<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
September 30, 1997 1-13906
BALLANTYNE OF OMAHA, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 47-0587703
------------------------------ -----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
4350 McKinley Street, Omaha, Nebraska 68112
---------------------------------------------------------
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code:
(402) 453-4444
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X N
--- ---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date:
Class Outstanding as of October 31, 1997
------------------
Common Stock, $.01 9,025,819
par value
Page 1
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BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 . . . . . . . . . . 3 - 4
Consolidated Statements of Income
for the Three Months and Nine Months
Ended September 30, 1997 and 1996. . . . . . . . . . . . . . . . 5
Consolidated Statements of Stockholders' Equity
for the Nine Months Ended September 30, 1997 . . . . . . . . . . 6
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 1997 and 1996. . . . . . . . . . . . . . . . . 7 - 8
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . .9 - 11
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition. . . . . . . . . . . . . . . . . . . . 12 - 16
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . .17
Page 2
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BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
A S S E T S
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
(Unaudited)
Current
Cash $ 6,636,141 6,042,593
Accounts receivable (less
allowance of $206,962
at September 30, 1997 and
$143,000 at December 31, 1996) 10,473,480 9,090,616
Inventories 16,270,800 11,901,123
Deferred income taxes 596,915 501,025
Other current assets 140,621 103,702
----------- -----------
Total current assets 34,117,957 27,639,059
Net property, plant and equipment 6,182,972 3,863,809
Goodwill, other intangibles and
other assets, net 1,339,544 959,352
----------- -----------
$41,640,473 32,462,220
=========== ===========
See accompanying notes to Consolidated Financial Statements.
Page 3
<PAGE>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
(Unaudited)
LIABILITIES:
Current:
Due to Canrad $ 161,802 93,140
Current installments of long-term debt 50,000 308,107
Accounts payable 6,507,114 5,759,722
Accrued Expenses 2,365,991 1,655,883
Income taxes 681,285 79,754
----------- -----------
Total current liabilities 9,766,192 7,896,606
Deferred income taxes 249,518 386,472
Long-term debt, excluding current portion 186,487 150,195
----------- -----------
10,202,197 8,433,273
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, par value
$.01 per share; authorized
1,000,000 shares - -
Common stock, par value
$.01 per share; authorized
25,000,000 shares; 9,018,319 shares
issued and outstanding at September 30, 1997
and 8,569,769 at December 31, 1996 90,185 85,698
Additional paid-in capital 20,835,115 18,906,556
Retained earnings 10,512,976 5,036,693
----------- -----------
31,438,276 24,028,947
----------- -----------
$41,640,473 32,462,220
=========== ===========
See accompanying notes to Consolidated Financial Statements.
Page 4
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BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
Net sales $17,378,858 12,637,047 48,452,667 36,494,907
Cost of sales 12,231,360 8,695,855 34,016,616 25,771,040
----------- ----------- ----------- -----------
Gross profit 5,147,498 3,941,192 14,436,051 10,723,867
Total operating expenses 2,106,225 1,798,294 6,187,517 4,950,896
----------- ----------- ----------- -----------
Income from operations 3,041,273 2,142,898 8,248,534 5,772,971
Net interest income (expense) 69,698 (42,405) 174,471 (424,176)
----------- ----------- ----------- -----------
Income before taxes 3,110,971 2,100,493 8,423,005 5,348,795
Income taxes 1,058,140 828,432 2,946,722 2,109,452
----------- ----------- ----------- -----------
Net income $ 2,052,831 1,272,061 5,476,283 3,239,343
=========== =========== =========== ===========
Net income per share .22 .15 .58 .43
=========== =========== =========== ===========
Weighted average shares
outstanding 9,499,450 8,315,399 9,491,132 7,586,927
=========== =========== =========== ===========
See accompanying notes to Consolidated Financial Statements.
Page 5
<PAGE>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN RETAINED
STOCK STOCK CAPITAL EARNINGS TOTAL
--------- ------ ---------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 - 85,698 18,906,556 5,036,693 24,028,947
Net Income - - - 5,476,283 5,476,283
Issuance of 448,550 shares
of Common Stock upon
exercise of options - 4,487 1,928,559 - 1,933,046
-----------------------------------------------------------------------
Balance at September 30, 1997 - 90,185 20,835,115 10,512,976 31,438,276
=======================================================================
</TABLE>
See accompanying notes to Consolidated Financial Statements.
Page 6
<PAGE>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30, 1997 and 1996
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 5,476,283 3,239,343
Depreciation and amortization 685,275 442,169
Changes in assets and liabilities:
Trade receivables (939,986) (1,992,082)
Other current assets (24,918) 9,459
Inventories (3,451,340) (1,682,048)
Accounts payable 225,288 626,427
Accrued expenses 467,236 420,084
Income taxes 382,879 (856,106)
Goodwill, other intangibles
and other assets (47,978) (9,935)
----------- -----------
Net cash provided by operating activities 2,772,739 197,311
----------- -----------
Cash flow from investing activities:
Capital expenditures (2,198,046) (578,821)
Purchase of net assets (1,150,000) -
----------- -----------
Net cash used in investing activities (3,348,046) (578,821)
----------- -----------
Cash flows from financing activities:
Change in due to Canrad 68,662 14,766
Repayment of long-term debt (832,853) (7,923,912)
Net proceeds from Equity Offering - 13,660,330
Proceeds from exercise of options 1,933,046 -
----------- -----------
Net cash provided by financing activities 1,168,855 5,751,184
----------- -----------
Page 7
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BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
1997 1996
---- ----
Net increase in cash 593,548 5,369,674
Cash at beginning of year 6,042,593 204,172
----------- -----------
Cash at end of period 6,636,141 5,573,846
=========== ===========
Supplemental disclosure of
cash flow information:
Interest payments 10,753 424,176
=========== ===========
Income tax payments(net of refunds) 2,479,616 2,965,558
=========== ===========
Other non-cash activities in 1996 included approximately $382,300 of additional
capital lease obligations in exchange for equipment.
Other non-cash activities during 1997 include recording the present value of
non-compete agreements for approximately $248,000.
See accompanying notes to Consolidated Financial Statements.
Page 8
<PAGE>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
1. THE COMPANY
Ballantyne of Omaha Inc. ("Ballantyne" or the "Company") and its
subsidiaries Strong International Inc., Ballantyne Fabricators, Inc.,
Xenotech Rental Corp. and Flavor-Crisp of America Inc., develop,
manufacture and distribute commercial motion picture projection equipment,
follow spotlights, computer operated lighting systems and restaurant
equipment. The Company's products are distributed worldwide through a
domestic and international dealer network and are sold to major movie
exhibition companies, sports arenas, auditoriums, amusement parks, special
venues, restaurants, supermarkets and convenience food stores. 22.8% of
the Company's common stock is owned by Canrad of Delaware Inc. ("Canrad"),
which is an indirect wholly-owned subsidiary of ARC International
Corporation.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation. The consolidated
financial statements have been prepared in conformity with generally
accepted accounting principles and include all adjustments which are, in
the opinion of management, necessary for a fair presentation of the results
for the periods presented. All such adjustments are, in the opinion of
management, of a normal, recurring nature. While the Company believes that
the disclosures presented are adequate to make the information not
misleading, it is suggested that these consolidated financial statements be
read in connection with the consolidated financial statements and related
notes included in the Company's latest annual report on Form 10-K.
2. INVENTORIES
Inventories consist of the following:
SEPTEMBER 30, DECEMBER 31,
1997 1996
---- ----
Raw Material $12,004,597 8,888,123
Work-in-process 2,658,552 2,184,945
Finished goods 1,607,651 828,055
----------- -----------
$16,270,800 11,901,123
=========== ===========
Page 9
<PAGE>
3. NET INCOME PER SHARE
Net income per share is based on the weighted average number of common
shares outstanding. The effects of the assumed exercise of outstanding
stock options and warrants have been included in the income per share
calculation for the period that the shares were assumed issued using the
treasury stock method.
The Company's Board of Directors declared a 3-for-2 stock split of the
Company's common stock on January 29, 1997. The stock split was in the
form of a 50% common stock dividend payable March 5, 1997 to stockholders
of record on February 10, 1997. The Company's Board of Directors declared
a 10% stock distribution on January 23, 1996, which was issued on March 8,
1996, to shareholders of record on February 9, 1996. This stock
distribution resulted in the issuance of 600,000 shares of common stock.
