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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 4, 1995
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NBI, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-9403 84-0645110
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
Incorporation)
1880 Industrial Circle, Suite F, Longmont, Colorado 80501
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(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 684-2700
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
I. On August 4, 1995, NBI, Inc. acquired 100% of the outstanding capital stock
of the Belle Vernon Motel Corporation for $2,430,000 in cash pursuant to a stock
purchase agreement with Romaine Gilmour and Rose B. Calderone, the sole
stockholders. The foregoing description of the stock purchase agreement is
subject to the terms of the actual agreement, a copy of which is attached as
exhibit 10.1 hereto and incorporated herein by reference.
The Belle Vernon Motel Corporation owns and operates an 81 room Holiday Inn in
Southwestern Pennsylvania. The primary assets held by the acquired corporation
consist of cash, accounts receivable, property and equipment.
The Registrant received approval as an authorized Holiday Inn franchisee prior
to the purchase transaction. The property and equipment acquired will continue
to be operated as a Holiday Inn Hotel.
The purchase price was determined based upon an analysis of historical and
projected net cash flow and was paid in cash from available current assets held
by the Registrant.
II. On August 14, 1995, American Glass, Inc., a recently formed, wholly-owned
subsidiary of NBI, Inc., closed on its purchase of a majority of the assets of
L.E. Smith Glass Company of Mount Pleasant, Pennsylvania, pursuant to an asset
purchase and sale agreement between Lawrence F. Ranallo, Trustee in Bankruptcy
of Pittsburgh Food & Beverage Company, Inc., L.E. Smith Glass Company and
American Glass, Inc. The foregoing description of the asset purchase and sale
agreement is subject to the terms of the actual agreement, a copy of which is
attached as Exhibit 10.2 hereto and incorporated herein by reference. L.E.
Smith Glass Company is a manufacturer of handmade fine glass giftware and
lighting fixtures and has been in business since 1907.
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An involuntary bankruptcy petition had been filed against the parent company of
L.E. Smith Glass and a Chapter 11 trustee was appointed with the mandate to
sell the assets of the various subsidiaries. The sale of the assets of L.E.
Smith Glass Company to American Glass, Inc. was approved by an order of the
United States Bankruptcy Court in Pittsburgh, Pennsylvania on July 25, 1995
and closed on August 14, 1995, with the effective date being the close of
business on July 31, 1995.
The assets purchased consist primarily of accounts receivable, inventory,
property, plant and equipment, goodwill and other intangibles. The aggregate
contract purchase price of $5,875,745 was determined by the Registrant based
upon a multiple of historical net cash flow adjusted for nonrecurring items.
The contract purchase price was also based upon amounts reflected in L.E.
Smith Glass Company's March 31, 1995's audited financial statements and
included adjustments for i) the net change in accounts receivable and inventory
from April 1, 1995, through July 31, 1995, ii) the increase in fixed assets
relating to certain verifiable capital expenditures made during this time
period and iii) certain other items. The property, plant and equipment
acquired will continue to be used in the manufacture of handmade fine glass
giftware and lighting fixtures. The purchase price was paid through the
assumption of $3,508,190 of certain liabilities at July 31, 1995, cash and cash
proceeds from the liquidation of other current assets held by the Registrant.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a) & b) The filing of financial statements and pro forma financial information
within the fifteen day filing period is impractical. Therefore, the
Registrant will file such information by amendment. The Registrant
expects this information to be filed on or before September 28, 1995,
but in no event later than October 18, 1995.
c) i) Stock Purchase Agreement with Romaine Gilmour and Rose B. Calderone
dated August 4, 1995.
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ii) Asset Purchase and Sale Agreement between Lawrence F. Ranallo, Trustee
in Bankruptcy of Pittsburgh Food & Beverage Company, Inc., L.E. Smith
Glass Company and American Glass, Inc. dated June 29, 1995.
EXHIBITS
10.1 Stock Purchase Agreement with Romaine Gilmour and Rose B. Calderone dated
August 4, 1995. The following exhibits to the Stock Purchase Agreement
have not been included with this filing but will be provided to the
Commission upon request:
i) Exhibit A - Legal Description of Property
ii) Exhibit B, Items 3 and 12 - Listing of additional leases,
licenses and contracts
iii) Exhibit C - Labor Contract between the Belle Vernon Motel
Corporation and the United Food and Commercial Workers
International Union, Local 23, dated November 1, 1992.
iv) Exhibit D - Employee Benefit Plans and Pension Plans: Total
Amendment and Restatement of the UFCW, Local 23 and Employers
Pension Plan effective January 1, 1989, adopted November 2, 1994.
