breach or failure has
or may reasonably be expected to have a
material adverse effect on the condition
(financial or otherwise), of the Property,
or (ii) a material failure of any
condition to the obligations of
- 12 -
<PAGE> 13
Purchaser.
(ii) By Seller if there has been (i) a
material misrepresentation, a material
breach of warranty, or a material failure
to comply on the part of the Purchaser
with respect to any of the
representations, warranties, covenants, or
other provisions set forth herein or
delivered in any document pursuant hereto
or (ii) a material failure of any
condition to the obligations of Seller, or
any misrepresentation, breach or failure
to comply that is evidenced in any
certificate delivered by Purchaser to
Seller.
(iii) By Purchaser or Seller, if the Closing
does not occur on or prior to November 15,
1996.
(iv) At any time prior to Closing by the mutual
consent in writing of Seller and
Purchaser.
(b) In the event of termination of this Agreement and the
transactions contemplated hereby, this Agreement shall,
with the exception of Sections 9, 11(a), 15 and 18
hereof which shall survive the termination of this
Agreement, become void and have no further effect,
without any liability on the part of any party hereto.
18. FEES, EXPENSES, TRANSFER TAXES, ETC.
(a) Except as otherwise provided herein, Purchaser and
Seller each shall pay their respective fees, costs and
expenses incurred in connection with this Agreement and
the transactions contemplated hereby, including without
limitation all fees of legal counsel, accountants,
brokers and finders, whether or not such transactions
are consummated hereunder.
(b) Seller shall be responsible for the payment of all
recording fees and sales, use and compensating taxes
with respect to the sale and transfer of the Property
hereunder whether or not imposed by law on Purchaser or
Seller. Purchaser shall cooperate with Seller in
obtaining applicable sales tax exemptions, if any.
(c) Seller has paid or shall pay all taxes with respect to
the use and ownership of the Property prorated through
the Closing Date. Purchaser shall be responsible for
the payment of all such taxes relating to the use and
ownership of the Property for all periods commencing
after the Closing Date.
- 13 -
<PAGE> 14
19. NOTICES.
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or by a nationally-recognized
overnight delivery service, or by telegraph, facsimile or mailed
by certified or registered mail, postage prepaid, as follows:
IF TO PURCHASER:
SST Acquisition Corporation
154 Commerce Boulevard
Loveland, Ohio 45140-6399
Fax: 513-583-4284
ATTENTION: C. WINFIELD SCOTT, PRESIDENT
WITH A COPY TO:
Thompson Hine & Flory LLP
312 Walnut Street, Suite 1400
Cincinnati, Ohio 45202-4029
Fax: 513-241-4771
ATTENTION: BARBARA S. BROMBERG, ESQ.
IF TO SELLER:
Bollinger Industries, Inc.
222 W. Airport Freeway
Irving, Texas 75062
Fax: 972-438-6242
ATTENTION: GLENN BOLLINGER
WITH A COPY TO:
Tracy & Holland L.L.P.
306 West Seventh Street
Suite 500
Fort Worth, Texas 76102
Fax: 817-332-3140
or to such other address as shall be specified by like notices.
- 14 -
<PAGE> 15
20. FURTHER ASSURANCES.
From and after the Closing, upon Purchaser's request, Seller
will execute and deliver such other instruments of conveyance
and transfer and take such other action as Purchaser may
reasonably request to effectively convey, transfer to and vest
in Purchaser title to and possession of all or any part of the
Property and all assignable rights pursuant to any unfilled
purchase orders or supplier contracts on the Closing Date.
21. GENERAL.
(a) This Agreement and the Certificates and Exhibits hereto
constitute the entire agreement and understanding of
the parties in respect of the transactions contemplated
hereby and supersede all prior agreements, arrangements
and understandings. This Agreement may be amended or
modified only in a writing signed by Purchaser and
Seller.
