<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
NOVEMBER 26, 1997
BOLLINGER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2502577
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
0-22716
(Commission File Number)
602 FOUNTAIN PARKWAY, GRAND PRAIRIE, TEXAS 75050
(Address of principal executive offices) (Zip Code)
(972) 343-1000
(Registrant's telephone number, including area code)
Former address: 222 W. Airport Freeway, Irving, Texas 75062
Total Number of
sequential numbered pages 4 Exhibit Index on page 4
--- ---
1
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 13, 1997, Bollinger Industries, Inc. and its wholly owned
subsidiary NBF, Inc. entered into an asset purchase agreement for the sale of
its trampoline division to Hedstrom Corporation and consummated the transactions
on November 21, 1997. The cash purchase price under the purchase agreement was
$14,250,000, subject to an upward or downward adjustment for the Company's
trampoline inventory at the closing. The purchase agreement covers inventory,
equipment and other assets of the Company and NBF that are related to the
Company's trampoline division. The Company is no longer engaged in the
manufacture and sale of trampolines.
The description contained herein of the sale is qualified in its
entirety by reference to the Purchase Agreement, dated as of November 21, 1997,
by and among the Registrant NBF and Hedstrom and the Press Releases dated
November 14, and November 17, 1997, which are attached hereto as Exhibits 10.61,
10.62 and 10.63, respectively, and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it is
impractical for the Registrant to provide the financial statements required by
this Item 7(a)(4) of Form 8-K, such financial statements shall be filed by
amendment to this Form 8-K no later than 60 days after November 28, 1997.
(b) Pro Forma Financial Information
As of the date of filing of the Current Report on Form 8-K, it is
impractical for the Registrant to provide the pro forma financial information
required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after November 28, 1997.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set forth
elsewhere herein.
2
<PAGE> 3
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: November 26, 1997 /s/ Rose Turner
----------------- ------------------------------------------
Rose Turner
Executive Vice President - Finance, Chief
Financial Officer, Treasurer and Secretary
3
<PAGE> 4
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
10.61 ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of November 13, 1997, by and among
Bollinger Industries, Inc., a Delaware corporation
("Parent"), NBF, Inc., a Georgia corporation and wholly
owned subsidiary of Parent ("Seller"), and Hedstrom
Corporation, a Delaware corporation ("Purchaser").
10.62 Press release dated November 14, 1997 - Hedstrom Corporation, a
Hicks, Muse Firm, Buys Bollinger Trampoline Division
10.63 Press release dated November 17, 1997 - Bollinger reports results
for the three and six months ended September 30, 1997.
</TABLE>
4
<PAGE> 1
EXHIBIT 10.61
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November 13, 1997, by and among Bollinger Industries, Inc., a
Delaware corporation ("Parent"), NBF, Inc., a Georgia corporation and wholly
owned subsidiary of Parent ("Seller"), and Hedstrom Corporation, a Delaware
corporation ("Purchaser").
RECITALS:
A. Seller presently conducts the business (the "Business") of
designing, manufacturing and marketing trampolines (the "Products"); and
B. Seller and Parent desire to sell, and Purchaser desires to purchase,
certain assets, rights and properties of Seller and Parent used or useful in the
operation of the Business and, in connection with such purchase and sale,
Purchaser is willing to assume certain obligations and liabilities relating to
the Business, all on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. PURCHASE OF ASSETS
I.1. Purchase and Sale of Assets. On the terms and subject to the
conditions hereof and subject to Sections 1.2 and 1.3, at the Closing (as
defined in Section 4.1), Seller and Parent will sell, transfer, convey, assign
and deliver, and Purchaser will purchase and accept, all right, title and
interest of Seller and Parent, respectively, in and to all rights, properties
and assets of Seller and Parent, respectively, described in this Section 1.1,
wherever located (collectively, the "Purchased Assets"), free and clear of all
mortgages, liens, claims, charges, pledges, or other encumbrances of any nature
whatsoever, including without limitation licenses, leases, chattel or other
mortgages, collateral security arrangements, pledges, security interests,
conditional and installment sales agreements or charges of any kind and other
title or interest retention arrangements, reservations or limitations of any
nature (collectively, "Encumbrances") other than Permitted Encumbrances (as
defined in Section 5.1.9):
I.1.1. Inventories. All items of finished goods inventory of
Seller (excluding trampoline products of forty-eight (48) or less inches),
including, without limitation, all finished goods, component parts, samples and
supply and packaging items (collectively, the "Inventories");
<PAGE> 2
I.1.2. Equipment. All spare parts, tools, machinery,
equipment, and other tangible personal property listed or described on
Schedule 1.1.2 (collectively, the
"Equipment");
I.1.3. Manufacturers' and Vendors' Warranties. All rights
under manufacturers' and vendors' warranties relating to items included in the
Purchased Assets and all similar rights against third parties relating to items
included in the Purchased Assets to the extent that such rights may be assigned
or transferred to Purchaser (provided, however, that Parent and Seller shall use
their commercially reasonable efforts to obtain prior to the Closing any
consents, approvals and waivers necessary to assign or transfer any rights that
are not freely assignable or transferrable);
I.1.4. Intellectual Property. All right, title and interest in
and to all domestic and foreign letters patent, patents, patent applications,
patent licenses, software licenses and know-how licenses, trade names,
trademarks, registered copyrights, service marks, trademark registrations and
applications, service mark registrations and applications and copyright
registrations and applications owned or used by Seller in the operation of the
Business and all trade secrets, technical knowledge, know-how and other
confidential proprietary information and related ownership, use and other rights
of Seller, including but not limited to those listed or described on Schedule
1.1.4 (collectively, the "Intellectual Property") (provided, however, that the
foregoing shall not include any right, title or interest in or to the name
"Bollinger," the use of which by Purchaser shall be governed exclusively by a
trademark license agreement substantially in the form attached hereto as Exhibit
A to be executed and delivered by Parent, Seller and Purchaser at the Closing
(the "Trademark License Agreement");
I.1.5. Books and Records. All the books and records of Seller
and Parent relating primarily to the Purchased Assets, including without
limitation all books and records relating to the purchase of materials, supplies
and services, product engineering, research and development, manufacture and
sale of products and all files and documents (including credit information)
relating to customers and suppliers of the Business;
I.2. Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, none of the Inventories which have been transferred
or consumed by Seller prior to the Closing in the ordinary course of the conduct
of the Business consistent with past practice (collectively, the "Excluded
Assets") shall be included in the Purchased Assets.
ARTICLE II. ASSUMPTION OF LIABILITIES
II.1. Assumed Liabilities. As of the Closing, Purchaser will assume and
thereafter in due course pay and fully satisfy all liabilities and obligations
of Seller in respect of the Product warranty and repair work obligations that
arise after the Closing Date except to the extent that
2
<PAGE> 3
such obligations are required to be performed by Seller pursuant to the terms of
a Supply and Services Agreement substantially in the form attached hereto as
Exhibit B to be executed and delivered by Seller and Purchaser at the Closing
(the "Supply and Services Agreement").
The liabilities and obligations assumed by Purchaser pursuant to this
Section 2.1 are referred to herein as the "Assumed Liabilities."
II.2. Retained Liabilities. Notwithstanding anything contained in this
Agreement to the contrary, Purchaser does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Seller (including, without limitation, any liabilities or obligations with
respect to defective products), whether primary or secondary, direct or
indirect, other than the Assumed Liabilities (the "Retained Liabilities").
ARTICLE III. PURCHASE PRICE
III.1. Unadjusted Purchase Price. At the Closing, in addition to assuming
the Assumed Liabilities, Purchaser will pay for the Purchased Assets and the
covenants of Seller and Parent included herein an aggregate purchase price in
the amount of $14,250,000 (the "Unadjusted Purchase Price"), subject to
adjustment as provided in Section 3.2 (as adjusted, the "Purchase Price"), which
amount shall be payable as follows:
(a) $13,250,000 of the Purchase Price (the "Cash Portion")
shall be paid to Seller by wire transfer of immediately available funds
to an account designated by Seller in writing;
(b) $1,000,000 of the Purchase Price (the "Escrow Portion")
shall be deposited with an escrow agent mutually acceptable to the
parties (the "Escrow Agent") pursuant to the terms of an escrow
agreement substantially in the form attached hereto as Exhibit C (the
"Escrow Agreement") to be executed by Parent, Seller, Purchaser and the
Escrow Agent on the Closing Date. The Escrow Portion of the Purchase
Price shall be held in, and released from, escrow in accordance with
the terms of the Escrow Agreement to secure Parent's and Seller's
indemnity obligations pursuant to Section 10.3; and
(c) any amounts payable after the Closing on account of
adjustments to the Unadjusted Purchase Price pursuant to Section 3.2
shall be paid by the party required to make such payment in the amount
and at the time specified in Section 3.2.
3
<PAGE> 4
III.2. Adjustment to Unadjusted Purchase Price for Changes in Inventories.
