<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 AND EXCHANGE ACT OF 1934.
Date of Report (Date of earliest event reported): June 2, 1995
------------------------------
Bird Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts
- --------------------------------------------------------------------------------
State or other jurisdiction of incorporation)
0-828 04-3082903
- ----------------------------------- -----------------------------------
(Commission File Number) (IRS Employer I.D. No.)
1077 Pleasant Street, Norwood, MA 02062
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(Address of principal executive offices) (zip code)
(617) 551-0656
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(Registrant's telephone number, including area code)
Former address: 980 Washington St., Suite 120, Dedham, MA 02026-6714
- --------------------------------------------------------------------------------
Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 2, 1995, Bird Incorporated (the "Seller"), a wholly-owned
subsidiary of Bird Corporation (the "Registrant"), sold all of the outstanding
capital stock of Bird-Kensington Holding Corp. ("Holding"), a wholly owned
subsidiary of the Seller, to Jannock, Inc. ("Jannock"). The sale was
consummated pursuant to the exercise by Jannock of an option granted under
that certain Asset Purchase Agreement dated as of September 23, 1994 (as
amended by amendments dated as of January 24, 1995, January 31, 1995, and
April 27, 1995, the "Asset Purchase Agreement") among the Seller, the
Registrant, and Jannock. Holding owns and operates the business of Kensington
partners ("Kensington") which is engaged in the manufacture and sale of vinyl
replacements windows at its facility in Leechburg, Pennsylvania. The purchase
price upon exercise of the option consisted of cash in the amount of
$2,780,000 and the assumption of certain liabilities related to the Kensington
business. As a condition to the sale, the Seller was required to invest
approximately $3,692,000 of additional funds in Kensington to enable
Kensington to pay certain liabilities and to assure that the net equity of
Kensington was not less than $1,150,000 at the time of closing. The
Registrant estimates a loss of $1.7 million on this transaction.
The foregoing description of this transaction is qualified in its
entirety by reference to the Asset Purchase Agreement, which is incorporated
herein by reference as an Exhibit to this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Unaudited Pro Forma Financial Information
Pro Forma Consolidated Statement of Operations for the Year Ended
December 31, 1994.
Pro Forma Consolidated Statement of Operations for the Three
Months Ended March 31, 1995.
Pro Forma Consolidated Balance Sheet - March 31, 1995
Notes to Pro Forma Consolidated Financial Information
2
<PAGE> 3
(c) Exhibits
1. Asset Purchase Agreement dated as of September 23, 1994 among Bird
Corporation, Bird Incorporated, and Jannock, Inc., as amended
January 24, 1995 and January 31, 1995 (the "Asset Purchase
Agreement"). (Filed on Exhibit B to the Registrant's proxy statement
dated February 12, 1995 for the special meeting of its stockhholders
held on March 7, 1995 and incorporated herein by reference.)
2. Amendment dated as of April 27, 1995 to the Asset Purchase Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
BIRD CORPORATION
(Registrant)
Date: June 16, 1995 By: /s/ DONALD L. SLOPER, JR.
-------------- ----------------------------
Donald L. Sloper, Jr.
Contoller (Principal Accounting
Officer)
<PAGE> 4
BIRD CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited balance sheet presents the financial position of Bird
Corporation (the "Company") as of March 31, 1995 assuming the sale of
Bird-Kensington Holding Corp. ("Bird-Kensington") to Jannock, Inc. had
occurred on that date. In addition, the unaudited statements of operations
that precede the balance sheet present the results of operations of Bird
Corporation for the year ended December 31, 1994 and the three months ended
March 31, 1995 assuming the sale of Bird-Kensington to Jannock, Inc. had
occurred immediately prior to commencement of the statement of operations
period. The historical results of operations have also been adjusted for the
prior sales of the Company's distribution and vinyl businesses.
The unaudited pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable in the
circumstances. The unaudited pro forma consolidated financial information
purports neither to represent what the Company's financial position or results
of operations would actually have been if the sale to Jannock had occurred on
January 1, 1994, January 1, 1995, or March 31, 1995 nor to project the
Company's financial position or results of operations for any future date or
period.