(b) This Agreement may be executed in counterparts, each
such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together
shall constitute but one agreement.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, other
than its conflict of laws provisions and except to the
extent that the laws of the United States or other
jurisdictions govern matters arising out of the
transfer and conveyance of the Property from Seller to
Purchaser. The parties hereby (a) agree that any suit,
proceeding or action at law or in equity (hereinafter
referred to as an "Action") arising out of or relating
to this Agreement must be instituted in state or
federal court located within Hamilton County, Ohio, (b)
waive any objection which he or it may have now or
hereafter to the laying of the venue of any such
Action, (c) irrevocably submit to the jurisdiction of
any such court in any such Action, and (d) waive any
claim or defense of inconvenient forum. The parties
irrevocably agree that service of any and all process
which may be served in any such Action may be served
upon him or it by registered mail to the address
referred to in Section 19 hereof or to such other
address as the parties shall designate in writing by
notice duly given in accordance with Section 19 hereof
and that such service shall be deemed effective service
of process upon the parties in any such Action and
shall be taken and held to be valid and personal
service upon the parties, whether or not he or it shall
then be resident or doing business in the State of
Ohio, and whether or not the Seller actually receives
such service. The parties irrevocably agree that any
such service of process shall have the same force and
validity as if service were made upon him or it
according to the law governing such service in the
State of Ohio, and waive all claims of error by reason
of any such service.
- 15 -
<PAGE> 16
(d) No provision of this Agreement may be waived except in
a writing executed by the party having the benefit
thereof. No waiver of a breach of any provision of
this Agreement shall operate or be construed as a
waiver of any subsequent breach.
(e) The section headings contained in this Agreement are
for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(f) Neither party shall assign this Agreement without the
prior written consent of the other party. This
Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the respective successors
and permitted assigns of the parties hereto. Except as
otherwise expressly provided herein, nothing expressed
or implied herein is intended or shall be construed to
confer upon or give any person, firm or corporation,
other than the parties hereto, any right or remedy
hereunder or by reason hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered on the day and year first written above.
SST ACQUISITION CORPORATION BOLLINGER INDUSTRIES, INC.
By: By:
-------------------------------- ----------------------------------
C. Winfield Scott, President Glenn Bollinger, Chief Executive
Officer
- 16 -
<PAGE> 17
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") is made between
BOLLINGER INDUSTRIES, INC., a Delaware corporation ("Assignor") and SST
ACQUISITION CORPORATION, an Ohio corporation ("Assignee"), under the following
circumstances:
A. Assignor is a party to the purchase orders and supplier
contracts listed on Appendix 1 attached hereto (the
"Contracts").
B. Pursuant to the terms of that certain Agreement of Sale and
Purchase, dated as of November 7th, 1996, among inter alia,
Assignor and Assignee (the "Asset Purchase Agreement"), the
Contracts are to be transferred from Assignor to Assignee upon
the terms and conditions set forth herein.
NOW THEREFORE, for valuable consideration paid, the receipt, adequacy
and sufficiency of which are hereby acknowledged, effective as of the Closing
Date (as defined in the Asset Purchase Agreement), the parties agree as
follows:
1. Assignor assigns to Assignee all of its right, title and
interest in the Contracts, together with all rights arising
under or by virtue of the Contracts.
2. Assignee accepts this assignment and assumes and agrees to
perform all of the obligations of Assignor arising or accruing
under the Contracts on or after the effective date of this
Agreement.
3. Assignor shall indemnify and hold Assignee harmless pursuant to
Section 15 of the Asset Purchase Agreement from and against all
loss, damage, cost and expense that may be claimed against,
imposed upon or incurred by Assignee by reason of Assignor's
failure to perform any of its obligations under any of the
Contracts before the effective date of this Agreement.
4. Assignee shall indemnify and hold Assignor harmless pursuant to
Section 15 of the Asset Purchase Agreement from and against all
loss, damage, cost and expense that may be claimed against,
imposed upon or incurred by Assignor by reason of Assignee's
failure to perform any of its obligations under any of the
Contracts on or after the effective date of this Agreement.