(a) The Unadjusted Purchase Price shall be adjusted following
the Closing Date as follows:
(i) if the value of the Inventories (as set forth on
the Inventory Statement (as defined in Section 3.2(b)) as of the
Closing Date is less than $1,500,000, the Unadjusted Purchase Price
shall be decreased by an amount equal to such difference; and
(ii) if the value of the Inventories (as set forth on
the Inventory Statement) as of the Closing Date is greater than
$1,500,000, the Unadjusted Purchase Price shall be increased by an
amount equal to such difference;
provided, however, that in no event shall the Purchase Price, as adjusted
pursuant to this Section 3.2, exceed $14,950,000 (the "Purchase Price Cap").
(b) As used herein, the term "Inventory Statement" shall mean
the statement of Inventories of the Business to be prepared by Seller as of the
Closing Date in accordance with this Section 3.2 and to be delivered to
Purchaser at the Closing. The Inventory Statement shall (i) present the
Inventories at the lower of cost or market (with adequate provision for excess,
obsolete and distressed merchandise) and (ii) identify the locations of the
Inventories. The quantity of the Inventories reflected on the Inventory
Statement shall be based on the Physical Inventory described in Section 3.2(c)
below.
(c) In connection with the preparation of the Inventory
Statement, a physical inventory of all finished goods inventories (excluding
trampoline products of forty-eight (48) inches or less), including, without
limitation, all finished goods, component parts, samples and supply and
packaging items, held by Seller shall be taken as of the Closing Date by
Seller, at Seller's sole expense, and observed by Purchaser or its
representatives (the "Physical Inventory"). Purchaser shall have the
opportunity to examine the work papers, schedules and other documents prepared
by Seller in connection with its preparation of the Inventory Statement. The
Inventory Statement shall be final and binding on the parties, and the net
amount of the adjustments set forth therein shall be paid by the party
obligated to make such payment hereunder within thirty (30) days after delivery
thereof to Purchaser, unless, within such thirty (30) day period notice is
given by Purchaser to Seller of its objection setting forth in reasonable
Purchaser's basis for objection. If notice of objection is given, the parties
shall consult with each other with respect to the objection. Any amount that is
not in dispute will be promptly paid by the party obligated to make such
payment hereunder to the party entitled to receive such payment hereunder by
wire transfer of immediately available funds. If the parties are unable to
reach agreement within fifteen (15) days after the notice of objection has been
given, the dispute shall be referred for resolution to the a "Big 6" accounting
firm mutually acceptable to the parties (the "Accountants") as promptly as
practicable. The Accountants will make a determination as to each of the items
in dispute, which determination will be (i) in writing, (ii) furnished to each
of the parties hereto as promptly as practicable after the items in dispute
have been referred to the Accountants, (iii) made in accordance with this
Agreement,
4
<PAGE> 5
and (iv) conclusive and binding upon each of the parties hereto. In connection
with their determination of the disputed items, the Accountants will be entitled
to rely on the workpapers, trial balances and similar materials, if any,
prepared by Seller's auditors in connection with such firm's examination of the
financial statements of Seller, and the fees and expenses of the Accountants
will be shared equally by Purchaser and Seller. Each of Purchaser and Seller
shall use commercially reasonable efforts to cause the Accountants to render
their decision as soon as practicable, including without limitation by promptly
complying with all reasonable requests by the Accountants for information,
books, records and similar items. Upon the final determination of the
Accountants as to the disputed items, the net amount of the remaining
adjustments shall be promptly paid by the party required to make such payment
hereunder by wire transfer of immediately available funds.
III.3. Allocation of Purchase Price. Seller, Parent and Purchaser agree
that the Purchase Price (including the Assumed Liabilities) shall be allocated
among the Purchased Assets as set forth on Schedule 3.3 hereto, as the same may
be adjusted after the Closing Date in connection with any adjustments to the
Unadjusted Purchase Price pursuant to Section 3.2 (the "Allocation"). Seller,
Parent and Purchaser agree to prepare and file all Tax Returns (as defined in
Section 5.15) (including Form 8594) in a manner consistent with the Allocation.
Seller, Parent and Purchaser agree to consult with each other with respect to
all issues related to such Allocation in connection with any tax audits,
controversy or litigation.
ARTICLE IV. THE CLOSING
IV.1. Date of Closing. The consummation of the purchase and sale of the
Purchased Assets contemplated hereby (the "Closing") shall take place on
November 21, 1997 at the offices of Weil, Gotshal & Manges LLP, 100 Crescent
Court, Suite 1300, Dallas, Texas (or at such other place as the parties may
designate) or such other date designated by the parties in writing, after each
of the conditions specified in Article VII has been fulfilled (or waived by the
party entitled to waive that condition). The date on which the Closing is
effected is referred to in this Agreement as the "Closing Date." At the Closing,
the parties shall execute and deliver the documents referred to in Article VIII.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
V.1. Representations and Warranties of Seller. Each of Seller and
Parent, jointly and severally, makes the following representations and
warranties to Purchaser, each of which is true and correct as of the date hereof
and shall be true and correct as of the Closing Date and shall be unaffected by
any investigation heretofore or hereafter made by Purchaser.
V.1.1. Organization and Good Standing. Seller and Parent are corpora-
tions duly organized, validly existing and in good standing under the laws of
the States of Georgia and Delaware, respectively. Each of Seller and Parent has
the requisite corporate power and authority to own or otherwise hold the
Purchased Assets owned or otherwise held by it and to carry on the Business as
presently conducted by it.
5
<PAGE> 6
V.1.2. Authorization of Agreement; Binding Obligation. Each of
Seller and Parent has the requisite corporate power to execute and to deliver
this Agreement, the Escrow Agreement, the Supply and Services Agreement, a
supplemental lockbox procedures letter agreement with Foothill Capital
Corporation substantially in the form attached hereto as Exhibit D (the "Lockbox
Letter Agreement") and the Trademark License Agreement (collectively, the
"Transaction Documents") and to perform the transactions contemplated by the
Transaction Documents to be performed by them. The execution and delivery by
each of Seller and Parent of the Transaction Documents and the performance by
them of the transactions contemplated by the Transaction Documents to be
performed by them have been duly authorized by all necessary corporate and
shareholder action on the part of Seller and Parent. This Agreement has been,
and the Transaction Documents will be, duly executed and delivered by duly
authorized officers of each of Seller and Parent and, assuming the due execution
and delivery of the Transaction Documents by the other parties thereto, this
Agreement constitutes, and the other Transaction Documents will constitute,
valid and binding obligations of Seller and Parent enforceable against them in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
V.1.3. No Restrictions Against Sale of the Purchased Assets;
Required Consents. The execution and delivery of this Agreement by Seller and
Parent does not and the execution and delivery of the other Transaction
Documents by Seller and Parent will not, and the performance by Seller and
Parent of the transactions contemplated by the Transaction Documents to be
performed by them will not (a) conflict with the articles or certificate of
incorporation or by-laws of either Seller or Parent, (b) conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under,
any contract, permit, order, judgment or decree to which either Seller or Parent
is a party or by which any of their properties are bound, (c) constitute a
violation of any law or regulation applicable to either Seller or Parent, or (d)
result in the creation of any Encumbrance upon any of the Purchased Assets. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any domestic or foreign court, government, governmental agency,
authority, entity or instrumentality ("Governmental Entity") is required to be
obtained or made by or with respect to Seller or Parent in connection with the
execution and delivery of the Transaction Documents by Seller or Parent or the
performance by Seller or Parent of the transactions contemplated by the
Transaction Documents to be performed by either of them, except for such of the
foregoing as are listed or described on Schedule 5.1.3 and any filings, if
required, with the Federal Trade Commission and Department of Justice pursuant
to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") or with the United States Securities and Exchange Commission pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended.
6
<PAGE> 7
V.1.4. No Third Party Options. There are no existing agreements
with, options or rights of, or commitments to any person to acquire any of the
Purchased Assets or any interest therein, except for those contracts entered
into in the normal course of business consistent with past practice for the
sale of Inventories.
V.1.5. Financial Statements. Attached hereto as Schedule 5.1.5
are true and complete copies of unaudited balance sheets of Seller at December
31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997 and the related
statements of income for the periods then ended, all of which have been
prepared in accordance with Seller's internal accounting procedures
consistently applied throughout the periods involved. Such balance sheets,
including the related notes, fairly present the financial position, assets and
liabilities (whether accrued, absolute, contingent or otherwise) of Seller at
the dates indicated and such statements of income fairly present the results of
operations of Seller for the periods indicated. The unaudited financial
statements as at and for the periods ending December 31, 1997, March 31, 1997,
June 30, 1997 and September 30, 1997 contain all adjustments, which are solely
of a normal recurring nature, necessary to present fairly the financial
position and results of operations of Seller for the periods then ended.
V.1.6. Inventories. All Inventories (i) have been acquired and
maintained in the ordinary course of the Business; (ii) are of good and
merchantable quality; (iii) consist substantially of a quality, quantity and
condition usable or saleable in the ordinary course of the Business; (iv) are
valued at the lower of cost or market (with adequate provision for excess,
obsolete and distressed merchandise); and (v) are not subject to any write-down
or write-off.
V.1.7. Books of Account. The books, records and accounts of
Seller maintained with respect to the Business accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of Seller
with respect to the Business.