The stock distribution is not considered a distribution of earnings except
to the extent that the Company has retained earnings, but rather had the
effect of increasing the number of outstanding shares.
Per share data have been restated for these stock transactions as of the
earliest period presented.
4. RELATED PARTY TRANSACTIONS
The Company is a party to a management agreement with Canrad, Inc.
Pursuant to the terms of the agreement, Canrad, Inc. provides certain
services to the Company. Such services include strategic planning,
acquisition assistance, procurement of capital and debt arrangements,
securing health and business insurance coverage's and other matters. Fees
charged for these services amounted to $187,500 and $225,000 for the nine
month periods ended September 30, 1997 and 1996, respectively.
5. ACQUISITIONS
On April 30, 1997, the Company purchased certain net assets, primarily
accounts receivable, inventories and fixed assets of Xenotech Inc.
("Xenotech") for a purchase price of approximately $1,000,000. The
purchase, which was effective as of April 1, 1997, was paid for through
cash flow from operations. The purchase price has been assigned to the
assets acquired based upon the fair market value of such assets. No
goodwill was recorded in connection with the acquisition. Xenotech
produces, sells and rents a complete line of stationary searchlights and
computer operated lighting systems for the motion picture production,
television, live entertainment, theme parks and architectural industries.
In addition, the Company entered into a five-year non-competition agreement
with Richard Hart, Xenotech's founder and sole proprietor. The agreement
is for a total of $250,000 payable by the Company in equal installments of
$50,000. The agreement has been recorded at the present value of the non-
competition payments in the financial statements.
Page 10
<PAGE>
During September of 1997, The Company acquired certain assets of Skytracker
of America, Inc. ("Skytracker") for a purchase price of approximately
$400,000. In connection with the purchase, the Company recorded $150,000 of
goodwill which will be amortized over 5 years. In addition, the Company
entered into a 3 year non-competition agreement with the owner of
Skytracker. The agreement is for a total of $60,000 payable in equal
installments and is included in the financial statements at its present
value.
6. RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
7. COMMON STOCK
On June 30, 1997, the Company completed a public offering pursuant to a
registration statement on Form S-3 (The "Offering"). Pursuant to the
Offering, Canrad sold 1,932,860 shares of Ballantyne common stock to the
public at the price of $16.875 per share. In addition, Canrad granted the
underwriters an option to purchase an aggregate of up to 333,729 additional
shares of common stock at $16.875 per share less underwriting discounts and
commissions to cover over allotments, if any. The underwriters purchased
all 333,729 shares.
While the Company did not offer any shares or pay any expenses incurred in
the offering, the Company did receive $1,146,000 from the exercise of a
warrant and certain stock options, which in aggregate totaled 280,750
shares and were sold in connection with the Offering.
On June 10, 1997, the stockholders of the Company approved an amendment to
the Company's Certificate of Incorporation to increase the authorized
common stock from 10,000,000 shares to 25,000,000 shares.
The stockholders of the Company also approved an amendment to the 1995
stock option plan to increase the number of shares that may be issued under
the plan from 660,000 shares to 1,060,000 shares.
Page 11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the accompanying unaudited consolidated financial statements and presents a
current assessment of material changes in financial condition and results
of operations. A detailed discussion and analysis for the preceding years
appears in the Registrant's December 31, 1996 Annual Report to
Stockholders.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1996
Net sales for the nine months ended September 30, 1997 (the "1997 Period")
increased $12.0 million or 32.8 % to $48.5 million from $36.5 million for
the nine months ended September 30, 1996 (the "1996 Period"). The
following table sets forth comparative consolidated net sales of theatre
products and restaurant products for the respective periods.
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
---- ----
Theatre Products $46,505,519 34,723,472
Restaurant Products 1,947,148 1,771,435
----------- -----------
$48,452,667 36,494,907
=========== ===========
Net sales of theatre products increased $11.8 million or 33.9% for the 1997
Period as compared to the 1996 Period. Net sales of commercial motion
picture projection equipment ("Motion picture projection equipment")
increased $10.0 million or 30.2 % and net sales of follow spotlights and
other lighting equipment ("lighting equipment") increased $1.8 million or
108.6%. The majority of the increase in net sales of motion picture
projection equipment was attributable to sales to domestic customers with
the remaining increase pertaining to sales to foreign customers. The
increase in lighting equipment was mainly due to the acquisition of
Xenotech. Net sales of replacement parts increased $971,654 or 21.9% to
$5.4 million for the 1997 Period from $4.4 million in the 1996 Period. This
increase is due to the Company having more projection equipment in service
compared to the prior year.
Net sales of restaurant products increased by $175,713 or 9.9% over the
same period in 1996. The increase was mainly due to an increase in sales of
pressure fryers.
Page 12
<PAGE>
Gross profit as a percentage of net sales increased to 29.8% for the 1997
Period from 29.4% for the 1996 Period. The increases were attributable to
improved efficiencies realized by purchasing and manufacturing due to an
increase in production volume.
Operating expenses increased $1.2 million or 25% for the 1997 Period to
$6.2 million from $5.0 million for the 1996 Period. As a percentage of net
sales, operating expenses decreased to 12.8% for the 1997 Period from 13.6%
for the 1996 Period, as a result of a greater increase in net sales without
a proportional increase in selling and general and administrative expenses.
Net interest income was $174,471 for the nine months ended September 30,
1997 as compared to net interest expense of $424,176 for the same period in
1996. The decrease in interest expense reflects the repayment of the
Company's Industrial Development Revenue Bonds (the "IDRBs") in March 1997
and the absence of borrowings under the Company's line of credit facility
with Norwest Bank (the "Norwest Facility").
The effective tax rate was 35.0% for the 1997 Period as compared to the
statutory rate of 34%. The difference relates to the effects of state
income taxes and the non-deductibility of certain intangible expenses,
principally goodwill.
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO THE QUARTER ENDED SEPTEMBER
30, 1996
Net sales for the quarter ended September 30, 1997 (the "1997 Period")
increased $4.7 million or 37.5% to $17.4 million from $12.6 million for the
quarter ended September 30, 1996 (the "1996 Period"). The following table
sets forth comparative consolidated net sales of theatre products and
restaurant products for the respective periods:
THREE MONTHS ENDED
SEPTEMBER 30,
1997 1996
---- ----
Theatre Products $16,736,898 12,024,569
Restaurant Products 641,960 612,478
----------- -----------
$17,378,858 12,637,047
=========== ===========
Page 13
<PAGE>
Net sales of theatre products increased $4.7 million or 39.2% for the 1997
Period as compared to the 1996 Period. Net sales of commercial motion
picture projection equipment ("motion picture projection equipment")
increased $3.8 million or 33.0%, while net sales of follow spotlights and
other lighting equipment ("lighting equipment") increased $938,680. The
majority of the increase in net sales of motion picture projection
equipment was attributable to sales of such equipment to domestic customers
with the remaining increase pertaining to sales to foreign customers. The
increase in lighting equipment was due to the acquisition of Xenotech. Net
sales of replacement parts increased $351,897 or 21.9% to $2.0 million for
the 1997 Period from $1.6 million in the 1996 Period.
Net sales of restaurant products increased by $29,482 or 4.8%, mainly due
to an increase in sales of pressure fryers.
Gross profit as a percentage of net sales decreased to 29.6% for the 1997
Period from 31.2% for the 1996 Period. The decrease was due to a change in
the product mix from the 1996 period.
Operating expenses increased $307,931 for the 1997 Period as compared to
the 1996 Period. As a percentage of net sales, operating expenses
decreased to 12.1% for the 1997 Period from 14.2% for the 1996 Period. The
decrease was attributable to increased sales without a proportional
increase in selling and general and administrative expenses.
Net interest income was $69,698 for the 1997 Period as compared to interest
expense of $42,405 for the 1996 Period. The decrease in interest expense
reflects the repayment of the Company's Industrial Development Revenue
Bonds in March 1997 and the absence of borrowings under the Norwest
Facility.
The effective tax rate was 34.0% for the 1997 Period which approximates the
statutory rate.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had $186,487 of long-term debt. The
debt relates entirely to non-compete agreements set up to be paid in
installments.
Page 14
<PAGE>
During August 1997, the Company amended it's line of credit with Norwest
Bank Nebraska N.A. (the "Norwest Facility"). The Norwest Facility was
initially for $10 million but was reduced by $500,000 on the first
anniversary date and then was to be reduced thereafter each year by either
$500,000 or $1,000,000 through the fourth anniversary date. The amended
agreement keeps the line of credit at $10 million until maturity.