<PAGE> 18
5. This Agreement is made, executed and delivered subject to the
terms and conditions of the Asset Purchase Agreement. In the
event of a conflict between this Agreement and the terms of the
Asset Purchase Agreement, the terms of the Asset Purchase
Agreement shall control.
6. This Agreement may be executed in counterparts, each of which
shall be an original but both of which together shall constitute
one and the same instrument.
Signed as of the date first written above.
ATTEST: ASSIGNOR:
BOLLINGER INDUSTRIES, INC.
By: By:
---------------------------------- ------------------------------------
Name: J.T. Pryor Name: Glenn Bollinger
Title: Secretary Its: Chief Executive Officer
ATTEST: ASSIGNEE:
SST ACQUISITION CORPORATION
By: By:
---------------------------------- ------------------------------------
Name: Scott Soutar Name: C. Winfield Scott
Title: Asst. to the President Its: President
<PAGE> 19
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT dated November 7th, 1996, among SST ACQUISITION
CORPORATION, an Ohio corporation ("Purchaser"); BOLLINGER INDUSTRIES, INC. a
Delaware corporation ("Seller"); and PNC BANK, OHIO, a national banking
association (the "Escrow Agent").
Concurrently herewith the Seller is selling to Purchaser, and Purchaser
is purchasing from Seller, some of the assets of Seller pursuant to an
Agreement of Sale and Purchase dated as of November 7th, 1996 (the "Purchase
Agreement") among Purchaser and Seller. This Escrow Agreement is being entered
into pursuant to Section 2(c)(ii) of the Purchase Agreement. All capitalized
terms used herein shall have the meanings set forth in the Purchase Agreement,
unless otherwise defined herein.
In consideration of the execution of the Purchase Agreement and the
mutual covenants herein contained, the parties hereto agree as follows:
1. COLLATERAL.
1.1 Seller hereby authorizes Purchaser to deliver to the Escrow
Agent, on Seller's behalf, simultaneously with the execution and
delivery of this Escrow Agreement, 10% of the Purchase Price as
defined in the Purchase Agreement (the "Escrow Amount") in
immediately available funds, the receipt of which is hereby
acknowledged by the Escrow Agent.
1.2 Subject to the provisions of this Escrow Agreement, the Escrow
Agent will hold the Escrow Amount and invest such Escrow Amount
in a PNC Government Money Market Portfolio.
1.3 As used herein, the term "Collateral" means the Escrow Amount
being delivered to the Escrow Agent as described in Section 1.1
hereof.
2. DELIVERY OF COLLATERAL BY ESCROW AGENT.
2.1 The Escrow Agent shall hold the Collateral in escrow until
authorized hereunder to deliver the same or any portion thereof.
The Collateral held by the Escrow Agent, other than Collateral
then being held by the Escrow Agent in respect of any Claim or
Claims hereunder pursuant to Section 2.2 hereof and other than
Collateral then deliverable to Purchaser pursuant to Section 2.3
hereof, shall be delivered by the Escrow Agent to Seller, free
and
<PAGE> 20
clear of any interest of Purchaser therein, promptly after the
expiration of 365 days from the date hereof (the "Escrow
Termination Date"). Except as provided below, all interest
("Interest") accrued with respect to the Collateral shall be
delivered by the Escrow Agent to Seller on the Escrow
Termination Date as a result of the investment set forth in
Section 1.2 hereof.