V.1.8. Contracts and Commitments. Except as described on
Schedule 5.1.8, Seller is not a party to any written or oral:
(i) distribution, dealer, representative or sales
agency agreement, contract or commitment relating to the Business;
(ii) lease under which Seller is either lessor
or lessee relating to the Purchased Assets;
(iii) agreement, contract or commitment limiting or
restraining Seller any successor thereto from engaging or competing in any
manner in the Business, nor, to Seller's knowledge, is any employee of Seller
engaged in the conduct of the Business subject to any such agreement, contract
or commitment;
(iv) license, franchise, distributorship or other
agreement
7
<PAGE> 8
which relates in whole or in part to any software, patent, trademark,
trade name, service mark or copyright or to any ideas, technical assistance or
other know-how of or used by Seller in the conduct of the Business; or
(v) material agreement, contract or commitment
relating to the Business not made in the ordinary course of business.
V.1.9. Title to Purchased Assets. Except for Encumbrances with
respect to which duly executed releases, termination statements, or payoff
letters in form and substance satisfactory to Purchaser have been delivered by
Seller and Parent, as applicable, at the Closing pursuant to Section 8.1.7,
Seller has, and following the Closing, Purchaser will have, good, valid and
marketable title to the Purchased Assets free and clear of all Encumbrances,
other than those listed or described on Schedule 5.1.9 ("Permitted
Encumbrances").
V.1.10. Intellectual Property. Schedule 1.1.5 contains an
accurate and complete list of all Intellectual Property owned or used by Seller
in the operation of the Business. Except as set forth on Schedule 5.1.9, Seller
owns the entire right, title and interest in and to the Intellectual Property
(including, without limitation, the right to use and license the same). Except
as set forth in Schedule 5.1.10, there are no pending, or to the knowledge of
Seller, threatened actions of any nature affecting the Intellectual Property.
Schedule 5.1.10 lists all notices or claims currently pending or received by
Parent or Seller which claim infringement of any domestic or foreign letters
patent, patent applications, patent licenses, software licenses and know-how
licenses, trade names, trademark registrations and applications, service marks,
copyrights, copyright registrations or applications, trade secrets, technical
knowledge, know-how or other confidential proprietary information. Except as set
forth on Schedule 5.1.10, there is, to the knowledge of Parent and Seller, no
reasonable basis upon which any claim may be asserted against Parent or Seller
for infringement or misappropriation of any domestic or foreign letters patent,
patents, patent applications, patent licenses, software licenses, and know-how
licenses, trade names, trademark registrations and applications, trademarks,
service marks, copyrights, copyright registrations or applications, trade
secrets, technical knowledge, know-how or other confidential proprietary
information. Except as set forth on Schedule 5.1.10, all letters patent,
registrations and certificates issued by any Governmental Entity relating to any
of the Intellectual Property and all licenses and other agreements pursuant to
which Seller uses any of the Intellectual Property, are valid and subsisting,
have been properly maintained and neither Parent, Seller, nor to the knowledge
of Parent or Seller, any other person, is in default or violation thereunder.
8
<PAGE> 9
V.1.11. Condition of Equipment. All the Equipment is in good
operating condition and repair, subject to normal wear and maintenance, usable
in the regular and ordinary course of business and conforms to all applicable
laws, ordinances, codes, rules and regulations relating to their construction,
use and operation.
V.1.12. Customers and Suppliers. Schedule 5.1.12 sets forth
(a) a list of (i) the ten largest customers of Seller based on sales during the
fiscal year ended March 31, 1997 and (ii) the ten largest customers of Seller
based on sales during the 6 months ended September 30, 1997, showing the number
and sales prices of units sold and the total sales by Seller to each such
customer during the fiscal year ended March 31, 1997 and the 6 months ended
September 30, 1997, respectively, and (b) a list of (i) the ten largest
suppliers of Seller based on purchases during the fiscal year ended March 31,
1997, and (ii) the ten largest suppliers of Seller based on purchases during the
6 months ended September 30, 1997, showing the type, unit numbers and sales
prices of goods purchased and the total amount of purchases by Seller from each
such supplier during the fiscal year ended March 31, 1997, and the 6 months
ended September 30, 1997, respectively. Except as described on Schedule 5.1.12,
there has not been any adverse change in the business relationship of Seller
with any customer or supplier named in Schedule 5.1.12, and Seller has no reason
to believe that there will be any such adverse change in the future either as a
result of the consummation of the transactions contemplated by this Agreement or
otherwise. Except as described on Schedule 5.1.12, Seller has not prepared any
"deal sheets" or "customer profiles" for, or made any similar arrangements with,
any customer identified on Schedule 5.1.12 or amended or changed any of such
"deal sheets" or arrangements.
V.1.13. Litigation; Decrees. (a) There are no judicial or
administrative actions, proceedings or investigations pending or, to Parent's or
Seller's knowledge, threatened that question the validity of the Transaction
Documents or any action taken or to be taken by Parent or Seller in connection
with the Transaction Documents. Except as listed or described on Schedules
5.1.13(a), there are no (i) lawsuits, claims, administrative or other
proceedings or investigations relating to the Business, the Products or the
Purchased Assets pending or, to Parent's or Seller's knowledge, threatened by,
against or affecting Parent or Seller or any Affiliate (as defined in Section
12.18) thereof or (ii) judgments, orders or decrees of any Governmental Entity
binding on the Business, the Products or the Purchased Assets.
(b) Without limiting the generality or effect of any other
provision hereof, (i) all claims or allegations asserted since May 1, 1994 that
any Product was defective or caused any injury or harm to any person, including,
without limitation, all such claims and allegations relating to any failure to
warn, breach of warranties of merchantability or fitness for any purpose or use
or similar matters are described on Schedule 5.1.13(b) and (ii) to Parent's and
Seller's knowledge, no basis exists for any person to make any such claim except
as so described.
(c) The statements of income described in Section 5.1.5
properly reflect the
9
<PAGE> 10
costs and expenses for returns and warranty claims relating to the Business
and Products for the periods covered by such statements. Schedule 5.1.13(c)
reflects accurate summaries of returns and return allowances for each of K-Mart
and WalMart. Neither Parent nor Seller has any knowledge of any facts or
circumstances that could give rise to return and warranty claims relating to the
Business or the Products that (i) would cause the costs and expenses reflected
on subsequent statements of income to vary materially from the costs and
expenses reflected on the statements of income described in Section 5.1.5. The
costs and expenses associated with warranty claims during the past year have not
exceeded $100,000 in the aggregate.
V.1.14. Compliance With Law. Seller and Parent have complied
with each domestic or foreign statute, law, ordinance, rule or regulation
("Law"), judgment, order and decree of any Governmental Entity to which Seller
or Parent or their respective businesses, operations, assets or properties is
subject and are not currently in violation of any of the foregoing.
V.1.15. Taxes. (a) All Tax Returns required to be filed by or
with respect to Seller and Parent have been duly and timely filed, and all such
Tax Returns are true, correct and complete in all material respects. Seller and
Parent have duly and timely paid all Taxes that are due, or claimed or asserted
by any taxing authority to be due, from or with respect to it.
(b) No claim for assessment or collection of Taxes has been
asserted against Seller or Parent or any of the Purchased Assets. No audit or
other proceeding by any court, governmental or regulatory authority, or similar
person is pending or, to the knowledge of Seller or Parent, threatened with
respect to any Taxes due from or with respect to Seller or Parent.
(c) No claim has been made within the past three years by any
taxing authority where Seller or Parent does not currently file Tax Returns with
respect to the Business that the Business is or may be subject to taxation by
that jurisdiction.
(d) Seller and Parent have withheld and paid all Taxes
required to be withheld in connection with any amounts paid or owing with
respect to the Business to any employee, creditor, independent contractor or
other third party
(e) Neither Seller nor Parent is a foreign person for
purposes of Section 1445.
(f) "Taxes" shall mean all taxes, charges, fees, levies, or
other similar assessments or liabilities, including without limitation (a)
income, gross receipts, ad valorem, premium, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll, medicare, and
franchise taxes imposed by the United States of America, or by any state, local,
or foreign government, or any subdivision, agency, or other similar person of
the United States or any such government; and (b) any interest, fines,
penalties,
10
<PAGE> 11
assessments, or additions to taxes resulting from, attributable to, or incurred
in connection with any Tax or any contest, dispute, or refund thereof. "Tax
Returns" shall mean any report, return, or statement required to be supplied to
a taxing authority in connection with Taxes.
V.1.16. Commissions or Finder's Fees. Neither Parent, Seller
nor any person or entity acting on their behalf has agreed to pay a commission,
finder's fee or similar payment in connection with this Agreement or any matter
related hereto to any person or entity.
V.1.17. Liability Insurance. Set forth in Schedule 5.1.17 is a
list of all liability insurance policies held by or applicable to Seller, Parent
or the Business (the "Liability Policies"), setting forth, in respect of each
such policy, the policy name, policy number, carrier, term, type of coverage and
annual premium. Schedule 5.1.13 sets forth, with regard to the Business and the
Products, each claim for coverage that has been filed by Parent or Seller since
May 1, 1994 under any liability insurance policy and each event or occurrence in
respect of which a claim for coverage under any liability insurance policy could
have been or could be filed if the event or occurrence had been or is reported
to or otherwise known to Parent or Seller. Excluding insurance policies that
have expired and been replaced in the ordinary course of business, no insurance
policy has been cancelled within the last two years and, to Seller's and
Parent's knowledge, no threat has been made to cancel any insurance policy of
Seller during such period (other than notices with respect to late payments).