10.2 Asset Purchase and Sale Agreement between Lawrence F. Ranallo, Trustee in
Bankruptcy of Pittsburgh Food & Beverage Company, Inc., L.E. Smith Glass
Company and American Glass, Inc. dated June 29, 1995. The following
exhibits to the Asset Purchase and Sale Agreement have not been included
with this filing but will be provided to the Commission upon request:
i) Exhibit A - Legal Description of Real Property
ii) Exhibit E - Financial Statements of L.E. Smith Glass Company dated
March 31, 1995
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iii) Exhibit F - Insurance Policies and Bonds
iv) Exhibit G - Schedule 2.2 - Detailed Schedule of Assumed
Liabilities
v) Schedule 7.18 - Employee Benefit Plans
vi) Schedule 7.19 - Collective Bargaining Agreement between Smith and
the September 1, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NBI, INC.
Dated: August 21, 1995 By: /s/ Marjorie A. Cogan
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Marjorie A. Cogan
As a duly authorized officer
Corporate Controller, Secretary
(Principal Financial and Accounting Officer)
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EXHIBIT 10.1 TO FORM 8-K
STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT, dated as of August 4, 1995, is by and
among NBI INC., a Colorado corporation having an office at 1880 Industrial
Circle, Longmont, Colorado 80501 ("NBI"), ROMAINE GILMOUR ("Gilmour"), an
individual whose address is R.D. 2, P.O. Box 70, Somerset, Pennsylvania 15501,
and ROSE B. CALDERONE ("Calderone"), an individual whose address is R.D. 2, P.O.
Box 743, Belle Vernon, Pennsylvania 15012 (Gilmour and Calderone are referred
to collectively herein as "Sellers").
W I T N E S S E T H:
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WHEREAS, at the Closing (as hereinafter defined), the issued and
outstanding share of capital stock of Belle Vernon Motel Corporation, a
Pennsylvania corporation (the "Company"), the principal assets of which are the
Hotel (as hereinafter defined) and one million one hundred thousand dollars
($1,100,000) more or less, in cash, will consist of 34,515 shares of Common
Stock, without par value (the "Stock"); and
WHEREAS, at the Closing, Gilmour will own 26,598 shares of the Stock
and Calderone will own 7,917 shares of the Stock and, collectively, the Sellers
will own 100% of the Stock; and
WHEREAS, Gilmour is President and a director of the Company and
Calderone is Treasurer and a director of the Company;
WHEREAS, James O. Courtney, Jr. is Secretary and a director of the
Company; and
WHEREAS, the Sellers desire to sell all of the Stock to NBI and NBI
desires to buy all of the Stock from the Sellers;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and affirmed, the
parties hereto agree as follows:
I. DEFINITIONS
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1.A. In addition to the terms defined elsewhere herein, when used in
this Agreement, the following terms have the meanings indicated:
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"Business Day" means a day other than a Saturday, Sunday, or other day
on which commercial banks in Pittsburgh, Pennsylvania are authorized or required
by law to close.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"Hotel" means the improvements erected on the Property including the
81-unit motor hotel known as Holiday Inn of Belle Vernon, the restaurant,
lounge and swimming pool situated thereon and the parking lot and other
improvements ancillary thereto, including, without limitation, the Personal
Property.
"Hottle" means Dean M. Hottle, C.P.A.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means the actual knowledge of Sellers.
"Licenses" means Pennsylvania Liquor Control Board License No. H-4878
and those additional licenses and permits identified on Exhibit B hereto.
"Lien" means any claim, lien (statutory or otherwise), mortgage,
pledge, hypothecation, security interest, assignment, encumbrance, or other
security agreement.
"Personal Property" means chattels and articles of personal property
placed upon or used in connection with or in the operation of the Hotel, or
which may hereafter be used or useful in connection with the Hotel, including
without limitation all records, recipes, furniture, silverware, linen, china,
glassware, napery and such other articles of personal property used in
connection with the Hotel.