2.2 At any time prior to the Escrow Termination Date, Purchaser may
give notice to the Escrow Agent and Seller pursuant to Section
15 of the Purchase Agreement, that Purchaser is asserting
against Seller a claim (a "Claim"). Such notice shall
constitute the assertion of such Claim by the Purchaser against
the Collateral held in escrow hereunder. Upon receipt by the
Escrow Agent and Seller of any such notice of a Claim, the
Escrow Agent shall hold in escrow hereunder a portion of the
Collateral which will be sufficient to pay such Claim (or shall
hold in escrow hereunder the entire Collateral plus the Interest
earned thereon, then in its possession until notice of the
amount of such Claim is provided, by Purchaser as set forth
below) until there has been a Determination of such Claim in
accordance with the provisions of Section 3.1 hereof. Notice of
a Claim given to the Escrow Agent and Seller pursuant to this
Section 2.2 shall briefly set forth the basis of the Claim and,
if then determinable by Purchaser, a reasonable estimate of the
amount thereof. If the estimated amount of a Claim is not set
forth in the notice of the Claim given to the Escrow Agent and
Seller, Purchaser will give a further notice to the Escrow Agent
and Seller setting forth Purchaser's estimate of the amount of
such Claim promptly after it is reasonably able to make such
estimate (and in any event within 30 days after Purchaser's
initial notice, or if such initial notice shall have been given
within 30 days prior to the Escrow Termination Date, within 10
days after Purchaser's initial notice). If Purchaser does not
provide a reasonable estimate of the amount of such Claim within
such 30-day period (or 10-day period, as applicable), such Claim
shall be null and void and no Collateral shall be held as
provided for above by Escrow Agent with respect to such Claim.
2.3 Promptly after the Determination of a Claim in accordance with
the provisions of Section 3.1(a) hereof and promptly after
receipt of notice of the Determination of a Claim in accordance
with the provisions of Section 3.1(b) hereof (which notice shall
be accompanied by a copy of any agreement, final arbitration
award or final court order, judgment or decree evidencing such
Determination), the Escrow Agent shall deliver to Purchaser,
free and clear of any interest of Seller therein, Collateral, in
the form of cash, in an amount equal to the amount, if any, of
such Claim payable to Purchaser pursuant to such Determination.
If the amount of the Collateral plus Interest earned thereon,
then held by the Escrow Agent is not greater than the amount, if
any, of such Claim so payable, the Escrow Agent shall deliver to
Purchaser,
<PAGE> 21
in the form of cash, all of the Collateral plus Interest earned
thereon, then held by it, free and clear of any interest of
Seller therein.
2.4 If any Claims are asserted hereunder pursuant to Section 2.2
hereof which do not result in a Determination prior to the
Escrow Termination Date, promptly after the Determination of
each such Claim and the delivery, if any, to Purchaser of
Collateral in respect thereof in accordance with Section 2.3
hereof, the Escrow Agent shall deliver to Seller all Collateral
remaining in escrow hereunder (together with all Interest which
accrued on such Collateral from the Escrow Termination Date up
to the date of delivery of all remaining Collateral to Seller
hereunder), other than Collateral and the Interest earned
thereon, then being held in respect of any other Claim or Claims
hereunder pursuant to Section 2.2 hereof and other than
Collateral then deliverable to Purchaser pursuant to Section 2.3
hereof, free and clear of any interest of Seller therein.
2.5 Upon the occurrence of the later of (a) the Escrow Termination
Date and (b) the date on which a Determination is reached for
each Claim with respect to which the Escrow Agent has received
notice prior to the Escrow Termination Date, the Escrow Agent
shall deliver to Seller the remaining Collateral then held by
the Escrow Agent (together with all Interest which accrued on
such Collateral from the Escrow Termination Date up to the date
of delivery of all remaining Collateral to Seller hereunder).
3. DETERMINATION OF CLAIMS.
3.1 The determination of a Claim asserted hereunder pursuant to
Section 2.2 hereof shall be made as follows (a "Determination"):
(a) The Claim shall be deemed to have resulted in a
Determination in favor of Purchaser for the amount of
such Claim on the 15th business day after Purchaser
gives the Escrow Agent and Seller notice of the
estimated amount of such Claim pursuant to Section 2.2
hereof, unless prior thereto the Escrow Agent and
Purchaser have received written notice from Seller that
it disputes the Claim, which notice shall specify the
reasons for such dispute. If any portion of the Claim
shall not be disputed, a Determination shall be deemed
to have been made with respect to such undisputed
portion.