Except as noted on Schedule 5.1.17, all Liability Policies will remain in full
force and effect with respect to periods before the Closing. To Seller's and
Parent's knowledge, no event has occurred, including, without limitation, the
failure by Seller or Parent to give any notice or information or Seller or
Parent giving any inaccurate or erroneous notice or information, which limits or
impairs the rights of Seller or Parent under any such insurance policies.
V.1.18. Absence of Certain Changes or Events. Except as
described on Schedule 5.1.18, since October 1, 1997 there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
which, alone or in the aggregate, has had or would reasonably be expected to
have, a material adverse effect on the Business or the Purchased Assets (a
"Material Adverse Effect") or (ii) any damage, destruction or loss, whether or
not covered by insurance, which has had, or would reasonably be expected to
have, a Material Adverse Effect.
V.1.19. Disclosure. No representation or warranty by Parent or
Seller contained in this Agreement, and no statement contained in any document
(including without limitation the financial statements referenced in Section
5.1.5., the closing documents delivered pursuant to Article VIII and the
Schedules hereto), list, certificate or other instrument furnished or to be
furnished by or on behalf of Parent or Seller or any Affiliate thereof to
Purchaser or any of its representatives in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading or necessary in order fully and
fairly to provide the information required to be provided in any
11
<PAGE> 12
such document, list, certificate or other instrument. Neither Parent nor Seller
has failed to disclose to Purchaser any fact which would reasonably be
determined to have a Material Adverse Effect or which is otherwise material to
the Business.
V.2. Representations and Warranties of Purchaser. Purchaser makes the
following representations and warranties to Seller, each of which is true and
correct as of the date hereof and shall be true and correct as of the Closing
Date and shall be unaffected by any investigation heretofore or hereafter made
by Seller.
V.2.1. Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted.
V.2.2. Authorization and Effect of Agreement. Purchaser has
the requisite corporate power to execute and deliver the Transaction Documents
and to consummate the transactions contemplated by the Transaction Documents to
be consummated by it. The execution and delivery by Purchaser of the Transaction
Documents and the consummation by it of the transactions contemplated by the
Transaction Documents to be consummated by it have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement has been,
and the other Transaction Documents will be, duly executed and delivered by
Purchaser and, assuming the due execution and delivery of the Transaction
Documents by each of the other parties thereto, this Agreement constitutes, and
the other Transaction Documents will constitute, valid and binding obligations
of Purchaser, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
V.2.3. No Restrictions Against Purchase of the Purchased
Assets. The execution and delivery of the Transaction Documents by Purchaser
does not, and the performance by Purchaser of the transactions contemplated by
the Transaction Documents to be performed by it will not (a) conflict with the
certificate of incorporation or by-laws of Purchaser, (b) conflict with, or
result in any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under,
any material contract or permit, order, judgment or decree to which Purchaser is
a party or by which it is bound, or (c) constitute a violation of any law or
regulation applicable to Purchaser. Except for any applicable requirements of
the HSR Act, no consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by or with respect to Purchaser in connection with the execution and
delivery of the Transaction Documents by Purchaser or the consummation by it of
the transactions contemplated by the Transaction Documents to be consummated by
it, except as listed or described on Schedule 5.2.3.
12
<PAGE> 13
ARTICLE VI. PRE-CLOSING COVENANTS
VI.1. Access to Information. Prior to the Closing, upon reasonable
notice from Purchaser to Parent, Parent and Seller will afford to the officers,
attorneys, accountants or other authorized representatives of Purchaser
reasonable access during normal business hours to the employees, assets,
facilities and the books and records of Parent and Seller so as to afford
Purchaser full opportunity to make such review, examination and investigation of
the Business and the Purchased Assets as Purchaser may desire to make. Purchaser
will be permitted to make extracts from or to make copies of such books and
records as may be reasonably necessary in connection therewith. Prior to the
Closing, Parent and Seller will promptly furnish or cause to be furnished to
Purchaser such financial and operating data and other information as Purchaser
may reasonably request.
VI.2. Conduct of Business. Except as contemplated herein or as otherwise
consented to by Purchaser in writing, during the period from the date of the
Agreement and continuing until the Closing Date, Parent and Seller will, in
respect of its conduct of the Business, and will cause its Affiliates to:
(a) use their respective best efforts to (i) carry on the
Business in the usual, regular and ordinary course as presently
conducted and consistent with past practice, (ii) keep the Business
intact, and (iii) use best efforts to maintain the goodwill associated
with the Business, including but not limited to preserving the
relationships of customers, suppliers and others having business
dealings with the Business;
(b) maintain the Purchased Assets in good condition and
working order, ordinary wear and tear excepted in the case of the
Equipment;
(c) not sell, lease or dispose of, or make any contract for
the sale, lease or disposition of, or subject to any Encumbrances, any
Purchased Assets other than sales of Inventories in the ordinary course
of the Business;
(d) not amend or terminate any Contract, other than in the
ordinary course of business consistent with past practices; and
(e) not take or omit to take any action as a result of which
any representation or warranty of Seller in Article V would be rendered
untrue or incorrect if such representation or warranty were made
immediately following the taking or failure to take such action.
VI.3. Notification. (a) Parent and Seller shall notify Purchaser, and
Purchaser shall notify Parent, of any litigation, arbitration or administrative
proceeding pending or, to its knowledge, threatened against Parent, Seller or
Purchaser, as the case may be, which
13
<PAGE> 14
challenges the transactions contemplated by the Transaction Documents.
(b) Each party will provide prompt written notice to the other
parties of any change in any of the information contained in their
representations and warranties made in Article V hereof or any Exhibits or
Schedules referred to herein or attached hereto and shall promptly furnish any
information which any other party may reasonably request in relation to such
change; provided, however, that such notice shall not operate to cure any breach
of the representations and warranties made in Article V hereof or any Exhibits
or Schedules referred to herein or attached hereto.
VI.4. Cooperation. Purchaser, Parent and Seller shall cooperate fully
with each other in taking any actions, including actions to obtain the required
consent of any Governmental Entity or any third party, necessary or helpful to
accomplish the transactions contemplated by this Agreement.
VI.5. No Inconsistent Action. Neither Purchaser, Parent nor Seller shall
take any action which is materially inconsistent with its obligations under this
Agreement.
VI.6. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article VII, prior to the Closing, each of the
parties will use its best efforts with due diligence and in good faith to
satisfy promptly all conditions required hereby to be satisfied by such party in
order to expedite the consummation of the transactions contemplated hereby.
VI.7. Injunctions. Without limiting the generality or effect of any
provision of Section 6.8 or Article VII, if any United States, state or foreign
court having jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which prohibits the
consummation of the transactions contemplated hereby, the parties will use their
respective reasonable efforts to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to or after the Closing, to pursue
the underlying litigation diligently and in good faith.
VI.8. Filings. As promptly as practicable after the execution of this
Agreement, each party shall use its reasonable efforts to obtain, and to
cooperate with the other party in obtaining, all authorizations, consents,
orders and approvals of any Governmental Entity that may be or become necessary
in connection with the consummation of the transactions contemplated by this
Agreement, and to take all reasonable actions to avoid the entry of any order or
decree by any Governmental Entity prohibiting the consummation of the
transactions contemplated hereby, including without limitation, any reports or
notifications that may be required to be filed by it under the HSR Act, and
shall furnish to the other all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by the
other. Purchaser and Seller agree that any filing fee required to be paid in
connection with any filing under the HSR Act made prior to the Closing shall be
paid one-half by Purchaser and one-half by Seller.
14
<PAGE> 15
VI.9. Publicity. Prior to the Closing, none of the parties hereto will
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby without
the prior consent of the other parties hereto, which consent will not be
unreasonably withheld; provided, however, that nothing herein will prohibit
either party from issuing or causing publication of any such press release or
public announcement to the extent that such party reasonably determines such
action to be required by Law or the rules of any national stock exchange
applicable to it or its Affiliates, in which event the party making such
determination will, if practicable in the circumstances, use reasonable efforts
to allow the other party reasonable time to comment on such release or
announcement in advance of its issuance.
VI.10. Acquisition Proposals. From and after the date of this
Agreement, neither Parent nor Seller shall, nor shall they authorize or permit
any officer, director or employee of, or any investment banker, attorney,
accountant or other representative retained by, Parent or Seller to, solicit,
initiate, encourage submission of, respond to or provide any information with
respect to any proposal or offer from any person which constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal. As used in this
Agreement, "Acquisition Proposal" shall mean any proposal for a merger or other
business combination involving Seller or any proposal or offer to acquire in any
manner a substantial equity interest in the Seller, or any portion of the
Purchased Assets.