"Property" means the leasehold interest of the Company in and to those
parcels of real property in Rostraver Township, Westmoreland County,
Pennsylvania, and more particularly described on Exhibit A attached hereto and
made a part hereof, said leasehold interest having been created by that certain
Lease Agreement dated May 16, 1969 between William F. Sullivan, Rosemary C.
Sullivan, James L. Smith and Thelma W. Smith, as Lessor, and the Company, as
Lessee, recorded on June 6, 1969 in Deed Book Volume 2015, Page 378, as amended
by Amendment to Lease dated October 14, 1970 recorded on October 16, 1970 in
Deed Book Volume 2052, 1179 and assigned by Assignment of Lease dated March 2d-
5th, 1973, executed by William F. Sullivan, Rosemary C. Sullivan, James L. Smith
and Thelma W. Smith in favor of Pittsburgh Penn Center Corporation, recorded
on March 14, 1973 in Deed Book Volume 2120, Page 566, all in the Recorder of
Deeds Office of Westmoreland County, Pennsylvania (collectively, the "Lease").
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1.B. References to this "Agreement" shall mean this Stock Purchase
Agreement, including all amendments, modifications and supplements thereto and
any exhibits or schedules to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference becomes
operative.
1.C. Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, consistently applied. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the schedules and exhibits hereto, as the same may from time
to time be amended, modified or supplemented, and not to any particular section,
subsection or clause contained in this Agreement.
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II. PURCHASE AND SALE OF THE STOCK
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2.A. Purchase of Securities. Subject to the terms and conditions set
forth herein, NBI agrees to purchase and the Sellersagree to sell the Stock for
an aggregate purchase price of $2,430,000 (the "Purchase Price").
2.B. Closing. (a) The closing of the purchase and sale of the Stock
(the "Closing") shall take place at 10:00 a.m. on Friday, August 4, 1995 (the
"Closing Date") at the offices of Courtney and Courtney, 142 North Court
Avenue, Somerset, Pennsylvania.
On the Closing Date, the respective Sellers will deliver to NBI
certificates evidencing the number of shares of Stock being sold by the
respective Sellers hereunder, in proper form for transfer and duly endorsed to
NBI or accompanied by valid instruments of assignment from the applicable
Seller to NBI duly executed by the respective Seller. At the Closing of the
Calderone Stock delivery, NBI shall deliver to Calderone a certified check to
the order of Rose B. Calderone in the amount of $529,520.34, representing 95%
of the $557,389.83 sales price of her 7,917 shares of Stock, and shall deliver
to Herbert J. deMarrais a certified check to the order of Herbert J. deMarrais
in the amount of $13,934.75, representing 2.5% of said $557,389.83 sales price,
as payment in full to him for all services rendered in connection with the sale
of said Stock of Calderone. At the Closing of the Calderone Stock delivery,
NBI shall deliver to James O. Courtney, Jr., a certified check to the order of
James O. Courtney, Jr., in the amount of $13,934.74, representing 2.5% of said
$557,389.83 sales price, as payment in full to him for his services rendered in
connection with the sale of said Stock of Calderone. At the Closing of the
Gilmour Stock delivery, NBI shall deliver to Gilmour a certified check to the
order of Romaine Gilmour in the amount of $1,778,979.66, representing 95% of the
$1,872,610.17 sales price of her 26,598 shares of Stock, and shall deliver to
Herbert J. deMarrais a certified check to the order of Herbert J. deMarrais in
the amount of $46,815.26, representing 2.5% of said $1,872,610.17 sales price,
as payment in full to him for all services rendered in connection with the sale
of said Stock of Gilmour. At the Closing of the Gilmour Stock delivery, NBI
shall deliver to James O. Courtney, Jr., a certified check to the order of
James O. Courtney, Jr., in the amount of $46,815.25, representing 2.5% of said
$1,872,610.17 sales price, as payment in full to him for his services rendered
in connection with the sale of said Stock of Gilmour.
(b) In addition, the parties hereto shall submit to the Pennsylvania
Liquor Control Board a Notice of Change of Officers, Directors and Stockholders
with such supporting documents as may be required, including financial
disclosures, resignations, corporate minutes, NBI's corporate documents, and
necessary authorizations to do business in Pennsylvania. Further, the parties
shall continue to process, cooperate and assist in any necessary proceedings
before or requests by the Pennsylvania Liquor Control Board until such time as
the corporate changes desired by NBI are accepted by the Pennsylvania Liquor
Control Board and NBI and/or its designees are accepted as authorized officers,
directors and shareholders of the Company. All of the documents referred to in
this Section 2.2(b) shall be prepared and processed by NBI at its sole expense.