Borrowings outstanding under the Norwest Facility bear interest, payable
monthly, at a rate equal to Norwest Bank's National Money Market Rate as
announced from time to time (8.5% at September 30, 1997). Amounts repaid
under the Norwest Facility will be available for reborrowing. All of the
Company's assets secure the Norwest Facility. The Norwest Facility
agreement contains certain restrictive covenants which include, among other
things, a prohibition on the payment of cash dividends and requirements
relating to current debt, current debt service coverage and total debt to
tangible net worth ratios and tangible net worth.
Historically the Company has funded its working capital requirements
through cash flow generated by its operations. Net cash provided by
operating activities for the nine months ended September 30, 1997 and 1996
was $2,772,739 and $197,311, respectively. The increase in net cash
provided by operating activities was due primarily to increases in net
income, income taxes payable, accounts payable and accrued expenses offset
by increases in trade receivables and inventories.
The Company anticipates that internally generated funds and borrowings
under the Norwest Facility will be sufficient to meet its working capital
needs. The Company initially expected that it would have capital
expenditures of $1.7 million in 1997, but due to its growth now expect
capital expenditures to be approximately $2.8 million.
The Company does not engage in any currency hedging activities in
connection with its foreign operations and sales. To date, all of the
Company's international sales have been denominated in U.S. dollars,
exclusive of Westrex sales, which are denominated in Hong Kong dollars.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 128, "Earnings per share" which revises the calculation and
presentation provisions of Accounting Principles Board Opinion 15 and
related interpretations. Statement No. 128 is effective for the Company's
fiscal year ending December 31, 1997. Retroactive application will be
required. The Company believes the adoption of Statement No. 128 will not
have a significant effect on its reported earnings per share.
Page 15
<PAGE>
In June of 1997, the FASB issued Statement No. 130, "Reporting
Comprehensive Income" which establishes standards for the reporting and
display of comprehensive income and its components. The Statement requires
that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in the
financial statements and displayed with the same prominence as other
financial statements. This Statement is effective for fiscal years
beginning after December 15, 1997. The Company believes that the adoption
of the Statement will not have a significant effect on its financial
statements.
Also in June of 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" which establishes
standards for the way that public business enterprises report information
about operating segments in annual financial statements and requires these
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and
major customers. This statement is effective for financial statements for
periods beginning after December 15, 1997. In the initial year of
application, comparative information for earlier years is to be restated.
Page 16
<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits
2.6 Asset Purchase Agreement dated September 8, 1997 between the
Company and Skytracker of America, Inc.
4.3 Amendment to Loan Agreement dated August 29, 1997 between the
Company and Norwest Bank Nebraska, N.A.
10.3.6 Consulting Agreement between the Company and Marlowe A Pichel.
10.3.7 Non-competition agreement between the Company and Marlowe A.
Pichel.
11 Computation of net earnings per share for the three and nine months
ended September 30, 1997 (included in financial statements)
27 Financial Data Schedule (for SEC information only)
(b.) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended September 30,
1997.
Page 17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be filed on its behalf by the
undersigned, thereunto duly authorized.
BALLANTYNE OF OMAHA, INC.
Date: November 10, 1997 By: /s/ John Wilmers
--------------------------------
John Wilmers, President and
Chief Executive Officer
Date: November 10, 1997 By: /s/ Brad French
---------------------------------
Brad French, Secretary, Treasurer,
and Chief Financial Officer
Page 18
<PAGE>
ASSET
PURCHASE AGREEMENT
PARTIES:
This Agreement is made and entered into as of the 8th day of September,
1997, by and between SKY-TRACKER OF AMERICA, INC., of 28007 Front Street,
Temecula, California 92590, a California corporation (hereinafter referred to
as the "Seller"), and BALLANTYNE OF OMAHA, INC., 4350 McKinley Street,
Omaha, Nebraska 68112, a Delaware corporation (the "Buyer").
RECITALS:
A. Seller is engaged in the business of the design, manufacture,
marketing, distribution and sale of lighting equipment and is also
engaged in the electroforming business.
B. Seller owns certain Assets which it uses in its business for the
design, manufacture, marketing, distribution, and sale of the
following lighting equipment: Sky-Light Search Lights; Sky-Tracker
Search Lights; and Sky-Tracker of America Infrared Illuminators
(hereinafter referred to as the "Product Lines").
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, substantially all of the assets and business of Seller
pertaining only to the Product Lines, specifically excluding
Seller's assets and business pertaining to its electroforming business.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
I. DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
following definitions:
<PAGE>
A. "Accounts Receivable" shall mean all open, unpaid invoices and
unapplied credit memos of Seller pertaining only to the Product Lines (and
not pertaining to Seller's electroforming business) as of the date of the
Closing. A true and correct list of Accounts Receivable items as of August
31, 1997, specifically identifying any accounts or amounts in dispute, is
attached hereto as Exhibit 1.
B. "Assumed Liabilities" shall mean:
1. All open purchase orders of Seller pertaining to the Product
Lines (and not pertaining to Seller's electroforming business); provided,
however, that Buyer shall not assume any open purchase orders for
equipment, parts or supplies entered into after September 8, 1997, not in
the ordinary course of business. A true and correct list of such current
Purchase Orders is set forth in Exhibit 2 attached hereto.
2. All express Warranty obligations (as defined herein) on any
lighting equipment from the Product Lines sold by Seller. True and correct
copies of Seller's Warranty Agreements are attached hereto as Exhibit 3.
3. Notwithstanding any other provision contained herein, Assumed
Liabilities shall not include:
a. Any federal, state or local income, sales, use, franchise,
or any other tax payable with respect to the Purchased Assets
(as hereafter defined), or operations of Seller.
b. Any liability or obligation related to any Assets of Seller
not being purchased by Buyer.
c. Any liability or obligations of Seller arising in connection
with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby.
d. Any liability or obligation with respect to any of Seller's
employees, agents or independent contractors, whether or not
subsequently employed by Buyer.
e. Any claim for injury to persons or property of any nature
whatsoever in connection with the business or operations of
Seller, or relating to any products sold by Seller.
f. Any liability or obligation arising out of any breach by
Seller of any provision of any agreement, contract or other
commitment.
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g. Any liability of Seller to pay royalties to Richard T. Headrich
for all periods prior to the date of Closing.
h. Any liabilities other than those expressly assumed by Buyer
hereby.
i. Any trade accounts payable of Seller.
C. "Balance Sheet" shall mean the unaudited Balance Sheet of Seller as
of August 31, 1997, a copy of which is attached hereto as Exhibit 4, which
Balance Sheet has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis.
D. "Contract" shall mean only any of Seller's open purchase orders and
sales orders pertaining to the Product Lines that shall exist as of the date
of Closing, a true and correct list of all of which is attached hereto as
Exhibit 2, and those entered into thereafter by Seller in the ordinary course
of business.
E. "Fixtures and Equipment" shall mean all of the manufacturing
equipment, test equipment, other plant and equipment, including tooling dies
and all other special equipment used in the manufacture of or pertaining to
the Product Lines owned by Seller, a true and correct list of which is
attached hereto as Exhibit 5.
F. "Inventory" shall mean all of Seller's inventories which are
directly related to the Product Lines and which are held for resale in the
ordinary course of Seller's business to its customers, and all of the raw
materials, work in process, spare parts, finished products, wrapping, supply
and packaging items, and similar items, all of which are used in the
manufacture, distribution and sale of the Product Lines, and which together
aggregate the amount listed as Inventory on Seller's Balance Sheet, as
adjusted to date of Closing in the ordinary course of business.
G. "Purchased Assets" shall mean all of the following Assets as of the
date of the Closing pertaining exclusively to the Product Lines, except those
Assets specifically excluded herein:
1. All Accounts Receivable:
2. All Contract rights of Seller, including all cash deposits
received by Seller in connection with open sales orders for the Product
Lines;
3. All Fixtures and Equipment;
4. All Inventory
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5. All Books and Records of Seller pertaining to the Purchased
Assets, including, but not limited to: accounting records, invoices,
customer lists, customer contracts, customer files, and marketing
materials pertaining to present and prospective customers;
6. All trademarks, trade names, patents, patent applications,
improvements thereto and interests thereunder, licenses, including patent
licenses, copyrights and copyright licenses pertaining to the Purchased
Assets, a true and correct list of which is attached hereto as Exhibit 6;
7. All invention processes, know-how, formulas, drawings, blueprints,
specifications, flow-sheets, manuals, data, trade secrets, plans, files,
software, computer programs, related documentation, and all other
intangible Assets of any nature whatsoever, all of which pertain to the
Product Lines; and
8. Any and all other assets of any kind or nature whatsoever
directly related or pertaining to the Product Lines, except any assets
specifically excluded herein.