ARTICLE VII. CONDITIONS TO CLOSING
VII.1. Conditions Precedent to Obligations of Purchaser. The obligations
of Purchaser under this Agreement to consummate the transactions contemplated
hereby will be subject to the satisfaction, at or prior to Closing, of all of
the following conditions, any one or more of which may be waived at the option
of Purchaser:
VII.1.1. Representations, Warranties and Covenants.
(a) All representations and warranties of Seller and Parent
made in this Agreement or in any Exhibit, Schedule or document
delivered pursuant hereto, shall be true and complete in all material
respects as of the date hereof (without regard to any schedule updates
furnished by Seller after the date hereof) and on and as of the Closing
Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied
with and performed by Parent and Seller on or prior to the Closing Date
shall have been complied with or performed.
(c) Purchaser shall have received a certificate, dated as of
the Closing Date, executed on behalf of Parent and Seller by authorized
officers thereof, certifying in such detail as Purchaser may reasonably
request that the conditions specified in Sections
15
<PAGE> 16
7.1.1(a) and (b) hereof have been fulfilled.
VII.1.2. Closing Documents. Parent and Seller shall have
delivered to Purchaser the documents identified in Section 8.1.
VII.1.3. Governmental Consents or Approvals. Each of the
governmental and other approvals, consents or waivers listed on Schedules 5.1.3
and 5.2.3 shall have been obtained.
VII.1.4. HSR Act. If applicable, the waiting period under the
HSR Act shall have expired or terminated.
VII.1.5. No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or Governmental Entity shall have been rendered
against, any party hereto which would render it unlawful, as of the Closing
Date, to effect the transactions contemplated by this Agreement in accordance
with its terms.
VII.1.6. Financing. Purchaser's senior lenders shall have
funded loans sufficient to enable Purchaser to consummate the transactions
contemplated hereby and pay all related fees and expenses.
VII.1.7. Insurance. Seller and Parent shall have caused
Purchaser to be named as an additional insured under each of the liability
insurance policies listed on Schedule 7.1.7, which policies, pursuant to their
respective terms, shall not be cancellable prior to thirty (30) days written
notice to Purchaser.
VII.2. Conditions Precedent to Obligations of Seller and Parent. The
obligations of Seller and Parent under this Agreement to consummate the
transactions contemplated hereby will be subject to the satisfaction, at or
prior to the Closing, of all the following conditions, any one or more of which
may be waived at the option of Seller:
VII.2.1. No Material Misrepresentation or Breach. (a) All
representations and warranties of the Purchaser made in this Agreement or in any
Exhibit, Schedule or document delivered pursuant hereto, shall be true and
complete in all material respects as of the date hereof and on and as of the
Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied
with and performed by the Purchaser on or prior to the Closing Date shall have
been complied with or performed.
(c) Seller shall have received a certificate, dated as of the
Closing Date, executed on behalf of Purchaser by an authorized officer thereof,
certifying in such detail as Seller may reasonably request that the conditions
specified in Sections 7.2.1(a) and (b) have
16
<PAGE> 17
been fulfilled.
VII.2.2. Closing Documents. Purchaser shall have delivered
to Seller the documents identified in Section 8.2.
VII.2.3. Governmental Consents or Approvals. Each of the
governmental and other approvals, consents or waivers listed on Schedules 5.1.3
and 5.2.3 shall have been obtained.
VII.2.4. HSR Act. If applicable, the waiting period under the
HSR Act shall have expired or terminated.
VII.2.5. No Adverse Proceedings. No suit, action, claim or
governmental proceeding shall be pending against, and no order, decree or
judgment of any court, agency or other Governmental Entity shall have been
rendered against, any party hereto which would render it unlawful, as of the
Closing Date, to effect the transactions contemplated by this Agreement in
accordance with its terms.
VII.2.6. Closing Price. Purchaser shall have paid the Cash
Portion of the Purchase Price to Seller in accordance with the provisions of
Section 3.1(a) and shall have deposited the Escrow Portion of the Purchase Price
with the Escrow Agent in accordance with the terms of Section 3.1(b).
ARTICLE VIII. DOCUMENTS TO BE DELIVERED AT THE CLOSING
VIII.1. Documents to be Delivered by Seller and Parent. At the Closing,
Seller and Parent will deliver to Purchaser the following, at the expense of
Seller and in proper form for recording when appropriate:
VIII.1.1. Transaction Documents. Counterparts, duly executed
by Seller and Parent, as applicable, of each of the following agreements:
(a) The Escrow Agreement;
(b) The Trademark License Agreement;
(c) The Supply and Services Agreement; and
(d) The Lockbox Letter Agreement.
VIII.1.2. Transfer Documents. Such bills of sale, assignments
and other good and sufficient instruments of transfer as Purchaser may
reasonably request conveying and transferring to Purchaser title to the
Purchased Assets.
17
<PAGE> 18
VIII.1.3. Certified Resolutions. Certified resolutions of the
Boards of Directors of Seller and Parent approving the execution and delivery of
this Agreement and each of the other documents delivered by each of Seller and
Parent pursuant thereto and authorizing the consummation of the transactions
contemplated hereby and thereby.
VIII.1.4. Officer's Certificate. A certificate, dated the
Closing Date, executed on behalf of Seller and Parent in the form described in
Section 7.1.1.
VIII.1.5. Opinion. A written opinion of Tracy & Holland,
L.L.P. in substantially the form attached hereto as Exhibit E attached hereto,
dated as of the Closing Date, together with reliance letters addressed to such
of Purchaser's financing sources as identified by Purchaser prior to Closing
and entitling such lenders to rely on such opinion to the same extent as if
they were an addressee hereof.
VIII.1.6. Good Standing Certificates. Governmental
certificates showing that each of Parent and Seller is duly incorporated and in
good standing in the state of its incorporation, certified as of a date not
more than fifteen (15) days before the Closing Date.
VIII.1.7. Lien Releases. Duly executed releases, termination
statements or payoff letters in form and substance satisfactory to Purchaser
necessary for the Purchaser to have good, valid and marketable title to the
Purchased Assets free and clear of all Encumbrances other than Permitted
Encumbrances after the Closing.
VIII.1.8. Inventory Statement. The Inventory Statement,
prepared and dated as of the Closing Date.
VIII.1.9. Insurance Certificates. Certificates of Seller's and
Parent's insurance carriers, in form and substance satisfactory to Purchaser,
with respect to the matters described in Section 7.1.7.
VIII.1.10. Other Documents. Such additional information
and materials as Purchaser shall reasonably request.
VIII.2. Documents to be Delivered by Purchaser. At the Closing, Purchaser
will deliver to Seller, at the expense of Purchaser:
VIII.2.1. Transaction Documents. Counterparts, duly executed
by Purchaser, of each of the following agreements:
(a) The Escrow Agreement;
(b) The Trademark License Agreement; and
18
<PAGE> 19
(c) The Supply and Services Agreement.
VIII.2.2. Certified Resolutions. Certified resolutions of the
Board of Directors of Purchaser approving the execution and delivery of this
Agreement and each of the other documents delivered by Purchaser pursuant hereto
and authorizing the consummation of the transactions contemplated hereby and
thereby.
VIII.2.3. Officer's Certificate. A certificate, dated the
Closing Date, executed on behalf of the Purchaser in the form described in
Section 7.2.1.
VIII.2.4. Good Standing Certificates. Governmental
certificates showing that Purchaser is duly incorporated and in good standing
in the state of its incorporation certified as of a date not more than fifteen
(15) days before the Closing Date.
VIII.2.5. Other Documents. Such additional information and
materials as Seller shall reasonably request.
ARTICLE IX. POST-CLOSING COVENANTS
IX.1. Maintenance of Books and Records. Each of Parent, Seller and
Purchaser shall preserve until the sixth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to any of the
assets, liabilities or business of the Business prior to the Closing Date. After
the Closing Date, where there is a legitimate purpose, such party shall provide
the other parties with access, upon prior reasonable written request specifying
the need therefor, during regular business hours, to (i) the officers and
employees of such party and (ii) the books of account and records of such party,
but, in each case, only to the extent relating to the assets, liabilities or
business of the Business prior to the Closing Date, and the other parties and
their representatives shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not be
exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party; and further, provided, that, as to so
much of such information as constitutes trade secrets or confidential business
information of such party, the requesting party and its officers, directors and
representatives will use due care to not disclose such information except (i) as
required by law, (ii) with the prior written consent of such party, which
consent shall not be unreasonably withheld, or (iii) where such information
becomes available to the public generally, or becomes generally known to
competitors of such party, through sources other than the requesting party, its
affiliates or its officers, directors or representatives. Such records may
nevertheless be destroyed by a party if such party sends to the other parties
written notice of its intent to destroy records, specifying with particularity
the contents of the records to be destroyed. Such records may then be destroyed
after the thirtieth (30th) day after such notice is given unless another party
objects to the destruction, in which case the party seeking to destroy the
records shall either agree to retain such records or deliver such records to the
objecting party.