(b) If a Claim asserted hereunder is disputed by Seller in
the manner provided in Section 3.1(a) hereof, and
Purchaser is not otherwise involved in a lawsuit
against Seller regarding such Claim, within two years
from the date of the Purchase Agreement, Purchaser
shall file a
<PAGE> 22
suit regarding the Determination of such Claim in a
court of competent jurisdiction in Hamilton County,
Ohio. If suit is not filed by Purchaser within such two
year period, the Claim shall be considered to have been
determined in favor of Seller.
4. CONCERNING THE ESCROW AGENT.
4.1 The Escrow Agent shall be paid its customary fee as set forth in
Appendix 1 attached hereto and reimbursed for all reasonable
expenses, disbursements and advances (including reasonable
attorneys' fees and expenses) incurred or made by it in
performance of its duties hereunder. Such fee and such
reasonable disbursements, expenses and advances shall be paid by
Purchaser upon request by the Escrow Agent and, in the case of
any such reimbursement, upon submission to Purchaser of a
reasonably detailed itemized statement relating to the amounts
to be reimbursed.
4.2 The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to
Purchaser and Seller specifying a date (not less than 30 days
after the giving of such notice) when such resignation shall
take effect. Promptly after such notice, a successor escrow
agent shall be appointed by mutual agreement of Purchaser and
Seller, with such successor escrow agent to become Escrow Agent
hereunder upon the resignation date specified in such notice.
If Purchaser and Seller are unable to agree upon a successor
escrow agent within 30 days after such notice, the Escrow Agent
shall be entitled to appoint its successor, so long as such
successor is a bank or trust company having capital, surplus and
undivided profits aggregating at least $100,000,000. The Escrow
Agent shall continue to serve until its successor accepts the
escrow agent appointment by written notice to the parties hereto
and receives the Collateral. Purchaser and Seller may agree at
any time to substitute a new escrow agent by giving notice
thereof to the Escrow Agent then acting.
4.3 The Escrow Agent undertakes to perform such duties as are
specifically set forth herein. The Escrow Agent acting or
refraining from acting in good faith shall not be liable for any
mistake of fact or error of judgment by it or for any acts or
omissions by it of any kind unless caused by willful misconduct
or gross negligence, and shall be entitled to rely, and shall be
protected in doing so, upon (i) any written notice, instrument
or signature believed by it to be genuine and to have been
signed or presented by the proper party or parties duly
authorized to do so, and (ii) the advice of counsel (which may
be of the Escrow Agent's own choosing). The Escrow Agent shall
have no responsibility for the contents of any writing submitted
to it hereunder and shall be entitled in good faith to rely
without any
<PAGE> 23
liability upon the contents thereof. The Escrow Agent shall not
responsible for any tax reporting.
4.4 Purchaser and Seller agree to indemnify the Escrow Agent and
hold it harmless against any and all liabilities incurred by it
hereunder as a consequence of their respective actions, and each
further agrees jointly to indemnify the Escrow Agent and hold it
harmless against any and all liabilities incurred by it
hereunder which are not a consequence of their respective
actions, except, in either case for liabilities incurred by the
Escrow Agent resulting from its own willful misconduct or gross
negligence.
5. MISCELLANEOUS.
5.1 This Escrow Agreement will be binding upon, inure to the benefit
of, and be enforceable by the respective beneficiaries,
representatives, successors and assigns of the parties hereto.
5.2 This Escrow Agreement and the Purchase Agreement contain the
entire understanding of the parties with respect to the subject
matter hereof, and this Escrow Agreement may be amended only by
a written instrument duly executed by all the parties hereto.
5.3 All notices, claims, requests, demands and other communications
hereunder ("notices") shall be in writing and shall be given as
follows:
(a) IF TO PURCHASER:
SST Acquisition Corporation
154 Commerce Boulevard
Loveland, Ohio 45140-6399
ATTENTION: C. WINFIELD SCOTT, PRESIDENT
COPY TO:
Thompson Hine & Flory LLP
312 Walnut Street, Suite 1400
Cincinnati, Ohio 45202-4029
ATTENTION: BARBARA SCHWARTZ BROMBERG, ESQ.