4
<PAGE> 5
<TABLE>
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1994
----------------------------------------------------------------------
SALE OF SALE SALE
DISTRIBUTION OF VINYL OF BIRD- PRO FORMA
HISTORICAL COMPANIES(1) BUSINESS(2) KENSINGTON(3) AS ADJUSTED
---------- ------------ ----------- ------------- -----------
(000) Omitted (except share data)
<S> <C> <C> <C> <C> <C>
Net Sales $ 167,886 $67,017 $46,406 $ 0 $ 54,463
---------- ------- ------- ------- ----------
Costs and expenses:
Cost of sales 136,878 53,949 35,960 0 46,969
Selling, general and
administrative expense (4) 28,786 11,444 5,360 0 11,982
Net interest expense 4,782 2,329 2,453 0 0
Net discontinued business
activities income (1,313) (1,313)(7) 0 0 0
Equity losses from partnership 4,680 0 0 4,680 0
---------- ------- ------- ------- ----------
Total costs and expenses 173,813 66,409 43,773 4,680 58,951
---------- ------- ------- ------- ----------
Earnings (loss) from continuing operations
before income taxes (5,927) 608 2,633 (4,680) (4,488)
Provision (benefit) for income taxes (7,010) 243 (5) 1,053 (5) (1,872)(5) (6,434)
---------- ------- ------- ------- ----------
Earnings (loss) from continuing operations $ 1,083 $ 365 $ 1,580 $(2,808) $ 1,946
======= ======= =======
Cumulative Preferred and Preference
dividends 1,536 1,536
---------- ----------
Earnings (loss) from continuing operations
applicable to common stock $ (453) $ 410
========== ==========
Earnings (loss) from continuing operations
per common share:(6)
Primary $ (0.11) $ 0.10
Average number of shares used in primary
earnings per share computation 3,992,251 3,992,251
</TABLE>
See Notes to Pro Forma Consolidated Financial Information
5
<PAGE> 6
<TABLE>
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1995
---------------------------------------------------------
SALE OF VINYL SALE OF BIRD- PRO FORMA
HISTORICAL BUSINESS (2) KENSINGTON (3) AS ADJUSTED
---------- ------------ -------------- -----------
(000) Omitted (except share data)
<S> <C> <C> <C> <C>
Net Sales $ 16,623 $ 6,464 $1,260 $ 8,899
---------- -------- ------ ----------
Costs and expenses:
Cost of sales 15,091 5,954 1,160 7,977
Selling, general and
administrative expense 3,002 816 166 2,020
Interest expense 641 588 53 0
Net discontinued business
activities expense (income) (19,079) (20,579) 0 1,500 (8)
Equity losses from partnership 372 0 372 0
Other (income) expense 1,537 0 (12) 1,549
---------- -------- ------ ----------
Total costs and expenses 1,564 (13,221) 1,739 13,046
---------- -------- ------ ----------
Earnings (loss) from continuing operations
before income taxes 15,059 19,685 (479) (4,147)
Provision (benefit) for income taxes 6,023 7,874 (5) (192)(5) (1,659)
---------- -------- ------ ----------
Earnings (loss) from continuing operations $ 9,036 $ 11,811 $ (287) $ (2,488)
======== ======
Cumulative Preferred and Preference
dividends 384 384
---------- ----------
Earnings (loss) from continuing operations
applicable to common stock $ 8,652 $ (2,872)
========== ==========
Earnings (loss) from continuing operations
per common share: (6)
Primary $ 2.11 $ (0.70)
Average number of shares used in primary
earnings per share computation 4,108,543 4,108,543
</TABLE>
See Notes to Pro Forma Consolidated Financial Information
6
<PAGE> 7
<TABLE>
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
MARCH 31, 1995
<CAPTION>
(000) Omitted
SALE OF BIRD- PRO FORMA AS
HISTORICAL KENSINGTON (9) ADJUSTED
---------- -------------- ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and equivalents $19,378 $ (1,912) $17,466
Accounts and notes receivable 13,829 (4,615) 9,214
Allowance for doubtful accounts (3,141) 382 (2,759)
Inventories 6,660 (1,758) 4,902
Prepaid expenses and other assets 2,120 (66) 2,054
Deferred income tax 1,837 0 1,837
------- -------- -------
Total current assets 40,683 (7,969) 32,714
------- -------- -------
Property, Plant and Equipment:
Land and land improvements 2,670 0 2,670
Buildings 10,625 (3,721) 6,904
Machinery and equipment 29,129 (350) 28,779
Construction in progress 879 0 879
------- -------- -------
43,303 (4,071) 39,232
Less - Depreciation and amortization 15,664 (1,007) 14,657
------- -------- -------
27,639 (3,064) 24,575
------- -------- -------
Other investments 677 0 677
Assets held for sale 7,500 0 7,500
Other assets 1,631 (1,448) 183
Deferred tax asset 8,662 669 9,331
------- -------- -------
$86,792 $(11,812) $74,980
======= ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $25,182 $ (7,771) $17,411
Long-term debt, portion due within one year 2,192 (1,633) 559
Retirement plan contributions payable 129 0 129
Income taxes payable 1,343 0 1,343
------- -------- -------
Total current liabilities 28,846 (9,404) 19,442
------- -------- -------
Long-term debt, portion due after one year 6,511 (803) 5,708
------- -------- -------
Other liabilities 4,582 (600) 3,982
------- -------- -------
Deferred income taxes 128 0 128
------- -------- -------
Total liabilities 40,067 (10,807) 29,260
------- -------- -------
Stockholders' Equity
Preferred and Preference stocks
at par value 1,396 0 1,396
Commom stock at par value 4,382 0 4,382
Other Stockholders' Equity 40,947 (1,005) 39,942
------- -------- -------
46,725 (1,005) 45,720
------- -------- -------
$86,792 $(11,812) $74,980
======= ======== =======
</TABLE>
See Notes to Pro Forma Consolidated Financial Information
7
<PAGE> 8
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (unaudited)
FOOTNOTES
---------
(1) Reflects the results of operations relating to the sale of the
Company's building materials distribution business to Wm. Cameron
& Co. ("Cameron") on August 22, 1994 including the sale
of substantially all the assets of Southland Building Products,
Inc. on November 28, 1994 to Ashley Aluminum, Inc., a Cameron
subsidiary. Proceeds from the sales were used to reduce the
Company's indebtedness under the Third Amended Credit Agreement
between the Company and The First National Bank of Boston,
Philadelphia National Bank, incorporated as Corestates, N.A. and
The Bank of Tokyo Trust by approximately $25 million. As of
November 29, 1994, the revolving credit line commitment totaled
$15,529,000 and the total principal outstanding on the term loan
totaled $11,999,000. The average interest rates on the revolving
credit line and the term loan under the Third Amended Credit
Agreement were 10.78% and 11.55%, respectively. Interest expense
was adjusted by $2.3 million for the twelve months ended December
31, 1994 to reflect the indebtedness reduced by such proceeds.
The pro forma results of operations for the period ended December
31, 1994 does not include any interest income on such proceeds.
(2) Reflects the results of operations relating to the sale of
substantially all the assets of the Company's vinyl business
(excluding Bird-Kensington) to Jannock, Inc. on March 8, 1995.
The proceeds were applied to reduce the Company's indebtedness
under the Loan and Security Agreement dated November 30, 1994
with Shawmut Capital Corporation (the "Loan Agreement"). As of
March 31, 1995, the revolving credit line commitment under the
Loan Agreement was zero and the total principal outstanding on
the term loans totaled $6,355,000. The average interest rates on
the revolving credit line and the term loan under the Loan
Agreement were 9.5% and 9.67%, respectively. Interest expense
for the twelve months ended December 31, 1994 and the three
months ended March 31, 1995 was virtually eliminated as a result
of reducing the Company's indebtedness. No amount relating to
interest income on such proceeds is included in the pro forma
results presented.
(3) Reflects the results of operations relating to the sale of
Bird-Kensington to Jannock, Inc. Effective February 28, 1995,
the Company's ownership in Bird-Kensington was permanently fixed
at 90% resulting in a change in financial reporting from the
equity method to consolidation. Consequently, the Company
recorded equity losses for the twelve months ended December 31,
1994 and the two months ended February 28, 1995. The anticipated
loss of $1.7 million attributable to the transaction is not
presented in the pro forma consolidated statements of operations.
Such loss is presented as an adjustment to retained earnings on
the pro forma consolidated balance sheet as of March 31, 1995.
8
<PAGE> 9
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION(unaudited)
FOOTNOTES
---------
(continued)
(4) SG&A expenses for the distribution businesses and the vinyl
business include historical allocations of corporate overhead
expenses amounting to $368,000 and $944,000, respectively. Such
expenses represent the estimated reduction to be realized in
on-going corporate SG&A including payroll-related costs for
headcount reductions, facilities expenses and systems support,
due to the sales of these businesses.
(5) The provision(benefit) for income taxes is based on the statutory
tax rates.