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III. SELLERS' REPRESENTATIONS
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Each of the Sellers, severally and for herself only, hereby stipulates
and represents to NBI, each and all of which shall survive the execution and
delivery of this Agreement and the Closing hereunder:
3.A. Authorized and Outstanding Shares of Capital Stock. (a)
Gilmour hereby stipulates and represents to NBI that, to her Knowledge: After
giving effect to the Closing, the authorized capital stock of the Company will
consist of 100,000 shares of Common Stock, without par value, of which 34,515
shares are issued and outstanding and of which Gilmour owns 26,598 shares (the
"Gilmour Shares"). No subscription, warrant, option or other right to purchase
or acquire any shares of any class of capital stock of the Company or securities
convertible into such capital stock is authorized or outstanding, and there is
no commitment of Gilmour to issue any such shares, warrants, options or other
such rights or securities.
(b) Calderone hereby stipulates, represents and warrants to NBI that
after giving effect to the Closing, the authorized capital stock of the Company
will consist of 100,000 shares of Common Stock, without par value, of which
34,515 shares are issued and outstanding and of which Calderone owns legally
and beneficially 7,917 shares (the "Calderone shares"). No subscription,
warrant, option or other right to purchase or acquire any shares of any class
of capital stock of the Company or securities convertible into such capital
stock is authorized or outstanding, and there is no commitment of Calderone to
issue any such shares, warrants, options or other such rights or securities.
This representation shall survive the closing.
3.B. Authorization and Issuance of the Stock. (a) Gilmour hereby
stipulates and represents to NBI that, to her Knowledge: The issuance of the
Stock has been duly authorized. Upon delivery to NBI of certificates therefor
against payment in accordance with the terms hereof, the Stock will have been
validly issued and fully paid and non-assessable, free and clear of all
pledges, liens, claims, encumbrances and pre-emptive rights and contractual
obligations.
(b) Calderone hereby stipulates and represents to NBI that the
issuance of the Stock has been duly authorized. Upon delivery to NBI of
certificates therefor against payment in accordance with the terms hereof, the
Stock will have been validly issued and fully paid and non-assessable, free and
clear of all pledges, liens, claims, encumbrances and pre-emptive rights and
contractual obligations.
3.C. Authority. To the Knowledge of each of the Sellers: The
Company has all the requisite power and authority to own and operate its
properties and to carry on its business as now being conducted. The Sellers
have all the requisite power and authority to enter into this Agreement and
perform their obligations hereunder. Upon its execution by NBI and the
Sellers, this Agreement shall be a valid, legally binding and enforceable
obligation of the Sellers.
3.D. No Violations. To the Knowledge of each of the Sellers: (i)
Except for the
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condition and operation of the sewage transportation and treatment system at the
Holiday Inn of Belle Vernon, which system has been examined by NBI, neither the
Company nor any Seller has received any notice of violations of any laws,
ordinances, orders, regulations or requirements of any applicable governmental
authority affecting any portion of the Hotel and (ii) the execution, delivery
and performance of this Agreement will not breach or violate any agreement,
indenture or instrument to which the Company is a party or to which the Stock,
the assets of the Company, the Hotel or the Property is subject.
3.E. Litigation. Except for the condition and operation of the
sewage transportation and treatment system at the Holiday Inn of Belle Vernon,
which system has been examined by NBI, and except as set forth on Schedule 3.5
hereto, there is no pending, or to the Knowledge of Sellers, threatened,
litigation, condemnation or other proceeding affecting the ownership, operation,
maintenance or use of the Property and the Hotel.
3.F. Financial Statements. To the Knowledge of each of the Sellers:
The financial statements heretofore delivered to NBI are true, complete and
accurate, present fairly the results of operations of the Hotel and the Company
for the periods covered thereby, and were prepared in accordance with GAAP,
consistently applied.