9. Notwithstanding any provision of this Agreement to the contrary,
the Purchased Assets shall not include any of Seller's assets and business
pertaining exclusively to its electroforming business.
H. "Warranty" shall mean all warrant obligations of Seller, pertaining
to the Product Lines sold by Seller, which are based on express warranties
only. Buyer does not assume any liability with respect to any implied
warranty or any liability which shall be in the nature of personal injury or
property damage or other consequential damages, except as stated herein.
I. "Financial Statements" shall mean the Balance Sheet and all other
exhibits and representations herein containing financial information
pertinent to the Purchased Assets.
II. SALE OF ASSETS
A. At Closing, Seller shall sell, assign, transfer, convey and deliver
to Buyer the Purchased Assets, free and clear of all liabilities,
obligations, liens, security interests and encumbrances of any kind, except
those liabilities expressly assumed by Buyer herein.
B. At Closing, Buyer agrees that it will accept and assume the Assumed
Liabilities.
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C. At Closing, Buyer shall wire transfer the Purchase Price to Seller's
bank account, subject to any amounts required to discharge any liens or
encumbrances against the Purchased Assets, or required by law to be withheld
to pay any obligations of Seller.
III. CLOSING
The Closing of the sale (the "Closing") shall take place at Seller's
offices on or before September 15, 1997, or as soon thereafter as all of the
conditions of this Agreement shall be complied with by the parties. At the
Closing, Seller shall deliver to Buyer such bills of sale, endorsements,
assignments, and other good and sufficient instruments of transfer and
conveyance as shall be effective to vest in the Buyer good and marketable
title to the Purchased Assets as provided in this Agreement.
IV. PURCHASE PRICE
The Purchase Price shall be Four Hundred Thousand Dollars ($400,000),
subject to adjustment as herein set forth.
V. ALLOCATION OF PURCHASE PRICE
Buyer shall allocate the Purchase Price among the Purchased Assets in
such manner as it shall determine. Such allocation shall be made at or prior
to the date of Closing. Such allocation shall be made in accordance with the
provisions of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and shall be binding upon Buyer and Seller for all purposes
(including financial accounting purposes, financial and regulatory reporting
purposes, and tax purposes). Buyer and Seller also each agree to file IRS
Form 8594 consistent with the foregoing and in accordance with Section 1060
of the Code.
VI. FURTHER ASSURANCES
From time to time, at Buyer's request, whether at or after the Closing
and without further consideration, Seller will execute and deliver such
further instruments of conveyance and transfer and take such other action as
Buyer reasonably may require more effectively to convey and transfer to Buyer
any of the Purchased Assets.
VII. PAYMENT OF SALES AND SIMILAR TAXES
Buyer will pay all sales, transfer, and documentary taxes, if any,
payable in connection with the sale, transfer, and deliveries to be made to
Buyer hereunder.
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VIII. ADDITIONAL CONSIDERATION TO SELLER
As additional consideration to Seller for entering into the transactions
contemplated in this Agreement, Buyer will pay to Seller a percentage of
Buyer's gross sales of the Product Lines after the Closing, as determined in
accordance with the following schedule:
Amount of Payment
Ballantyne's Sales of the Product Lines After Closing to Seller
- ----------------------------------------------------- ------------------
First $1 million in sales None
Sales in excess of $1 million but not more than $1.5 million 5%
Sales in excess of $1.5 million 10%
Buyer shall pay such additional consideration to Seller on an annual basis,
making each payment on a date which shall be no later than thirty (30) days
following the end of each 12-month period. Such payments shall be made to
Seller until a cumulative total of Five Hundred Thousand Dollars ($500,000)
has been paid to Seller, or until a date which is five (5) years after the
date of Closing, whichever shall be earlier. Upon such date, Buyer's
obligation to pay any additional consideration to Seller shall terminate.
Notwithstanding the foregoing, if, after Closing, Seller shall be in default
under any provision of this Agreement or any agreement executed in connection
herewith, Buyer may withhold any amounts payable to Seller hereunder until
such default shall be cured by Seller.
IX. MARLOWE A. PICHEL CONSULTING AGREEMENT
Buyer shall engage Marlowe A. Pichel (the Chairman of the Board and
Chief Executive Officer of Seller) as a Consultant effective immediately upon
the Closing of the transactions herein contemplated for a term of three (3)
years at an annual compensation of Seventy-five Thousand Dollars ($75,000).
At Closing, Buyer and Marlowe A. Pichel shall enter into a written Consulting
Agreement in the form and of the content of Exhibit 7, attached hereto, the
terms and conditions of which are incorporated herein by this reference.
X. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents, warrants and covenants to and with Buyer as follows:
A. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has full corporate
power and authority to
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conduct its business as it is presently being conducted and to own, sell and
convey its properties and Assets.
B. Copies of Seller's Certificate of Incorporation and all
amendments thereof to date, certified by the Secretary of State of
California, and of Seller's Bylaws as amended to date, have been delivered to
Buyer and are complete and correct as of the date of this Agreement. At the
Closing, Seller shall deliver to Buyer a Certificate of Good Standing
certified by the Secretary of State of California.
C. Seller has all necessary corporate power and authority and has
taken all corporate action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
Seller and constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its respective terms.
D. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will result in (1) a
violation of or a conflict with any of the provisions of the Certificate of
Incorporation or Bylaws of Seller, (2) a breach of, or a default under, any
term or provision of any contract, agreement, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Seller is a party, which breach or default would have a material adverse
effect on the business or financial condition of Seller or its ability to
consummate the transactions contemplated hereby, or (3) a violation by Seller
of any statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award, which violation would have a material adverse
effect on the business or financial condition of Seller or its ability to
consummate the transactions contemplated hereby.
E. Except as provided in Paragraph E of Article XII herein, Seller
knows of no and has not been informed of any consent, approval or
authorization of, or declaration, filing or registration with any
governmental or regulatory authority, or any other person or entity which is
required to be made or obtained by Seller in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
F. Neither Seller nor any affiliate of Seller has entered into or
will enter into any contract, agreement, arrangement, or understanding with
any person or firm which will result in the obligation of Buyer or any
Stockholder to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
G. Except as otherwise provided herein, Seller currently has and
will have and will transfer to Buyer at Closing, good and marketable title to
all of the Purchased Assets, free and clear of all mortgages, pledges, liens,
security interests, conditional sales agreements, charges, encumbrances,
restrictions and equities, except those mortgages, pledges, liens, security
interests and other liabilities expressly assumed by Buyer hereunder.
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H. Except as described in Exhibit 9, there are no material actions,
suits, claims, proceedings or investigations pending or, to the best
knowledge of Seller, threatened against or affecting the Purchased Assets, at
law or in equity, or before or by any federal, state, municipal or other
governmental court, department, commission, board, bureau, agency or
instrumentality. Prior to the Closing, either (1) Seller shall have resolved
the matters disclosed in Exhibit 9, or (2) Buyer and Seller shall agree as to
how such matters will be handled.
I. The Assets being purchased hereunder by Buyer constitute all of
the Assets of Seller pertaining to the Product Lines.
J. Other than as set forth in this Agreement or the Exhibits hereto,
there are no material liabilities or obligations, secured or unsecured,
whether accrued, absolute, contingent, unasserted or otherwise, affecting the
Purchased Assets. Unless consented to by Buyer in writing, no liabilities
have been or will be incurred since August 31, 1997, except in the ordinary
course of business. Seller has no liabilities or obligations whatsoever,
either accrued, absolute, contingent or otherwise, which are not reflected or
provided for in the Financial Statements except (i) those arising after the
date of the Balance Sheet which are in the ordinary course of business, in
each case in normal amounts and none of which is materially adverse, and (ii)
as and to the extent specifically described in the Schedules hereto.
K. Seller has disclosed to Buyer all facts known by Seller to be
material to the Assets to be acquired by Buyer pursuant to this Agreement. No
written representation or warranty by the Seller in this Agreement or any
written statement or certificate furnished or to be furnished to the Buyer
pursuant hereto, contains or will contain any untrue statement of a material
fact known to Seller, or omits or will omit to state a material fact known to
Seller necessary to make the statements contained therein not misleading.