(6) The "historical" and "pro forma as adjusted" earnings(loss) per
share amounts have been determined after deducting the dividend
requirement for the Company's Preferred and Preference stock.
Earnings(loss) per share are based on the weighted average number
of common shares outstanding and exclude common stock equivalents
if they are anti-dilutive.
(7) Reflects an approximate $2.7 million gain on the sale of
substantially all of the Company's building materials
distribution businesses and the loss of approximately $1.3
million on sale of the Company's interest in Mid-South Building
Supply, Inc. Historical results of operations for this business
were breakeven for the twelve months ended December 31, 1994.
(8) Represents the estimated cost to terminate the qualified and
unqualified unfunded employer benefit plans and future product
liability claims related to former roofing operations.
(9) Reflects the sale of Bird-Kensington for cash in the amount of
$2,780,000. Cash proceeds have been reduced by $1 million
representing the cost to acquire the minority partner's interest
in Kensington. In addition, $3,692,000 was invested in
Bird-Kensington, as a condition of the sale, to enable Kensington
to pay certain liabilities and to assure that the equity of Bird-
Kensington was not less than $1,150,000 at the time of closing.
Certain adjustments, subject to increase or decrease upon final
determination at the closing date, affecting equity were required
to be made to the Kensington financial statements as of March 31,
1995. These adjustments were primarily asset write-downs and the
exclusion of certain assets related to affiliated companies to be
assumed by the Company of approximately $700,000 and $500,000,
respectively. The anticipated loss, which is not reflected on
the pro forma consolidated statement of operations, also reflects
the tax effect of the transaction.
9
<PAGE> 10
BIRD CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION(unaudited)
FOOTNOTES
---------
(continued)
<TABLE>
Computation of cash proceeds and the loss on the sale are presented
below:
Computation of Net Cash Proceeds From Sale
------------------------------------------
<S> <C> <C>
Gross proceeds $ 2,780
Less:
Buy out of minority partner 1,000
Additional investment 3,692 4,692
----- -------
Net deficit $(1,912)
=======
</TABLE>
<TABLE>
Calculation of Loss on Sale Reflected in Pro Forma Stockholders Equity
----------------------------------------------------------------------
<S> <C> <C>
Gross proceeds $ 2,780
Less:
Net book value of assets sold 3,254
Legal, accounting, etc. 200
Buy out of minority partner 1,000 4,454
----- -------
Loss on sale before taxes (1,674)
Provision (benefit) for income taxes (669)
-------
Net loss on sale reflected as adjustment to
stockholders equity $(1,005)
=======
</TABLE>
10
<PAGE> 1
As of April 27, 1995
Bird Corporation
and Bird Incorporated
980 Washington Street
Suite 120
Dedham, Massachusetts 02026
Re: Asset Purchase Agreement dated as of September 23,
1994, as amended (the "Asset Purchase Agreement"),
among Bird Corporation, Bird Incorporated and
Jannock, Inc.
--------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 1.03 of the Asset Purchase Agreement,
Jannock, Inc., a Delaware corporation ("Buyer"), has the option
(the "Option"), exercisable on or before noon on April 28, 1995, to
acquire from Bird Incorporated, a Massachusetts corporation
("Seller"), all the outstanding capital stock (the "Holding Stock")
of Bird-Kensington Holding Corp., a Delaware corporation
("Holding"). Terms defined in the Asset Purchase Agreement are
used herein as therein defined.
Buyer has advised Seller that it is willing to exercise
the Option to acquire the Holding Stock on the Kensington Closing
Date, subject to satisfaction of the conditions set forth in
Sections 8.06 through 8.14 and Section 13.02 of the Asset Purchase
Agreement, only upon the further condition that the Asset Purchase
Agreement be amended and supplemented in the manner hereinafter
provided. Seller has advised Buyer that it desires that Buyer
exercise the Option and acquire the Holding Stock.