3.G. Contracts. To the Knowledge of each of the Sellers: The list
of Contracts, Licenses, and Leases attached hereto as Exhibit B affecting the
Property as of the date of this Agreement is complete and correct; the Company
is not a party to any other material contracts including, without limitation,
any contract with Umesh Patel; and with respect to such Contracts, Licenses and
Leases, except as set forth on Exhibit B, no such Contracts, Licenses, and
Leases have been supplemented or amended, all such Contracts, Licenses and
Leases remain in full force and effect, there has been no default by the Company
or any other party thereto in the performance of the terms, covenants and
conditions thereof to be performed by such party thereunder and all sums due by
the Company thereunder have been paid in full.
3.H. Licenses. To the Knowledge of each of the Sellers: Except as
set forth on Schedule 3.8 hereto, no citations or notices of default have been
issued in respect of the Licenses during the period in which the Licenses have
been held by the Company.
3.I. Liens. To the Knowledge of each of the Sellers: The Hotel and
the Property are free and clear of all Liens occasioned by Sellers and are free
and clear of all material Liens except for (i) the Lease and (ii) Liens for
current real property taxes not yet due and payable.
3.J. Franchise Agreement. To the Knowledge of each of the Sellers:
The Company is in full compliance with the Franchise Agreement (as such term is
defined on Exhibit B hereto), except for such matters as may be shown on the
Product Improvement Plan prepared by Holiday Inns of America, a copy of which
has been delivered to NBI.
3.K. Actions. To the Knowledge of each of the Sellers: Except for
any action pertaining to the condition and operation of the sewage
transportation and treatment system at
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the Holiday Inn of Belle Vernon, which system has been examined by NBI, there
are no civil, criminal or administrative actions, suits (including suits brought
by or on behalf of a citizen or citizens group), demands, claims, hearings, or
proceedings pending, or to the Knowledge of Sellers, threatened, against the
Company or in respect of the Hotel or the Property, nor has the Company or
either Seller received any notice of violation, demand or other notice from any
governmental authority or agency, citizen or citizens group relating to the use,
except for asbestos in the roof, generation, storage, treatment, disposal,
release or threatened release of Hazardous Substances on or about the Property.
NBI is aware that the roof contains asbestos and has made its own examination
pertaining thereto.
3.L. Collective Bargaining Agreements. To the Knowledge of each of
the Sellers: There are no labor union contracts or collective bargaining
agreements in effect with regard to any employees of the Company or any other
employees of the Property and Hotel, except for the Labor Contract appended
hereto as Exhibit C.
3.M. Sewage. The Property is not served by a community sewage
facility (as that term is defined in the Pennsylvania Sewage Facilities Act) and
the Property's sewage facility may not be adequate to meet the needs of the
Property and may not be in compliance with all governmental regulations. Said
sewage facility has been examined by NBI.
3.N. Zoning. To the Knowledge of each of the Sellers: The Property
is zoned under the applicable zoning ordinances of the county or other political
subdivision in which any portion of the Property is situated for the purpose for
which the Property is being used on the date of this Agreement including, but
not limited to, the operation of the Hotel.
3.O. "As Is". With the exception of the sewage line underneath the
Holiday Inn of Belle Vernon and pump station, NBI has examined the Hotel and
Personal Property and is buying them "as is", including, but not limited to, any
mechanical, electrical and structural defects affecting them and any hazardous
substance or other substances thereon.
3.P. Legal Requirements. To the Knowledge of each of the Sellers:
The Company has all requisite permits necessary to own, operate, maintain and
use the Property and Hotel including, without limitation, (i) all permits
required to operate the Hotel restaurant and (ii) an amusement permit for live
entertainment in the Hotel, have been issued and are in full force and effect.
The Company has paid in full any and all prior fines imposed upon the Company
including, without limitation, any and all fines imposed by the Pennsylvania
Department of Environmental Resources. The Company has obtained and maintained
in force all permits required by law to undertake any work carried out on or in
respect of the Hotel or the Property throughout the duration of any such work.
3.Q. Intentionally omitted.
3.R. Pension and Benefit Plans; ERISA; Labor Relations. To the
Knowledge of each of the Sellers: (a) Exhibit D includes copies of (i) all
"employee benefit plans," as defined
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in Section 3(3) of ERISA, maintained by the Company or to which the Company
contributed or is obligated to contribute thereunder for the benefit of the
current or former employees of the Company ("Employee Benefit Plans") and (ii)
all "employee pension plans," as defined in Section 3(2) of ERISA maintained by
the Company or any person, firm or corporation which is or was under common
control with the Company or treated as a single employer with the Company under
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended (the "Code") ("ERISA Affiliate") or to which the Company, or any ERISA
Affiliate contributed or is obligated to contribute thereunder ("Pension
Plans").