19
<PAGE> 20
IX.2. Payments Received. Subject to the terms of the Lockbox Letter
Agreement, Seller and Purchaser each agree that after the Closing they will hold
and will promptly transfer and deliver to the other, from time to time as and
when received by them, any cash, checks with appropriate endorsements (using
their best efforts not to convert such checks into cash), or other property that
they may receive on or after the Closing which properly belongs to the other
party, including without limitation any insurance proceeds, and will account to
the other for all such receipts. From and after the Closing, (i) Seller and
Parent shall comply with the terms of the Lockbox Letter Agreement and Parent
shall promptly deliver to Purchaser copies of all documents received by Parent
from the Bank (as defined in the Lockbox Letter Agreement) in connection
therewith or the underlying lockbox agreement and all documents delivered by
Parent to Foothill Capital Corporation in connection therewith, (ii) Purchaser
shall have the right and authority (x) to notify Seller's customers regarding
Purchaser's purchase of the Inventories, (y) to require Seller to join with
Purchaser in requesting that such customers remit to Purchaser all payments for
goods delivered under an invoice of Purchaser and (z) to endorse without
recourse the name of Seller on any check or any other evidences of indebtedness
received by Purchaser on account of the Business and the Purchased Assets
transferred to Purchaser hereunder and (iii) Seller and Parent shall provide
such additional information and take such actions as Purchaser may reasonably
request in connection with the foregoing.
IX.3. UCC Matters. From and after the Closing Date, Parent and Seller
will promptly refer all inquiries with respect to ownership of the Purchased
Assets or the Business to Purchaser. In addition, Parent and Seller will execute
such documents and financing statements as Purchaser may request from time to
time to evidence transfer of the Purchased Assets to Purchaser, including any
necessary assignments or terminations of financing statements.
IX.4. Covenant Not to Compete; Confidentiality. Seller and Parent each
agree that for a period of five (5) years after the Closing Date, neither it nor
any of its Affiliates will, directly or indirectly, (i) own, manage, operate,
control or participate in the ownership, management, operation or control of any
business, whether in corporate, proprietorship or partnership form or otherwise,
engaged in the design, manufacturing or marketing of products that are
competitive with the Products or that otherwise competes with the Business
or (ii) disclose, reveal, divulge or communicate to any person or entity other
than authorized officers, directors and employees of Purchaser, or use or
otherwise exploit for its own benefit or for the benefit of anyone other than
Purchaser, any Confidential Information (as defined below). Neither Seller nor
Parent shall have any obligation to keep confidential any Confidential
Information if and to the extent disclosure thereof is specifically required by
law; provided, however, that in the event disclosure is required by applicable
law, Seller or Parent, as applicable, shall, to the extent reasonably possible,
provide Purchaser with prompt notice of such requirement prior to making any
disclosure so that Purchaser may seek an appropriate protective order. For
purposes of this Section 9.4, "Confidential Information" shall mean any
confidential information with respect to the conduct or details of the Business,
including,
20
<PAGE> 21
without limitation, methods of operation, customers, and customer lists,
products, proposed products, former products, proposed, pending or completed
acquisitions of any company, division, product line or other business unit,
prices, fees, costs, plans, designs, technology, inventions, trade secrets,
know-how, software, marketing methods, policies, plans, personnel, suppliers,
competitors, markets or other specialized information or proprietary matters.
The term "Confidential Information" does not include, and there shall be no
obligation hereunder with respect to, information that (a) is generally
available to the public on the date of this Agreement, or (b) becomes generally
available to the public other than as a result of a disclosure by Seller or
Parent not otherwise permissible thereunder, or (c) Seller or Parent learns
from other sources where such sources have not violated their confidentiality
obligation to Purchaser. The parties hereto specifically acknowledge and agree
that the remedy at law for any breach of the foregoing will be inadequate and
that the Purchaser, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage or posting any bond whatsoever. In the event that the
provisions of this Section 9.4 should ever be deemed to exceed the limitation
provided by applicable law, then the parties hereto agree that such provisions
shall be reformed to set forth the maximum limitations permitted.
The foregoing shall not apply to sales by Parent or Seller of
trampoline products of forty-eight (48) or less inches on or before June 30,
1998.
IX.5. Post-Closing Notifications. Purchaser and Seller will, and each
will cause their respective Affiliates to, comply with any post-Closing
notification or other requirements, to the extent then applicable to such party,
of any antitrust, trade competition, investment or control, export or other law
or regulation of any Governmental Entity having jurisdiction over Purchaser or
Seller.
IX.6. Certain Tax Matters. All sales, use, transfer, stamp, conveyance,
value added or other similar taxes, duties, excises or governmental charges
imposed by any taxing jurisdiction, domestic or foreign, and all recording or
filing fees, notarial fees and other similar costs of Closing with respect to
the transfer of the Purchased Assets or otherwise on account of this Agreement
or the transactions contemplated hereby will be borne by Seller.
IX.7. Liability Policies. Seller and Parent shall maintain in full force
and effect each of the liability insurance policies listed on Schedule 7.1.7
(and Purchaser's status as an additional insured thereunder) for a period of
five (5) years following the Closing Date; provided, however, that Seller and
Parent may replace such policies with policies providing coverage on terms and
in amounts not materially less advantageous to Purchaser than the terms and
amounts of coverage of such policies on the date hereof.
21
<PAGE> 22
ARTICLE X. SURVIVAL AND INDEMNIFICATION
X.1. Survival of Representations, Warranties and Covenants. (a) Except
as to (i) the representations and warranties contained in Section 5.1.9 relating
to title to the Purchased Assets, which shall survive the closing and remain in
effect indefinitely and (ii) the representations and warranties contained in
Section 5.1.15, which shall survive the Closing until the expiration of the last
day on which any Tax may be validly assessed by the Internal Revenue Service or
any other Governmental Entity against or with respect to the Purchased Assets or
the Business, the representations and warranties of Seller and Parent and of
Purchaser contained in this Agreement or in any Transfer Document shall survive
the Closing until the expiration of two (2) years from the Closing Date. Any
claim for indemnification with respect to any of such matters which is not
asserted by notice given as herein provided relating thereto within such
specified period of survival may not be pursued and is hereby irrevocably waived
after such time. Any claim for an Indemnifiable Loss (as defined in Section
10.2) asserted within such period of survival as herein provided will be timely
made for purposes hereof.
(b) Unless a specified period is set forth in this Agreement
(in which event such specified period will control), the covenants in this
Agreement will survive the Closing and remain in effect indefinitely.
X.2. Limitations on Liability. (a) For purposes of this Agreement, (i)
"Indemnity Payment" means any amount of Indemnifiable Losses required to be paid
pursuant to this Agreement, (ii) "Indemnitee" means any person or entity
entitled to indemnification under this Agreement, (iii) "Indemnifying Party"
means any person or entity required to provide indemnification under this
Agreement, (iv) "Indemnifiable Losses" means any and all damages, losses,
liabilities, obligations, costs and expenses, and any and all claims, demands or
suits (by any person or entity, including without limitation any Governmental
Entity), including without limitation the costs and expenses of any and all
actions, suits, proceedings, demands, assessments, judgments, settlements and
compromises relating thereto and including reasonable attorneys' fees and
expenses in connection therewith, and (v) "Third Party Claim" means any claim,
action or proceeding made or brought by any person or entity who or which is not
a party to this Agreement or an Affiliate of a party to this Agreement.
(b) Notwithstanding any other provision hereof or of any
applicable Law, no Indemnitee will be entitled to make a claim against an
Indemnifying Party in respect of any breach of a representation or warranty
under Sections 10.3(a)(i) or 10.3(b)(i) unless and until the aggregate amount of
claims in respect of breaches of representations and warranties asserted for
Indemnifiable Losses under 10.3(a)(i) or 10.3(b)(i), as applicable, exceeds
$100,000, in which event the Indemnitee will be entitled to make a claim against
the Indemnifying Party to the extent of the full amount of Indemnifiable Losses.
X.3. Indemnification. (a) Subject to Sections 10.1 and 10.2, Seller
and Parent jointly
22
<PAGE> 23
and severally agree to indemnify, defend and hold harmless Purchaser and its
Affiliates and each of their respective directors, officers, partners,
employees, agents and representatives from and against any and all Indemnifiable
Losses to the extent relating to, resulting from or arising out of:
(i) any breach of representation or warranty of Seller
or Parent under the terms of this Agreement or any other Transaction
Document and any certificate or other document delivered pursuant
hereto or thereto;
(ii) any breach or nonfulfillment of any agreement or
covenant of Seller or Parent under the terms of this Agreement or any
other Transaction Document;
(iii) any Retained Liabilities; and
(iv) the conduct of the Business or any portion thereof
or the use or ownership of any of the Purchased Assets prior to or on
the Closing Date.
(b) Purchaser agrees to indemnify, defend and hold harmless
Parent and Seller and their respective Affiliates and each of their respective
directors, officers, partners, employees, agents or representatives from and
against any and all Indemnifiable Losses to the extent relating to, resulting
from or arising out of:
(i) any breach of representation or warranty of
Purchaser under the terms of this Agreement or any other Transaction
Document and any certificate or other document delivered pursuant
hereto or thereto;
(ii) any breach or nonfulfillment of any agreement or
covenant of Purchaser under the terms of this Agreement or any other
Transaction Document;
(iii) any Assumed Liabilities; and
(iv) the conduct of the Business or any portion thereof
or use or ownership of any of the Purchased Assets after the Closing
Date.