Accordingly, Parent, Seller and Buyer, intending to be
legally bound hereby, agree that the Asset Purchase Agreement shall
be amended and supplemented as follows:
1. On or before to the Kensington Closing Date, Seller
(a) shall have caused Kensington Partners (i) to make the revisions
and adjustments in its financial statements as of March 31, 1995
and for the periods then ended specified on Schedule 1 hereto and
(ii) pay all Federal, State and local taxes, including withholding,
sales and unemployment taxes, and all related interest and
penalties payable by Kensington Partners with respect to all
periods ending on or before March 31, 1995, including any amounts
being contested ("Prior Period Taxes"), (iii) to pay all
unsatisfied judgments or other liens set forth on Part C of
Schedule 2 hereto (Part C Liens") recorded on the books of
Kensington Partners, (iv) to record on the books of Kensington
Partners, add to Schedule 1 hereto and pay any liabilities secured
by Part C Liens which Seller reasonably determines are appropriate
and which are not currently recorded on such books and (v) to pay
all amounts of rent due under leases of the Kensington artners
Facility securing the Financings and (b) shall have invested
sufficient funds in the equity of Kensington Partners such that the
net partnership equity of Kensington Partners, computed in
<PAGE> 2
accordance with generally accepted accounting principles as of
March 31, 1995 and following the revisions and adjustments referred
to herein, shall not be less than $1,150,000; provided, however,
that the aggregate amount which Seller shall be required to invest
in Kensington Partners pursuant to this paragraph 1 between the
date hereof and the Kensington Closing Date shall not exceed
$5,100,000 and all payments required to be made pursuant to this
paragraph 1 shall be made out of such funds so invested. Following
the Kensington Closing Date, any refunds of any amounts paid by
Kensington Partners in respect of Prior Period Taxes shall be
promptly paid to Seller. Seller and Parent shall jointly and
severally indemnify and hold harmless Buyer from and against any
and all Damages suffered by Buyer resulting from, arising out of,
or in connection with any claims in respect of Prior Period Taxes
and liabilities secured by Part C Liens.
2. On or before the Kensington Closing Date, Seller will
cause the interest of Kensington Partners in the partnership, and
the rights and obligations of Kensington Partners under the
Partnership Agreement, referred to in Item K.4. of Schedule 4.17 to
the Asset Purchase Agreement and the interest of Holding in the
partnership, and the rights and obligations of Holding under the
Partnership Agreement, referred to in Item K.5. of Schedule 4.17 of
the Asset Purchase Agreement, to be transferred to and assumed by
Seller. Further, on or before the Kensington Closing Date, Seller
will cause the rights and obligations of Kensington Partners under
the agreements referred to in Items F.3. and F.4. of Schedule 4.17
to the Asset Purchase Agreement to be transferred to and assumed by
Seller.
3. In addition to the conditions set forth in
Sections 8.06 through 8.14 and Section 13.02 of the Asset Purchase
Agreement, the obligation of Buyer to pay the Additional Purchase
Price and acquire the Holding Stock shall be subject to the due
execution and delivery of the following agreements, in form and
substance reasonably satisfactory to Buyer, by the following
parties on or before the Kensington Closing Date:
a. A supply agreement between Kensington Partners
and Jones & Brown, Inc. (""J&B") covering the annual
purchase of windows by J&B from Kensington Partners at a
volume reasonably satisfactory to Buyer, which supply
agreement shall have a term of not less than five years.
b. An agreement of sale between Holding and ZES,
Inc. pursuant to which ZES, Inc. shall have sold all of
the interest of ZES, Inc. in Kensington Partners to
Holding.
c. An amendment to the lease agreement ("Lease
Agreement") between Lila Snyder ("Mrs. Snyder") and
Kensington Partners relating to the Kensington Partners
Facility pursuant to which (i) the rent thereunder is
fixed in an amount equal, from time to time, to the
payments due under the four financings listed on Part A
of Schedule 2 hereto (the "Financings") secured by the
Kensington Partners Facility, (ii) Mrs. Snyder grants
Kensington Partners an option to acquire the Kensington
Partners Facility and (iii) Kensington Partners is
granted the right to cure landlord defaults under the
Financings, including the failure to pay taxes, and to
pay rent directly to the Financing parties.