During the period from the date of this Agreement to the Closing date, Seller
represents and covenants that its business in connection with the Product
Lines shall in all respects continue to be operated only in the ordinary
course. Seller shall give prompt notice to Buyer with respect to any material
changes in the operation of its business in connection with the Product Lines
and any matter or event which comes to Seller's attention and which, if it
had occurred as of the date hereof, would constitute a material breach of the
representations and warranties of Seller contained in this Agreement.
L. All Financial Statements provided to Buyer pursuant to this
Agreement and all Exhibits hereto are accurate in all material respects; and
all other financial data relating to the Purchased Assets given by Seller to
Buyer was accurate in all material respects as to what it was represented to
be when given to Buyer.
M. The Accounts Receivable reflected in the Balance Sheet and all
Accounts Receivable arising after the Balance Sheet date through Closing
arose from bona fide
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transactions in the ordinary course of business, and to the best of Seller's
knowledge and belief are valid.
N. Seller warrants that the Product Lines do not violate or infringe
upon any valid patent, trade secret or proprietary rights of others and that
Buyer may continue to manufacture the Product Lines without violating any
patents, trade secrets or proprietary rights of others, or of Seller. Seller
shall defend any action brought against Buyer based upon a claim that any of
such items infringe upon a patent, trade secret or other proprietary right.
Seller further agrees to indemnify Buyer and hold Buyer harmless from any or
all of judgments, decrees, costs or expenses resulting from such action.
O. The execution and delivery of this Agreement to Buyer and the
consummation of the transactions contemplated hereby have been duly authorized
by Seller's Board of Directors, and by Seller's Shareholders in accordance
with the business corporation laws of the State of California.
P. Exhibit 10 sets forth a complete and correct list and description of
all of the policies of liability, property, and all other forms of insurance
or bonds carried by Seller for the benefit of or in connection with the
Purchased Assets and the business of Seller pertaining to the Product Lines.
XI. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
A. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to conduct its business as it is presently being conducted and
to own and lease its properties and Assets.
B. Copies of Buyer's Certificate of Incorporation and all amendments
thereof to date, certified by the Secretary of State of Delaware, and of
Buyer's Bylaws as amended to date, have been delivered to Seller and are
complete and correct as of the date of this Agreement.
C. Buyer has all necessary corporate power and authority and has taken
all corporate action necessary to enter into this Agreement, to consummate
the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its respective terms.
D. Neither the execution and delivery of this Agreement, nor the
consummation of the transaction contemplated hereby will result in (1) a
violation of or a conflict with any
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of the provisions of the Certificate of Incorporation or Bylaws of Buyer, (2)
a breach of, or a default under, any term or provision of any contract,
agreement, indebtedness, lease, commitment, license, franchise, permit,
authorization or concession to which Buyer is a party, which breach or
default would have a material adverse effect on the business or financial
condition of Buyer or its ability to consummate the transactions contemplated
hereby, or (3) a violation by Buyer of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or award, which
violation would have a material adverse effect on the business or financial
condition of Buyer or its ability to consummate the transactions contemplated
hereby.
E. Buyer knows of no and has not been informed of any consent, approval
or authorization of, or declaration, filing or registration with any
governmental or regulatory authority, or any other person or entity which is
required to be made or obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
F. Neither Buyer nor any affiliate of Buyer has entered into or will
enter into any contract, agreement, arrangement, or understanding with any
person or firm which will result in the obligation of Seller or Stockholder
to pay any finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
XII. COVENANTS OF SELLER AND BUYER
Seller covenants with Buyer and Buyer covenants with Seller as follows:
A. Seller shall assign to Buyer all transferable manufacturer, supplier
or contractor warranties or guaranties respecting any of the Purchased Assets.
B. Effective upon the Closing of the transactions contemplated hereby,
Seller shall no longer use, in any respect, the name or terms "Sky-Tracker"
or "Sky-Light" without the express written consent of Buyer. Within
seventy-five (75) days after Closing, Seller shall change its corporate name
to a name which bears no resemblance to the name "Sky-Tracker," and
thereafter shall never use a name or names which shall be similar to such
name.
C. Seller shall not use, in any respect, the name, terms, or items
listed in Exhibit 6 hereto without the express written consent of Buyer.
D. Except as otherwise requested by Buyer, and without making any
commitment on its behalf, Seller will use its best efforts to preserve its
business intact; and preserve for Buyer the goodwill of the suppliers,
customers, and others having business relations with Seller prior to Closing.
In addition, until Closing, Seller shall make no purchases or sales of
Inventory items, or enter into any contract or transaction, without the
consent of Buyer
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in writing, except in the ordinary course of its business. Further, Seller
has not and shall not make any distributions or payments to its stockholders
and employees (except its regular payroll payments) between June 30, 1997,
and the date of Closing, without the written consent of Buyer.
E. Seller acknowledges that title to certain intellectual property
assets (including the assets listed on Exhibit 6) which it is transferring to
Buyer in accordance with this Agreement is currently held by Pichel
Industries, Inc., a related corporation. Prior to Closing, Seller shall take
such actions as shall be necessary to acquire full title to such assets to
facilitate transfer of such assets to Buyer at Closing. The acquisition of
title by Seller in such assets shall be effected in accordance with specific
instructions as shall be given to Seller by Buyer's patent counsel.
XIII. BULK SALES
Seller agrees to cooperate with Buyer in complying with the provisions
of Article 6 of the California Uniform Commercial Code--Bulk Transfer--
relating to bulk transfers in connection with the transactions contemplated
by this Agreement. If Buyer shall waive the provisions of the Bulk Sales Law,
Seller shall indemnify and hold Buyer harmless from any damages, losses or
expenses (including reasonable attorneys' fees) suffered by Buyer from any
claim which may be asserted against Buyer by creditors of Seller for
obligations not assumed by Buyer hereunder which result from noncompliance
with the California Bulk Transfer Law.
XIV. COVENANT NOT TO COMPETE
At the Closing, Seller and Marlowe A. Pichel will execute a
Non-Competition Agreement in the form of Exhibit 8 hereto. The effectiveness
of this Agreement and of the Non-Competition Agreement will be contingent
upon the execution of each other.
XV. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
A. Seller and Buyer agree that so long as any books, records and files
relating to the business, Assets or operations of the Seller pertaining to
the Product Lines remain in existence and available, Buyer (at its expense)
shall have the right to inspect and to make copies of the same at any time
during business hours for any proper purpose with reasonable advance notice.
Seller further agrees that it shall preserve and maintain all of its existing
books and records relating to the Purchased Assets for a period of at least
three (3) years following the date of Closing.
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B. On and after the Closing date, Seller and Buyer will take all
appropriate action and execute all documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of
the provisions hereof.
C. Buyer will assume all express Warranty obligations, as defined
herein.
XVI. INDEMNIFICATIONS
A. BY SELLER: It is specifically acknowledged that Buyer does not
assume and will not be responsible for any liabilities of Seller, except as
may be expressly stated herein. Effective as of the Closing date, Seller
shall indemnify and hold harmless Buyer against and in respect of:
1. All liabilities and obligations of, or claims against, Seller
not expressly assumed by Buyer in this Agreement.
2. Any damage or deficiency resulting from any material
misrepresentation, breach of warranty, or nonfulfillment of any agreement
on the part of Seller under this Agreement or from any material
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished to Buyer under this Agreement.
B. BY BUYER: Buyer agrees that, on and after the date hereof, it shall
indemnify and save and hold harmless Seller from and against any and all
damages incurred in connection with or arising out of or resulting from (1)
any material breach of any covenant or warranty, or the inaccuracy of any
representation, made by Buyer in or pursuant to this Agreement; (2) any
liability, obligation or commitment of Buyer relating in any way to the
Purchased Assets or Assumed Liabilities; or (3) any claim, liability,
obligation or commitment of any nature which is specifically assumed by
Buyer pursuant to this Agreement.
XVII. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Purchased Assets from Seller
are subject to the satisfaction, on or before the Closing date, of all of the
following conditions, which conditions may be waived in writing by Buyer:
A. The representations and warranties of Seller contained in this
Agreement shall have been true in all material respects when made and,
in addition, shall be true in all material respects on and as of the Closing
date with the same force and effect as though made on and as of the Closing
date.