X.4. Defense of Claims. (a) If any Indemnitee receives notice of
assertion or commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide indemnification
under this Agreement, the Indemnitee will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than thirty
(30) calendar days after receipt of such notice of such Third Party Claim. Such
notice will describe the Third Party Claim in reasonable detail, will include
copies of all material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has been or
may be sustained by the Indemnitee. The Indemnifying Party will have the right
to participate in, or, by giving written notice to the Indemnitee, to assume,
the defense of any Third Party Claim at such
23
<PAGE> 24
Indemnifying Party's own expense and by such Indemnifying Party's own counsel
(reasonably satisfactory to the Indemnitee), and the Indemnitee will cooperate
in good faith in such defense.
(b) If, within ten (10) calendar days after giving notice of a
Third Party Claim to an Indemnifying Party pursuant to Section 10.4(a), an
Indemnitee receives written notice from the Indemnifying Party that the
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in the last sentence of Section 10.4(a), the Indemnifying Party will
not be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnifying
Party fails to take reasonable steps necessary to defend diligently such Third
Party Claim within ten (10) calendar days after receiving written notice from
the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to
take such steps or if the Indemnifying Party has not undertaken fully to
indemnify the Indemnitee in respect of all Indemnifiable Losses relating to the
matter, the Indemnitee may assume its own defense, and the Indemnifying Party
will be liable for all reasonable costs or expenses paid or incurred in
connection therewith. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
which would lead to liability or create any financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third Party Claim
without leading to liability or the creation of a financial or other obligation
on the part of the Indemnitee for which the Indemnitee is not entitled to
indemnification hereunder and the Indemnifying Party desires to accept and agree
to such offer, the Indemnifying Party will give written notice to the Indemnitee
to that effect. If the Indemnitee fails to consent to such firm offer within ten
(10) calendar days after its receipt of such notice, the Indemnitee may continue
to contest or defend such Third Party Claim at its own expense and, in such
event, the maximum liability of the Indemnifying Party as to such Third Party
Claim will not exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnitee through the end of such ten (10)
calendar day period.
(c) A failure to give timely notice or to include any
specified information in any notice as provided in Sections 10.4(a) or 10.4(b)
will not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party which was entitled to
receive such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise damaged as a result of such
failure.
(d) The Indemnifying Party will have a period of thirty (30)
calendar days within which to respond in writing to any claim by an Indemnitee
on account of an Indemnifiable Loss which does not result from a Third Party
Claim (a "Direct Claim"). If the Indemnifying Party does not so respond within
such thirty (30) calendar day period, the Indemnifying Party will be deemed to
have rejected such claim, in which event the Indemnitee will be free to pursue
such remedies as may be available to the Indemnitee on the terms and subject to
the provisions of this Article X.
24
<PAGE> 25
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other entity,
the amount of such reduction, less any costs, expenses, premiums or taxes
incurred in connection therewith will promptly be repaid by the Indemnitee to
the Indemnifying Party. Upon making any Indemnity Payment the Indemnifying Party
will, to the extent of such Indemnity Payment, be subrogated to all rights of
the Indemnitee against any third party that is not an Affiliate of the
Indemnitee in respect of the Indemnifiable Loss to which the Indemnity Payment
related; provided, however, that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers fully payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of said Indemnity Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision hereof,
each such Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the above-described
subrogation and subordination rights.
ARTICLE XI. TERMINATION
XI.1. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing, if the party seeking to terminate is not then in material default or
breach of this Agreement:
(a) By the mutual written consent of Purchaser and Seller;
(b) By Purchaser, on or prior to November 21, 1997, if the
results and findings of Purchaser's due diligence with respect to
Seller's customers are not satisfactory to Purchaser in its sole
discretion;
(c) By either Purchaser or Seller if the Closing shall not
have occurred on or before November 21, 1997;
(d) By either Purchaser or Seller if there shall have been
entered a final, nonappealable order or injunction of any Governmental
Entity restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof; or
(e) By either Purchaser or Seller if, prior to the Closing
Date, the other party is in material breach of any representation,
warranty, covenant or agreement herein contained and such breach shall
not be cured within fifteen (15) days of the date of notice of default
served by the party claiming such material default, provided that such
terminating party shall not also be in material breach of this
Agreement at the time
25
<PAGE> 26
notice of termination is delivered.
In no event shall termination of this Agreement relieve (i) any party of any
liability for breaches of this Agreement prior to the date of termination or
(ii) Purchaser of its obligations under the confidentiality letter agreement,
dated August 15, 1997, between Purchaser and Parent (the "Confidentiality
Agreement").
ARTICLE XII. MISCELLANEOUS PROVISIONS
XII.1. Specific Performance. The parties recognize that if Parent or
Seller refuses to perform under the provisions of this Agreement, monetary
damages alone will not be adequate to compensate Purchaser for its injury.
Purchaser shall therefore be entitled, in addition to any other remedies that
may be available, to obtain specific performance of the terms of this Agreement.
If any action is brought by Purchaser to enforce this Agreement, Parent and
Seller shall waive the defense that there is an adequate remedy at law. In the
event of a default by Parent or Seller which results in the filing of a lawsuit
for damages, specific performances, or other remedies, Purchaser shall be
entitled to reimbursement by Parent and Seller of reasonable legal fees and
expenses incurred by Purchaser.
XII.2. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by electronic facsimile transfer or one (1) business day after
having been dispatched by a nationally recognized overnight courier service to
the appropriate party at the address specified below:
<TABLE>
<S> <C>
(a) If to Parent or Seller, to:
Bollinger Industries, Inc.
602 Fountain Parkway
Grand Prairie, Texas 75050
Facsimile No.: (972) 343-1199
Attention: Glenn D. Bollinger
with a copy to:
Tracy and Holland, L.L.P.
Suite 500
306 W. 7th Street
Fort Worth, Texas 76102-4982
Facsimile No. (817) 332-3140
Attention: George T. Johns, Esq.
</TABLE>
26
<PAGE> 27
<TABLE>
<S> <C>
(b) If to Purchaser, to:
Hedstrom Corporation
585 Slawin Court
Mount Prospect, Illinois 60056
Facsimile No.: (847) 803-1971
Attention: David F. Crowley
with a copy to each of:
Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Facsimile No.: (212) 424-1450
Attention: Alan B. Menkes
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile No.: (212) 310-8007
Attention: Simeon Gold, Esq.
</TABLE>
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
XII.3. Expenses. Except as otherwise expressly provided herein, Parent
and Seller will pay any expenses incurred by them incident to this Agreement and
in preparing to consummate and consummating the transactions provided for
herein. Purchaser will pay any expenses incurred by it incident to this
Agreement and in preparing to consummate and consummating the transactions
provided for herein.
XII.4. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party which shall not be unreasonably
withheld; provided, however, that (a) nothing in this Agreement is intended to
limit Purchaser's ability to sell or to transfer any or all of the Purchased
Assets following the Closing Date, (b) upon notice to Seller, Purchaser may
assign or delegate any or all of its rights or obligations under this Agreement
to any Affiliate thereof or to any person or entity that acquires all or
substantially all of the assets or voting stock of Purchaser, and (c) Purchaser
may make a collateral assignment of its rights under this Agreement to any
institutional lender who provides funds to Purchaser for the acquisition of the
Purchased Assets. Seller agrees to execute acknowledgements of such
assignment(s) and
27
<PAGE> 28
collateral assignments in such forms as Purchaser or Purchaser's institutional
lender(s) may from time to time reasonably request. In the event of such a
proposed assignment by Purchaser, the provisions of this Agreement shall inure
to the benefit of and be binding upon Purchaser's assigns; provided, however,
that no such assignment shall relieve Purchaser of its obligations under this
Agreement.
XII.5. Waiver. Purchaser and Seller by written notice to the other may
(a) extend the time for performance of any of the obligations of the other under
this Agreement, (b) waive any inaccuracies in the representations or warranties
of the other contained in this Agreement or in any document delivered in
connection herewith, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or modify
performance of any of the obligations of the other under this Agreement;
provided, however, that no such party may, without the prior written consent of
the other party, make or grant such extension of time, waiver of inaccuracies or
compliance or waiver or modification of performance with respect to its (or any
of its Affiliates) representations, warranties, conditions or covenants
hereunder. Except as provided in the immediately preceding sentence, no action
taken pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any representations, warranties, conditions or covenants
contained in this Agreement and will not operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature.
XII.6. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the Confidentiality Agreement supersede any other
agreements, whether written or oral, that may have been made or entered into by
any party or any of their respective Affiliates (or by any director, officer or
representative thereof) relating to the matters contemplated hereby. This
Agreement (together with the Exhibits and Schedules hereto) and the
Confidentiality Agreement constitute the entire agreement by and among the
parties hereto and there are no agreements or commitments by or among such
parties or their Affiliates except as expressly set forth herein.
XII.7. Amendments and Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements signed by the parties
hereto.