<PAGE> 3
d. Assignments executed by J&B or ZES, Inc., as
appropriate, transferring and assigning to Kensington
Partners all right, title and interest of the assigning
party in and to (i) the trademarks listed on
Schedule 4.25 to the Asset Purchase Agreement, (ii) the
lease dated April 1, 1992 between Regency Management
Services and J&B regarding heat mirror equipment, and
(iii) each other agreement reflected on Part B of
Schedule 2 hereto and each other asset reflected on the
books of Kensington Partners on the Kensington Closing
Date as an asset of Kensington Partners and not
heretofore transferred to it.
e. Consents to assignment by (i) Amplicon, Inc.
with respect to the lease agreement dated as of
September 20, 1993 between Amplicon, Inc. and Kensington
Partners, (ii) Southwall Technologies, Inc. ("Southwall")
with respect to the Value-Added Reseller Agreement dated
as of May 9, 1991 between Southwall and Kensington
Manufacturing Co., and (iii) the lessors under the
equipment leases listed as items 1, 2, 6 and 7 on Part B
of Schedule 2 hereto.
f. Releases (and UCC-3's) or similar documents
reasonably satisfactory to Buyer executed by each person
who holds a lien against the Kensington Partners
Facility, other than the parties to the Financings and
the lessors (or their assigns) under the equipment leases
listed in Part B of Schedule 2 hereto, including without
limitation each person who holds a Part C Lien; PROVIDED,
HOWEVER, that the parties hereto acknowledge and agree
that any and all payments required to satisfy any
judgments and liens described in this paragraph 3.f shall
be made only out of the funds invested by Seller in
Kensington Partners pursuant to paragraph 1 hereof.
g. A computer support agreement between Kensington
Partners and J&B pursuant to which J&B agrees to provide
the computer services to Kensington Partners which it is
currently providing for a period of 12 months following
the Kensington Closing Date at a cost of $12,000 per
month.
h. An agreement by ZES, Inc., J&B, Mrs. Snyder and
Barry D. Snyder (individually, a "Snyder Party" and
collectively, the "Snyder Parties") in which each Snyder
Party (i) releases Kensington Partners, Holding and Buyer
from and against any liability each may have to such
Snyder Party other than any such liability, in the case
of Mrs. Snyder, under the Lease Agreement, as amended as
contemplated in clause(c) above, in the case of J&B,
under the agreements referred to in clauses(a) and (g)
above and, in the case of each of the Snyder Parties,
accounts payable and other liabilities incurred by
Kensington Partners in the ordinary course of business
and reflected on the Kensington Closing Balance Sheet and
(ii) agrees not to compete with Kensington Partners or
Holding in the manufacture of polyvinyl chloride
<PAGE> 4
replacement windows such noncompetition agreement to be
on terms reasonably acceptable to Buyer.
4. On or before the Kensington Closing Date, the Seller
shall take such action as shall be necessary to cause the condition
set forth in Section 8.14 of the Asset Purchase Agreement to be
satisfied including but not limited to the execution, delivery and
filing of appropriate UCC-3 termination statements evidencing the
satisfaction of such condition.
5. The liabilities and obligations of Kensington
Partners or Holding incurred in connection with or resulting from
(a) the matters or agreements referred to in, Schedule 4.16 and
Schedule 4.17, Items F.3., F.4., K.4. and K.5., and (b) any other
liabilities of Kensington Partners or Holding incurred in
connection with or resulting from the interest of either in North
American Installation Company, Quantum II Partners ("Quantum II"),
Permalite and Window Systems of Cleveland (the "Third Party
Ventures") shall, for purposes of Article X of the Asset Purchase
Agreement, be deemed Retained Liabilities; PROVIDED, HOWEVER, that
"normal and customary product warranty claims for windows"
manufactured and sold by Kensington Partners in connection with the
activities of the Third Party Ventures shall be deemed Assumed
Liabilities and PROVIDED FURTHER that the term "normal and
customary warranty claims for windows" shall exclude all claims
relating to the installation by any Third Party Venture of any
windows and all claims relating to the manufacture or sale of
Quantum II products not manufactured to customer specifications and
supplied by Kensington Partners to NewPro, Ambassador, Permalite or
Window Systems of Cleveland. Buyer shall cause Holding to
cooperate with Seller in connection with the Retained Liabilities
in this paragraph 5 and make available to Seller or its designee
replacement parts on commercially reasonable terms and prices. The
penultimate sentence of Section 10.04(c) of the Asset Purchase
Agreement shall not apply to the Retained Liabilities referred to
in this paragraph or to the breach by Seller of its covenants
contained in paragraphs 1, 2 and 4 of this letter agreement.