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B. Seller shall have, or have caused to be performed and observed, in
all material respects, all obligations and agreements hereunder and shall
have complied with all covenants and conditions contained in this Agreement
to be performed and complied with by it at or prior to the Closing date.
C. If, prior to the Closing date, any material part of the Purchased
Assets is damaged by fire, other casualty, or any cause or activity not
attributable to or under the control of Buyer, Seller shall give Buyer
written notice thereof and Buyer may, at its option, terminate this Agreement
by written notice of such election given to Seller no later than five (5)
working days after receipt of Seller's notice, and upon giving such notice,
both parties shall be fully discharged from all duties hereunder and all
obligations hereof. However, if Buyer shall not so elect, or if an immaterial
part of the Assets is damaged, then Seller hereby assigns to Buyer all of its
rights, title and interest in and to any and all insurance proceeds payable
by reason of such destruction or damage to the Purchased Assets and Seller
hereby agrees to pay Buyer a sum equal to the deductible amount provided in
such policies to the extent necessary to correct such damage.
D. At or prior to the Closing, Seller and Marlowe A. Pichel shall have
executed the Non-Competition Agreement as provided in Article XIV herein.
E. There shall not have been, between the date of this Agreement and
the Closing date, any materially adverse change in any of the Purchased
Assets or the current operations of Seller.
F. Seller shall have furnished Buyer with such certificates in form and
substance reasonably satisfactory to counsel for Buyer as may be reasonably
requested by counsel for Buyer to evidence compliance with the conditions set
forth in this Section.
G. Either (1) Seller shall have resolved the matters disclosed in
Exhibit 9, or (2) Buyer and Seller shall have agreed as to how those matters
that will be handled.
H. Seller shall have acquired full title to the assets as provided in
Paragraph E of Article XII herein, to the satisfaction of Buyer's patent
counsel.
I. At or prior to the Closing, Buyer and Marlowe A. Pichel shall have
executed the Consulting Agreement as provided in Article IX herein.
J. Prior to Closing, Buyer shall have completed, to its satisfaction,
such financial, technical and legal due diligence of Seller as Buyer, its
counsel and its accountants shall deem necessary and appropriate.
K. Prior to Closing, the parties shall have complied, to the
satisfaction of Buyer's counsel, with the requirements of the Bulk Sales
Provisions of the California Commercial Code; provided, further that Buyer
and its counsel shall be satisfied that its exposure to
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liability from Seller's creditors (including taxing authorities) shall be
minimal as a result of such compliance.
XVIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to sell the Purchased Assets under this
Agreement to Buyer is subject to the satisfaction, on or before the Closing
date, of all of the following conditions, which conditions may be waived in
writing by Seller:
A. The representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when made and, in
addition, shall be true in all material respects on and as of the Closing
date with the same force and effect as though made on and as of the Closing
date.
B. Buyer shall have, or have caused to be, performed and observed, in
all material respects, all covenants, agreements and conditions hereof to be
performed or observed by Buyer at or before the Closing.
C. Seller shall have received approval from its Board of Directors and
Shareholders for consummation of this transaction on the terms and conditions
contained herein.
D. Either (1) Seller shall have resolved the matters disclosed in
Exhibit 9, or (2) Buyer and Seller shall have agreed as to how those matters
will be handled.
XIX. NON-ASSIGNMENT
Neither this Agreement nor any of the rights or obligations hereunder
may be assigned by any party without the prior written consent of the other
parties. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns, and no other person shall have any right, benefit or obligation
hereunder, as a third-party beneficiary or otherwise.
XX. EXPENSES
Except as otherwise provided in this Agreement, each party shall pay its
respective expenses, taxes, charges and liabilities incurred in connection
with or arising out of this Agreement, including, without limitation thereto,
counsel fees, accounting fees, and other expenses related to the assignment
and delivery of the Purchased Assets to Buyer.
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XXI. NOTICES
Unless otherwise provided herein, any notices, request, instruction or
other document to be given hereunder by either party to the other shall be in
writing and delivered personally or mailed by certified mail, postage
prepaid, return receipt requested (such mailed notice to be effective on the
date such receipt is acknowledged or refused), as follows:
IF TO SELLER: Sky-Tracker of America, Inc.
Attention: Marlowe A. Pichel
28007 Front Street
Temecula, CA 92590
WITH COPY TO: __________________________
__________________________
__________________________
IF TO BUYER: Ballantyne of Omaha, Inc.
Attn: Ronald H. Echtenkamp
4350 McKinley Street
Omaha, NE 68112
WITH COPY TO: Marks Clare & Richards
David P. Wilson, Esq.
11605 Miracle Hills Dr., Suite 300
Omaha, NE 68154
or at such other address or designation as is provided by one party to the
other in writing.
XXII. CHOICE OF LAW
This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of California
(without reference to the choice of law provisions of California law).
XXIII. SURVIVAL OF WARRANTIES AND REPRESENTATIONS
The representations, warranties and covenants of the parties hereto
contained herein, or in any certificates or other documents delivered prior
to or at the Closing, shall not be deemed waived or otherwise affected by any
investigation theretofore made by either party. Each and every
representation, warranty and covenant of Seller and Buyer and the
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indemnification provisions set forth in Article XVI herein shall survive the
Closing date and remain operative and in full force and effect as herein
provided.
XXIV. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS
This Agreement, together with all exhibits and schedules hereto,
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
XXV. MULTIPLE COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together constitute one
and the same instrument.
XXVI. INVALIDITY
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then
to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or
any other such instrument.
XXVII. TITLES
The titles, captions or headings of the Articles and 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.
XXVIII. CONFIDENTIAL INFORMATION
In connection with the negotiation of this Agreement, each party
acknowledges that it has had access to confidential information relating to
the other party. Each party shall treat such information as confidential,
preserve the confidentiality thereof and not duplicate or make use of any
other such information, except to advisors, consultants, lenders and
-16-
<PAGE>
affiliates in connection with the transactions contemplated hereby or
pursuant to or as required by law. If the transaction is not closed, each
party shall return to the other all confidential information in tangible
form, belonging or relating to the other party or provide a certificate of
destruction of such material acceptable to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers
thereunto duly authorized, on this 8th day of September, 1997.
"Seller"
SKY-TRACKER OF AMERICA, INC.
By /s/ Marlowe A. Pichel
_________________________________
Marlowe A. Pichel
President
"Buyer"
BALLANTYNE OF OMAHA, INC.
a Delaware corporation
By /s/ Ronald H. Echtenkamp
_________________________________
Ronald H. Echtenkamp
Vice Chairman
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<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF RIVERSIDE )
On this 4th day of September, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named MARLOWE A.
PICHEL, President of SKY-TRACKER OF AMERICA, INC. to me known to be the
identical person named in and who executed the foregoing instrument and
acknowledged that he executed the same as his voluntary act and deed and the
voluntary and deed of said corporation.
/s/ Deborah Pinto
___________________________________
Notary Public
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
On this 8th day of September, 1997, before me, the undersigned, a Notary
Public in and for said County, personally appeared the above-named RONALD H.
ECHTENKAMP, Vice Chairman of BALLANTYNE OF OMAHA, INC., to me known to be the
identical person named in and who executed the foregoing instrument and
acknowledged that he executed the same as his voluntary act and deed and the
voluntary act deed of said corporation.
/s/ Nancy A. Cronin
___________________________________
Notary Public
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<PAGE>
AMENDMENT NO.2 TO LOAN AGREEMENT
THIS AMENDMENT is made and entered into as of the 29th day of August,
1997, by and among Ballantyne of Omaha, Inc., a Delaware corporation (the
"Borrower") and Norwest Bank Nebraska, National Association ("Bank").
W I T N E S S E T H :
WHEREAS, Borrower and Bank have previously entered into Loan Agreement
dated August 30, 1995 as amended by Amendment No. 1 to Loan Agreement dated
24th Nov, 1995 (the "Agreement");
WHEREAS, Borrower and Bank have reached agreement regarding certain
modifications to the Agreement; and
WHEREAS, the parties desire to set forth their agreements regarding the
above matters in this Amendment No. 2 to Loan Agreement ("Amendment No. 2").
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants and agreements hereinafter set forth, the parties agree as follows:
1. All terms contained herein with an initial capitalized letter
which are not otherwise defined herein shall have the meaning ascribed to
them in the Agreement.
2. The definition of "Revolving Loan Commitment Amount" in Section
1.2 of the Agreement is hereby deleted and in substitution therefor, the
following definition of "Revolving Loan Commitment Amount" is hereby added to
the Agreement:
REVOLVING LOAN COMMITMENT AMOUNT means $10,000,000.
3. Section 2.1(d) of the Loan Agreement is hereby deleted.
4. This Amendment No. 2 is not intended to supersede or amend the
Agreement or any documents executed in connection therewith except as
specifically set forth herein. Nothing contained herein is intended to
reduce, restrict or otherwise affect any warranties, representations,
covenants or other agreements made by Borrower or waive any existing Events
of Default, if any, under or pursuant to the Agreement. All of the covenants
and obligations or Borrower under the Agreement and instruments, documents
and agreements executed pursuant to the Agreement are hereby acknowledged,
ratified and affirmed by Borrower.
5. Borrower represents and warrants to Bank as follows:
a. The execution, delivery and performance by Borrower of this
Amendment No. 2 have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval of the
stockholders of Borrower; (ii) result in any breach of or constitute a
default under any indenture, loan or credit agreement or any other
agreement, lease or instrument to which Borrower is a party or by which
it or its properties may be bound; or (iii) result in, or require, the
creation or imposition of any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature upon
<PAGE>
or with respect to any of the properties now owned or hereinafter
acquired by Borrower except in favor of Bank; and
b. No authorization, approval or other action by and notice to
or filing with any governmental authority or regulatory body or any
person or entity is required for the execution, delivery and performance
by Borrower of this Amendment No. 2.
6. Borrower agrees to reimburse Bank for all reasonable
out-of-pocket expenses, including, but not limited to reasonable fees and
disbursements of Bank's counsel in connection with the preparation and
execution of this Amendment No. 2 and any documents related hereto.
7. No failure on the part of Bank to exercise and no delay in
exercising, any right under the Agreement as amended hereby shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
8. A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER
NEBRASKA LAW. TO PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR
DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING, OR OFFER TO FOREBEAR
REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL ACCOMMODATION IN CONNECTION
WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, OR ANY AMENDMENT OF,
CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR
PROVISION OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN
OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of
the date and year first above written.
BALLANTYNE OF OMAHA, INC., a Delaware
corporation
By: /s/ JOHN WILMERS
_________________________________
John Wilmers
President
By: /s/ BRAD FRENCH
_________________________________
Brad French
Secretary
NORWEST BANK NEBRASKA, NATIONAL
ASSOCIATION, a national banking
association
By: /s/ KEVIN MUNRO
_________________________________
Kevin Munro
Its: Vice President
_________________________________
-2-
<PAGE>
Exhibit 10.3.6
CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into this 16th day of September,
1997, by and between BALLANTYNE OF OMAHA, INC., a Delaware corporation, with
its principal offices at 4350 McKinley Street, Omaha, Nebraska 68112 (the
"Company"), and MARLOWE A. PICHEL an individual residing at 40235 Reed Valley
Road, Aguanga, California 92536 ("Pichel").
W I T N E S S E T H
WHEREAS, Pichel is a stockholder and the president of Sky-Tracker of
America, Inc., a California corporation; and
WHEREAS, by that certain Asset Purchase Agreement dated September 8,
1997 (hereinafter referred to as the "Purchase Agreement"), the Company has
agreed to purchase certain of the assets of Sky-Tracker of America, Inc.; and
WHEREAS, pursuant to the Purchase Agreement, Pichel and Company have
agreed to enter into a Consulting Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties intending to be legally bound agree as follows:
1. ENGAGEMENT AS CONSULTANT. Company hereby engages Pichel as a
consultant for a term beginning on September 16, 1997, and terminating on
September 16, 2000, and Pichel hereby accepts such engagement.
2. ACTIVITIES OF CONSULTANT. During the term of this Agreement, Pichel
will assist the Company in the operation of the assets and business which the
Company has purchased from Sky-Tracker of America, Inc., in accordance with
the Purchase Agreement, and will render counsel and advice, will perform
certain engineering and design services in the development of new products
and the improvement of existing products, and will perform such other
services as the Company assigns to him from time to time. Pichel shall devote
a minimum of thirty (30) hours per week during the term of this Agreement to
the performance of his duties hereunder, and shall furnish the Company an
accounting of such time spent in the performance of such duties. Consultant
may perform some of his engineering, design, prototype and/or developmental
activities at his own design and shop facility in Aguanga, California, unless
the Company deems it reasonably necessary or desirable that such services be
performed at the Company's facilities. Consultant shall undertake such travel
as the Company deems reasonably necessary or desirable to promote the
business and affairs of the Company.
<PAGE>
3. COMPENSATION. As compensation for his services to be rendered to the
Company, the Company will pay Pichel at the rate of Six Thousand Two Hundred
Fifty Dollars ($6,250) per month, payable on the last business day of each
month during the term hereof. Company shall review such compensation on
January 1, 1999, and thereafter on January 1 of each year of this Agreement,
but in no event shall such compensation in each subsequent year be less than
the aforesaid amount. In addition, Pichel will be reimbursed for all
out-of-pocket expenses incurred on behalf of the Company in the performance
of his services hereunder.
4. OFFICE. Pichel will be entitled to use the Company's office located
at 7344-7348 Bellaire Avenue, North Hollywood, California 91605, and will be
entitled to use secretarial services and other administrative support
provided by the Company.
5. INSURANCE. As additional consideration for the services to be
performed by Pichel, the Company agrees to reimburse Pichel for the cost of
providing Pichel with Medicare Supplement Insurance and medical and hospital
insurance for Pichel's spouse.
6. CONFIDENTIALITY/DISCLOSURE OF INFORMATION. Pichel acknowledges that
during the term of this Agreement he will be exposed to the Company's trade
secrets, customer lists, processes, ideas, plans, programs, procedures,
intellectual property, and other proprietary assets. Pichel acknowledges that
the Company's trade secrets, as they may exist from time to time, including
but not limited to, Company's list of customers, processes, ideas, plans,
programs, procedures, and know-how are valuable, special and unique assets of
Company's business, access to and knowledge of which may be essential to the
performance of Pichel's duties hereunder. The parties agree that Pichel will
not, during the term hereof, nor at any time thereafter, disclose such
secrets to any person, firm corporation, association or other entity, or use
such secrets for any reason or purpose whatsoever; nor shall Pichel make use
of any such property for his own purposes or for the benefit of any other
person, firm, corporation or other entity (except Company) under any
circumstances during or after the term of this Agreement. Notwithstanding the
foregoing provisions of this paragraph, Pichel may use or disclose any
general know-how, ideas, procedures, processes and any other general industry
information and technical knowledge for his own use or for the use of any
other person or entity after the expiration of the term of the
Non-competition Agreement referred to in Paragraph 7 below; provided that
such general know-how, ideas, procedures, processes and other general
industry and technical information: (i) shall not be proprietary assets of
the Company and (ii) shall not constitute assets purchased by Company
pursuant to the Purchase Agreement.
7. NON-COMPETITION AGREEMENT. The parties acknowledge that they have
entered into a Non-competition Agreement of even date herewith, and that
Pichel shall be bound by the provisions of said Non-competition Agreement.
Further, the provisions of said Non-competition Agreement are hereby
incorporated herein by this reference as though they were an original part of
this Consulting Agreement.
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<PAGE>
8. INVENTIONS AND DISCOVERIES
a. Pichel hereby sells, transfers and assigns to Company all of
the entire right, title and interest of Pichel in and to all inventions,
ideas, disclosures, and improvements, whether patented or unpatented, and
copyrightable material made or conceived by Pichel, solely or jointly,
during the term of this Agreement which relate to the products and
services manufactured or performed by Company or which otherwise relate
or pertain to the business, functions or operations of Company.
b. Pichel has represented to Company that he has developed certain
improvements, modifications and additions to U.S. Patent No. 4,298,911.