<PAGE> 24
(b) IF TO SELLER:
Bollinger Industries, Inc.
Attention: Glenn Bollinger
222 W. Airport Freeway
Irving, TX 75062
COPY TO:
Tracy & Holland L.L.P.
306 West Seventh Street
Suite 500
Fort Worth, Texas 76102
ATTENTION: GEORGE T. JOHNS
(c) IF TO THE ESCROW AGENT:
PNC Bank, Ohio, N.A.
Corporate Trust Department
201 East 5th Street
Cincinnati, Ohio 45202
ATTENTION: JACK HANNAH
or to such other address as the persons to whom notice is to be
given may have previously furnished to the others in writing in
the manner set forth in this Section 5.3, provided that notices
of changes of address shall only be effective upon receipt. A
notice given in accordance with the preceding sentence shall be
deemed to have been duly given upon receipt or (if receipt is
not expressly required by the terms hereof) upon mailing by
registered or certified mail, postage prepaid, return receipt
requested.
5.4 This Escrow Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio,
without regard to its conflicts of law rules.
5.5 This Escrow Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
5.6 This Escrow Agreement shall remain in full force and effect
until the Escrow Agent has delivered all the Collateral and the
Interest in its possession in
<PAGE> 25
accordance with the terms hereof.
5.7 Article headings contained herein are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Escrow Agreement.
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and
delivered by Purchaser, Seller and the Escrow Agent on the date first above
written.
PNC BANK, OHIO SST ACQUISITION CORPORATION
(Escrow Agent) (Purchaser)
By: By:
-------------------------------- ---------------------------------
Name: Jack Hannah C. Winfield Scott, President
Title: Assistant Vice President
BOLLINGER INDUSTRIES, INC.
(Seller)
By:
---------------------------------
Glenn Bollinger, Chief Executive
Officer
<PAGE> 1
Exhibit 11.1
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Thirteen Three Month Thirty-nine Nine Month
Week Period Period Week Period Period
Ended Ended Ended Ended
December 29, December 31, December 29, December 31,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings (loss) from continuing
operations ....................... $(2,017,176) $ 651,519 $(3,856,009) $ 521,186
Net earnings (loss) .................... $(2,113,152) $ 485,334 $(3,145,289) $ (48,416)
Weighted average number of common
shares outstanding during the
period ........................... 4,000,210 3,708,090 4,000,210 3,708,090
Net effect of dilutive stock options
based on the treasury stock method
at market prices ................. 0 226,890 0 260,718
----------- ----------- ----------- -----------
Shares used for computation ............ 4,000,210 3,934,980 4,000,210 3,968,808
=========== =========== =========== ===========
Earnings (loss) from continuing
operations ....................... $ (.50) $ .17 $ (.96) $ .13
=========== =========== =========== ===========
Net earnings (loss) per share .......... $ (.53) $ .12 $ (.79) $ (.01)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-29-1996
<CASH> 127,754
<SECURITIES> 0
<RECEIVABLES> 23,480,779
<ALLOWANCES> 0
<INVENTORY> 23,952,792
<CURRENT-ASSETS> 48,764,661
<PP&E> 4,315,219
<DEPRECIATION> 2,379,115
<TOTAL-ASSETS> 53,610,996
<CURRENT-LIABILITIES> 29,942,337
<BONDS> 0
0
0
<COMMON> 40,002
<OTHER-SE> 9,277,237
<TOTAL-LIABILITY-AND-EQUITY> 53,610,996
<SALES> 66,135,657
<TOTAL-REVENUES> 66,135,657
<CGS> 54,399,287
<TOTAL-COSTS> 13,600,353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 443,211
<INTEREST-EXPENSE> 1,967,997
<INCOME-PRETAX> (3,831,980)
<INCOME-TAX> 24,029
<INCOME-CONTINUING> (3,856,009)
<DISCONTINUED> 710,720
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,145,289)
<EPS-PRIMARY> (.79)
<EPS-DILUTED> (.79)
</TABLE>