6. Seller and Parent agree to join with Buyer in making
an election under section 338(h)(10) of the Internal Revenue Code
of 1986 (the "Code") and under any comparable provisions of state,
local, or foreign law with respect to the purchase of the Holding
Stock. As promptly as practicable following delivery of the
Kensington Closing Balance Sheet, Buyer shall execute and deliver
to Parent five copies of Internal Revenue Service Form 8023, a
preliminary draft of which Form shall have been provided to, and
reviewed and approved by, Parent at least 5 days prior to the
Kensington Closing Date. Unless such Form differs materially from
the draft thereof previously provided to Parent, Parent shall
promptly execute and redeliver such Form to Buyer. Seller and
Parent shall comply with all of the requirements of section
338(h)(10) of the Code and the Treasury Regulations thereunder.
Seller and Parent shall take no action which is inconsistent with
the requirements for filing the election under section 338(h)(10)
of the Code and the applicable Treasury Regulations. Seller and
Parent agree that to the extent that an election similar to an
election under section 338(h)(10) of the Code is optional under any
state, local, or foreign law, Seller and Parent shall join in any
such election as requested in writing by Buyer.
7. Within 30 days following the Kensington Closing Date,
Buyer shall deliver to Seller a balance sheet, prepared in
<PAGE> 5
accordance with the generally accepted accounting principles
consistently applied, reflecting the assets and liabilities of
Holding as of the Kensington Closing Date (the "Kensington Closing
Balance Sheet"). The preparation of the Kensington Closing Balance
Sheet, objections thereto and the resolution of disputes with
respect thereto shall be dealt with in the manner contemplated by
Sections 3.01 and 3.02 of the Asset Purchase Agreement with respect
to the Closing Balance Sheet which provisions are hereby included
herein MUTATIS MUTANDIS except that appropriate changes shall be
made to reflect the fact that Buyer shall prepare the Kensington
Closing Balance Sheet, the Kensington Closing Balance Sheet shall
not be audited and the limitations contained in Section 3.02(b)
shall not be applicable. In the event that the amount of net
equity reflected with Kensington Closing Balance Sheet is less than
$1,050,000, Seller shall pay to Buyer such difference and in the
event such amount is more than $1,250,000 Buyer shall pay to Seller
such difference.
8. Upon execution and delivery of this letter agreement
by Seller, Parent and Buyer, this letter agreement shall constitute
the exercise by Buyer of the Option, subject to the satisfaction on
or before the Kensington Closing Date of the conditions set forth
in the Asset Purchase Agreement, as amended and supplemented
hereby, required to be satisfied on or before such Date.
9. The parties shall take such steps as are necessary to
cause the Kensington Closing Date to occur on Tuesday May 30, 1995
with effect from 7:00 a.m. on that date or as promptly as
practicable thereafter.
If the foregoing accurately represents the understanding
of the parties to the Asset Purchase Agreement with respect to the
subject matter hereof, please execute and return the enclosed
copies of this letter agreement, whereupon it shall become a
binding agreement among us and a binding amendment and supplement
to the Asset Purchase Agreement. The parties hereto hereby confirm
that the Asset Purchase Agreement, as amended and supplemented
hereby, remains in full force and effect.
Very truly yours,
Jannock, Inc.
By
--------------------------------
Michael A. Risso
President
Agreed to:
Bird Corporation
By:
----------------------------
Joseph D. Vecchiolla
Chairman and Chief Executive Officer
Bird Incorporated
By:
----------------------------
Joseph D. Vecchiolla
Chairman and Chief Executive Officer
<PAGE> 1
Asset Purchase Agreement dated as of September 23, 1994, as amended
(the "Asset Purchase Agreement") among Bird Corporation, Bird
Incorporated and Jannock Inc.
Amendment to Section 1.03
<TABLE>
SCHEDULE 1
Accounting Adjustments to Kensington Partners as of March 31, 1995
(Reduction of Equity)
$000
----
<S> <C> <C>
Accounts Receivable
(bad debt reserve) (158) fully reserve
Inventories ( 71) write down
Prepaid expenses ( 9) write down
Other Assets
- Quantum II Samples ( 16) write down
- Amre Samples ( 31) write down
- Amre Start Up Costs ( 31) write down
- Gemini Computer Software ( 75) write down
Quantum II Receivable (677) eliminate from transaction
Naico Payable 103 eliminate from transaction
Audit Fees Payable ( 71) expense
Amplicon Lease Liability (130) expense adjustment
-------
$(1,166)
-------
</TABLE>
Seller, Parent and Buyer acknowledge and agree that the adjustment
amounts set forth in this Schedule 1 represent the adjustments to
be made to the Kensington Partners financial statements as of March
31, 1995. The amounts set forth above are subject to increase or
decrease upon the final determination as at the Kensington Closing
Date of the actual adjustments required in respect of the items
listed above. The parties further acknowledge that liability under
the Amplicon lease and any adjustments in connection therewith
shall be based on Seller's and Buyer's confirmation of the amount
of such liability on or around the Kensington Closing Date.