Company has purchased said patent from Sky-Tracker of America, Inc., in
accordance with the Purchase Agreement. Pichel hereby sells, transfers
and assigns to Company all right, title and interest in and to all such
improvements, modifications and additions to said patent. Company shall
have the sole right to apply for United States patents for such
improvements, modifications and additions.
c. Pichel agrees to communicate promptly and to disclose to Company,
in such form as Pichel may be required by the Company to do so, all
information, details and data pertaining to such inventions, ideas,
disclosures, improvements, modifications and additions, and to execute
and deliver to Company such formal transfers and assignments and such
other papers and documents as may be required of Pichel to permit Company
to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyrights thereof.
d. If, during the term hereof, Pichel shall develop any ideas,
inventions, writings, patents, improvements or other discoveries which
do not relate to products and services manufactured and performed by the
Company, or which do not otherwise relate or pertain to the business,
functions or operations of the Company (the "Unrelated Inventions and
Discoveries"), Pichel shall grant to Company the exclusive right of
first refusal in connection with the manufacture, marketing, development,
sale and distribution of such Unrelated Inventions and Discoveries. Such
right of first refusal shall be subject to the parties entering into a
Definitive Agreement specifying the terms and conditions of such
manufacture, marketing, development, sale and distribution of any such
Unrelated Inventions and Discoveries, and any royalties or other
compensation to be paid to Pichel therefor.
9. INDEPENDENT CONTRACTOR. For the purposes of this Agreement, and the
services to be rendered hereunder, Pichel shall, at all times, be an
independent contractor and shall not be considered an employee of the Company.
3
<PAGE>
10. TERMINATION
a. Notwithstanding anything to the contrary provided herein, the
Company or Pichel may give the other sixty (60) days' written notice
prior to the end of the term hereof, or of any extension or renewal
hereof, of such party's intention to negotiate a new consulting
arrangement commencing at the end of the term or to terminate this
Agreement. In the event no such notice is given, the term described in
Paragraph 1 above shall automatically continue for an additional year,
and this subsection (a) shall be applicable again with each such one
(1) year extension.
b. This Agreement may be terminated by Company, at its discretion,
upon Pichel's death, inability to perform, or incapacity (being defined
as inability to perform normal activities and functions for a period of
one hundred eighty (180) consecutive days) or for cause.
c. This Agreement may be terminated by Pichel in the event that
Company breaches any of the terms or conditions of this Agreement and
such breach is not cured by Company within ten (10) days after written
notice.
11. MISCELLANEOUS. The following miscellaneous provisions shall apply
to this Agreement:
a. ENTIRE AGREEMENT. This agreement constitutes the entire
agreement and understanding between the parties with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings, oral and written, between the parties with respect
thereto. The Agreement may be amended or supplemented at any time only
by an instrument in writing signed by both of the parties.
b. APPLICABLE LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.
c. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective personal
representatives, heirs, successors and assigns, except that the
obligations of Pichel hereunder may not be assigned.
d. NOTICES. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent to the other
party by certified mail, return receipt requested, to the address for
such party set forth above.
e. HEADINGS. The headings of the sections herein are for
convenience only and shall not be construed as in any manner defining,
limiting, or describing the scope or intent of the particular sections
to which they refer, or as affecting the meaning or construction of the
language in the body of such sections.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands the date
first above written.
"Company"
BALLANTYNE OF OMAHA, INC.
By: /s/ Ronald H. Echtenkamp
___________________________________
Ronald H. Echtenkamp, Vice Chairman
"Pichel"
/s/ Marlowe A. Pichel
____________________________________
Marlowe A. Pichel
5
<PAGE>
EXHIBIT 10.3.7
NON-COMPETITION AGREEMENT
THIS AGREEMENT is made and entered into as of September 16, 1997, by
and between SKY-TRACKER OF AMERICA, INC.,28007 Front Street, Temecula,
California 92590, a California corporation (the "Seller"), MARLOWE A. PICHEL,
a California resident ("Pichel"), and BALLANTYNE OF OMAHA, INC., 4350
McKinley Street, Omaha, Nebraska 68112, a Delaware corporation (the "Buyer").
WHEREAS, Buyer and Seller have entered into an Asset Purchase Agreement
dated as of the 8th day of September, 1997 (the "Asset Purchase Agreement")
wherein Seller has agreed to sell, and Buyer has agreed to buy, all of the
operating assets of Seller pertaining only to certain product lines of search
lights and illumination equipment manufactured and sold by Seller; and
WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has agreed to
enter into a Consulting Agreement with Pichel for a three (3) year period
following the closing of the transactions contemplated in the Asset Purchase
Agreement; and
WHEREAS, it is specifically provided that as an integral part of said
transaction, an agreement not to compete would be set forth in a separate
agreement between the parties, and that this Agreement is in fulfillment of
the same.
NOW, THEREFORE, for the consideration mentioned in the Asset Purchase
Agreement, and in consideration of the purchase by Buyer of certain of the
operating assets of Seller, which is in the business of the design,
manufacture, marketing, distribution, and sale of search lights and
illumination equipment, and in consideration of the Consulting Agreement
between Pichel and Buyer, and in consideration of Sixty Thousand Dollars
($60,000) to be paid to Pichel as hereinafter provided, the parties agree as
follows, to wit:
1. Seller and Pichel jointly and severally agree that for a period of
time beginning on September 16, 1997, and ending on a date which is three
(3) years after the date of the termination of Pichel's Consulting Agreement
with the Buyer, or any extension thereof, or on September 16, 2002,
whichever date shall be later, Seller and Pichel, or either of them, shall not,
without Buyer's prior written consent, directly or indirectly, own, manage,
operate, join, control, be employed by, or participate in the ownership,
management, operation or control of, or assist any other person, firm, or
corporation as an employee or otherwise, in the ownership, management,
operation or control, financial or otherwise, of any business or organization
anywhere in the world which, directly or indirectly, competes with the
lighting business of the Buyer or its affiliated or subsidiary companies; and
Seller and Pichel, or either of them, shall not, directly or indirectly, by
themselves or through others, make, manufacture, assemble, sell, distribute or
otherwise deal in lighting products similar to those manufactured, assembled,
sold or distributed by Buyer. Pichel hereby agrees that he shall not, as a
director, an officer, and a stockholder of Seller, take any action which
would cause the Seller to be in violation of any provision of this Agreement.
<PAGE>
2. Seller specifically acknowledges that the market for its lighting
business is global and that the restrictions on competition herein contained
are fair and reasonable.
3. Seller and Pichel specifically acknowledge that a breach by them or
either of them of this Agreement would cause Buyer irreparable harm which
could not be adequately compensated by monetary damages, and therefore,
Seller and Pichel expressly agree that Buyer shall be entitled to injunctive
or other equitable relief from any court having jurisdiction of the parties
to prevent a breach of this Agreement, and that said injunctive or other
equitable relief shall be in addition to any and all other remedies which may
be available to Buyer.
4. As consideration for this Non-competition Agreement, Buyer agrees to
pay to Seller and Pichel the total sum of Sixty Thousand Dollars ($60,000),
payable in three (3) annual installmants of Twenty Thousand Dollars ($20,000)
each, the first such installment being paid simultaneously with the execution
hereof, and such installments continuing on the same date each year until
said total sum shall be paid in full.
5. This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of California
(without reference to the choice of law provisions of California law).
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, personal
representatives and assigns, and no other person shall have any right,
benefit or obligation hereunder, as a third-party beneficiary or otherwise.
7. In the event that any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then
to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or
any other such instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SKY-TRACKER OF AMERICA, INC. MARLOWE A. PICHEL
"Seller" "Pichel"
By /s/ Marlowe A. Pichel /s/ Marlowe A. Pichel
- ---------------------------------- ---------------------------------------
Marlowe A. Pichel, Its President Marlowe A. Pichel
BALANTYNE OF OMAHA, INC.
"Buyer"
By /s/ Ronald H. Echtenkamp
--------------------------------------
Ronald H. Echtenkamp, Vice Chairman
-2-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Interim
Consolidated Financial Statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,636,141
<SECURITIES> 0
<RECEIVABLES> 10,680,442
<ALLOWANCES> 206,962
<INVENTORY> 16,270,800
<CURRENT-ASSETS> 34,117,957
<PP&E> 9,342,482
<DEPRECIATION> 3,159,510
<TOTAL-ASSETS> 41,640,473
<CURRENT-LIABILITIES> 9,766,192
<BONDS> 0
0
0
<COMMON> 90,185
<OTHER-SE> 31,348,091
<TOTAL-LIABILITY-AND-EQUITY> 41,640,473
<SALES> 48,452,667
<TOTAL-REVENUES> 48,452,667
<CGS> 34,016,616
<TOTAL-COSTS> 34,016,616
<OTHER-EXPENSES> 6,120,517
<LOSS-PROVISION> 67,000
<INTEREST-EXPENSE> (174,471)
<INCOME-PRETAX> 8,423,005
<INCOME-TAX> 2,946,722
<INCOME-CONTINUING> 5,476,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,476,283
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