XII.8. Rights of the Parties. Except as provided in Articles II and X or
in Section 12.4, nothing expressed or implied in this Agreement is intended or
will be construed to confer upon or give any person or entity other than the
parties hereto and their respective Affiliates any rights or remedies under or
by reason of this Agreement or any transaction contemplated hereby.
XII.9. Brokers. Purchaser hereby agrees to indemnify and hold harmless
Seller and Parent, and Seller and Parent hereby agree to indemnify and hold
harmless Purchaser, against any liability, claim, loss, damage or expense
incurred by Purchaser or by Seller or Parent, respectively, relating to any fees
or commissions owed to any broker, finder, or financial advisor as a result of
actions taken by Purchaser or by Seller or Parent, respectively.
28
<PAGE> 29
XII.10. Further Assurances. From time to time, as and when requested by
either party, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments as may be reasonably necessary
to consummate the transactions contemplated by this Agreement.
XII.11. Transfers. Purchaser and Seller will cooperate and take such
action as may be reasonably requested by the other in order to effect an orderly
transfer of the Purchased Assets and the Business with a minimum of disruption
to the operations and employees of the businesses of Purchaser and Seller.
XII.12. Governing Law. This Agreement, including without limitation, the
interpretation, construction and validity hereof, shall be governed by the Laws
of the state of Texas.
XII.13. Severability. The parties agree that if one or more provisions
contained in this Agreement shall be deemed or held to be invalid, illegal or
unenforceable in any respect under any applicable Law, this Agreement shall be
construed with the invalid, illegal or unenforceable provision deleted, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not be affected or impaired thereby.
XII.14. Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
XII.15. Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
XII.16. Passage of Title and Risk of Loss. Legal title, equitable title
and risk of loss with respect to the Purchased Assets will not pass to Purchaser
until such Purchased Assets are transferred at the Closing, which transfer,
once it has occurred, will be deemed effective for tax, accounting and other
computational purposes as of 11:59 P.M. (Central Standard Time) on the Closing
Date.
XII.17. Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Sections, Articles or
Schedules are to Sections, Articles or Schedules of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it, (iii) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with GAAP, (iv) "or" is disjunctive but not necessarily
exclusive, (v) words in the singular include the plural and vice versa, and
(viii) the terms "Subsidiary" and "Affiliate" have the meanings given to those
terms in Rule 12b-2 of Regulation 12B under the 1934 Act. All references to "$"
or dollar amounts will be to lawful currency of the United States of America.
29
<PAGE> 30
(b) No provision of this Agreement will be interpreted in
favor of, or against, either of the parties hereto by reason of the extent to
which either such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
XII.18. No Recourse. Notwithstanding any of the terms or provisions of
this Agreement, each of the Purchaser, on the one hand, and Parent and Seller,
on the other hand, agree that neither it nor any person acting on its behalf may
assert any claims or cause of action against any officer or director of the
other party (or parties) or stockholder of such other party (or parties) in
connection with or arising out of this Agreement or the transactions
contemplated hereby.
[Remainder of page intentionally left blank]
30
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BOLLINGER INDUSTRIES, INC.
By: /s/ GLENN D. BOLLINGER
----------------------------
Name: Glenn D. Bollinger
Title: Chairman/CEO
NBF, INC.
By: /s/ BOBBY D. BOLLINGER
----------------------------
Name: Bobby D. Bollinger
Title: Chairman/CEO
HEDSTROM CORPORATION
By: /s/ DAVID F. CROWLEY
------------------------------
Name: David F. Crowley
Title: C.E.O.
34
<PAGE> 32
A number of schedules referenced in the asset purchase agreement, were omitted
from this filing. The registrant will furnish this information to the S.E.C.
upon request.
<PAGE> 1
EXHIBIT 10.62
[BOLLINGER INDUSTRIES LETTERHEAD]
PRESS
November 14, 1997
Bollinger Industries--BOLL
602 Fountain Parkway
Grand Prairie, Texas 75050
Contact: Glenn Bollinger, Chairman & CEO or Pat Carrithers, EVP/Marketing
(972) 343-1000
Hedstrom contact:
Dave Crowley, CFO
(847) 803-9200
FOR IMMEDIATE RELEASE
HEDSTROM CORPORATION, A HICKS, MUSE FIRM, BUYS BOLLINGER
TRAMPOLINE DIVISION
Dallas, Texas--From its corporate headquarters in Grand Prairie, Texas,
Bollinger Industries announced an agreement to sell the assets of NBF, Inc.,
its trampoline division, to The Hedstrom Corporation. Hedstrom is a leading
juvenile products manufacturer, acquired by Hicks, Muse, Tate & Furst,
Incorporated in October, 1995. Terms of the sale were not disclosed.
For Bollinger, the sale provides an improved financial position, and will allow
more aggressive pursuit of its core fitness products business.
President Bob Bollinger stated, "We have done very well in the trampoline
business since acquiring the division in 1994. Our merchandising and buying
power have allowed us the opportunity to significantly grow the business.
Looking forward, we see our greatest opportunities in focusing on our core
business of fitness. This sale frees management time, and creates an improved
financial base from which to operate as we work to solidify and increase our
position as the leading provider of fitness accessories and products."
Bollinger (BOLL) distributes a broad line of fitness products including
hand-held accessories, light equipment, exercise bikes and other products. Its
products are sold both domestically and internationally, primarily through
major mass-merchant retail chains and sporting goods stores.
Founded in 1915, Hedstrom manufactures and distributes activity-oriented play
products for children. The Company's major product lines include swing sets,
wood gym kits and slides, play balls and ball pits, and ride-on products.
Since its formation in 1989, Hicks, Muse, Tate & Furst Incorporated has
completed or currently has pending more than 100 transactions with a total
capital value of approximately $24 billion. Headquartered in Dallas, the firm
also has offices in New York, St. Louis and Mexico City.
###
<PAGE> 1
EXHIBIT 10.63
NEWS RELEASE
For Immediate Release
November 17, 1997
Bollinger Industries, Inc.
602 Fountain Parkway
Grand Prairie, Tx 75050
Contact: Glenn D. Bollinger, Chairman and CEO or Rose Turner, CFO (972)343-1000
BOLLINGER REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1997.
Grand Prairie, Texas, November 17, 1997-From its headquarters in Grand Prairie,
Texas, Bollinger Industries, Inc. today announced results of operations for the
three and six months ended September 30, 1997.
Bollinger reported that sales for its second quarter were down $4.0 million, a
20.9% decrease compared to the same quarter in the previous year. The company
also reported a $5.9 million decrease in its year to date sales, a 14.2%
decrease compared to the prior year.
The Company reported a loss of $474,000, $0.12 per share, for the second
quarter, as compared to a loss of $267,000, $0.07 per share, for the
previous year. Year to date, the company reported a loss of $1,112,000, $0.28
per share, compared to a loss of $1,032,000, $0.26 per share for the prior
year.
Subsequent to the end of the quarter, Bollinger announced the pending sale of
its trampoline division to Hedstrom Corporation. The cash purchase price for
assets, excluding accounts receivable, under the purchase agreement is
$14,250,000, subject to upward or downward inventory adjustments at closing.
Glenn D. Bollinger, Chairman and CEO commented on the sale: "We have been very
pleased with the performance of the trampoline division over the last few years
but our continuing focus will remain on fitness accessory products. This sale
allows us to improve our financial position and strengthen our growth programs
for the future."
Bollinger is a leading domestic supplier of consumer fitness accessories.
Bollinger Fitness products are sold by leading mass market retailers and other
retail outlets nationwide and overseas. The Company's stock symbol is "BOLL"
and is currently traded over the counter.
(charts follow)
<PAGE> 2
BOLLINGER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1997, AND SEPTEMBER 29, 1996
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
----------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 15,107 $ 19,093 $ 35,624 $ 41,527
COST OF GOODS SOLD 12,356 15,481 28,858 33,135
----------- ----------- ----------- -----------
GROSS PROFIT 2,751 3,612 6,766 8,392
SELLING, DISTRIBUTION, GENERAL AND
ADMINISTRATIVE EXPENSES 3,562 4,051 7,597 8,956
----------- ----------- ----------- -----------
OPERATING PROFIT (LOSS) (811) (439) (831) (564)
INTEREST AND OTHER EXPENSE-NET 531 635 1,149 1,275
GAIN ON SALE OF ASSETS (868) -- (869) --
----------- ----------- ----------- -----------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (474) (1,074) (1,111) (1,839)
INCOME TAX EXPENSE/(BENEFIT) -- -- 1 --
----------- ----------- ----------- -----------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (474) (1,074) (1,112) (1,839)
GAIN (LOSS) ON DISPOSAL OF DISCONTINUED
HEALTHCARE OPERATION -- 807 -- 807
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ (474) $ (267) $ (1,112) $ (1,032)
----------- ----------- ----------- -----------
PER SHARE DATA:
EARNINGS (LOSS) FROM CONTINUING OPERATIONS $ (.12) $ (.27) $ (.28) $ (.46)
NET EARNINGS (LOSS) $ (.12) $ (.07) $ (.28) $ (.26)
----------- ----------- ----------- -----------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 4,000 4,000 4,000 4,000
----------- ----------- ----------- -----------
</TABLE>
####