<PAGE> 2
SCHEDULE 2
PART A
1. Loan made on or about April 11, 1989 by The
Pennsylvania Industrial Development Authority ("PIDA") to Kiski
Valley Enterprises, Inc. ("KVE") in the original principal amount
of $597,350 secured by mortgages on the Kensington Partners
Facility.
2 Loans made on or about June 29, 1988 by Equibank
(now Integra Bank) to Mervin A. Snyder (deceased) ("MR. SNYDER")
and to Mrs. Snyder in the original maximum principal amounts of
$1,050,000 secured by mortgages (joined in by KVE and ACIDA) on
the Kensington Partners Facility.
3 Loan made on or about October 5, 1977 by Armstrong
County Building and Loan Association (now Armstrong County
Building and Loan Association of Ford City) ("ARMSTRONG B&L") to
Armstrong County Industrial Development Authority ("ACIDA") for
the benefit of Mr. Snyder in the original principal amount of
$1,250,000 secured by a mortgage on the Kensington Partners
Facility.
4 Loan made on or about January 31, 1979 by
Armstrong B&L to ACIDA for the benefit of Mr. Snyder in the
original principal amount of $100,000 secured by a mortgage on
the Kensington Partners Facility.
PART B
1. Equipment Lease Agreement dated as of October 10,
1989 between General Electric Capital Corporation (lessor) and
Kensington Manufacturing Company (lessee).
2. Equipment Lease dated as of April 1, 1992 between
Regency Management Services (lessor) and Jones & Brown, Inc.
(lessee) regarding heat mirror equipment.
3. Retail Instalment Sale Contract dated as of
September 1, 1992 between GMAC and Kensington Manufacturing Co.
(buyer) for sale of Chevrolet vehicle.
4. Lease dated as of June 1, 1993 between Regency
Management Services Co. (lessor) and Kensington Manufacturing Co.
(lessee) regarding lease of two trucks.
5. Lease dated as of June 1, 1993 between Regency
Management Services Co. (lessor) and Kensington Manufacturing Co.
(lessee) regarding lease of one tractor.
6. Lease Agreement dated as of September 20, 1993
between Amplicon, Inc. (lessor) and Kensington Partners (lessee)
regarding saws, buffers and cleaners.
7. Letter Agreement dated June 15, 1994 between
Southwall Technologies and Kensington Manufacturing Company
regarding purchase of a Gas Fired Batch Oven.
<PAGE> 3
PART C
1. Judgment: Bureau of Compliance vs. Kensington
Partners d/b/a Kensington Manufacturing entered at No. 810 CIV
1994 on June 20, 1994 in the amount of $14,817.60.
2. Judgment: Bureau of Compliance vs. Barry D. Snyder
and Bird Corp. t/a Kensington Partners entered at No. 1030 CIV
1994 on August 1, 1994 in the amount of $29,874.96.
3. Judgment: Overnight Transportation Company vs.
Kensington Manufacturing Company entered at No. 385-1994 Civil
Action on March 21, 1994 in the amount of $12,874.96
4. Judgment: S.I.P. (USA) Inc. vs. A.K. Supply
Company, Inc. entered at No. 1994-80092 Civil Action, March 13,
1995 against garnishee Kensington Manufacturing in the amount of
$287.
5. Financing Statement between Kensington
Manufacturing Co., Debtor, and Associates Commercial Corp.,
Secured Party, filed in the Prothonotary's Office March 22, 1995
at No. 25619-1955.
6. Financing Statement between Kensington
Manufacturing Co., Debtor, and Chase Manhattan Leasing Co. Inc.,
Secured Party, filed at No. 22648, Volume 12, page 129, Block 1.
7. Financing Statement between Bird-Kensington Holding
Corp., Debtor, and Barclay's Business Credit (subsequently
assigned to Shawmut Capital Corp), Secured Party, filed in the
Office of the Secretary of State at No. 23741699.
8. Financing Statement between Bird-Kensington Holding
Corp., Debtor, and Barclay's Business Credit (subsequently
assigned to Shawmut Capital Corp), Secured Party, filed in the
Office of the Prothonotary at No. 25459.