(b) NBI will not have (i) any obligation to make any contribution to
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA
("Multiemployer Plan") or (ii) any withdrawal liability from any such
Multiemployer Plan under Section 4201 of ERISA which it would not have had if
it had not consummated the transaction at the Closing Date in accordance with
the terms of this Agreement, except as provided in Section 3.18(c) or (d).
(c) Other than the Multiemployer Plan listed on Exhibit D, none of the
Pension Plans are or were subject to the minimum funding requirements of
Section 302 of ERISA, Section 412 of the code, or Title IV of ERISA.
(d) True and complete copies of the following documents with respect
to each of the Employee Benefit Plans and Pension Plans have been made
available to or delivered to NBI by the Sellers: (i) any plans and related
trust documents, and amendments thereof, (ii) the most recent Forms 5500, (iii)
the last IRS determination letter, (iv) summary plan descriptions, (v) written
communications to employees relating to the Employee Benefits Plans, and (vi)
written descriptions of all non-written agreements relating to the Employee
Benefits Plans.
(e) The Employee Benefit Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of ERISA
(including rules and regulations thereunder and other applicable law), and
neither the Company, any "party in interest" nor any "disqualified person" with
respect to the Employee Benefit Plans has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA.
(f) The Company maintains no Employee Benefit Plans which provide for
post-retirement benefits (other than pension) or that must provide health care
continuation under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
(g) Neither the Company nor any ERISA Affiliate has contributed or
been obligated to contribute to a Multiemployer Plan, except as set forth on
Exhibit D.
(h) Neither the Seller nor any ERISA Affiliate has (i) withdrawn in a
complete or partial withdrawal from any Multiemployer Plan, (ii) incurred any
liability due to the termination or reorganization of a Multiemployer Plan, or
(iii) received notification that any Multiemployer Plan is currently in
reorganization or is or has been terminated or will immediately be in
reorganization or terminated.
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(i) The Company has no contract, plan, or commitment, whether legally
binding or not, to create any additional Employee Benefit Plans or to modify any
existing Employee Benefit Plan.
(j) The Company is not a party to any employment contract and there
is no employment contract, non-competition, employment retention, extension,
continuation, commitment, or other similar contract affecting any employee,
officer, or director of the Company or any consulting agreement pursuant to
which the Company has any liability.
(k) No labor organization or group of employees of the Company has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. There are no organizing activities involving
the Company pending with any labor organizations or group of employees of the
Company. There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, material grievances, or other material labor disputes pending or
threatened in writing against or involving the Company.
(l) There has been no "mass layoff" or "plant closing" as defined by
the Worker Adjustment and Retraining Notification Act ("WARN") with respect to
the Company within the six months prior to the date hereof and the Company has
complied with applicable provisions of the Immigration Reform and Control Act of
1986.
3.S. Comprehension. Both the Sellers have either (i) read this
Agreement in its entirety or else (ii) it has been read to and understood by
such Seller.
3.T. Prior Agreements. Any and all prior agreements concerning the
sale of the Stock and/or the sale of all or substantially all of the Company's
assets have been terminated.
3.U. Taxes. To the Knowledge of each of the Sellers: No transfer,
excise or similar taxes (excluding pass-through income taxes for the period
prior to the Closing Date) will be or become due or payable in connection with
the sale, delivery or transfer by the Sellers to NBI of the Stock. All federal,
state and local tax returns, reports and statements required to be filed by the
Company have been filed with the appropriate governmental agencies, and all
taxes and other impositions shown thereon to be due and payable have been paid
prior to the date on which any fine, penalty, interest or late charge may be
accrued thereto or for nonpayment thereon, or any such fine, penalty, interest
or late charge has been paid. All such returns, reports and statements are
true, complete and correct, and there are no material deficiencies in respect
thereof.
IV. COVENANTS
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Each of the Sellers, jointly and severally, covenants and agrees
(except as
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otherwise provided herein, or unless NBI has given its prior written consent) as
follows. Each such covenant and agreement shall survive the execution and
delivery of this Agreement and the Closing hereunder.
4.A. Tax Compliance. Each of the Sellers shall pay her proportionate
share of all pass-through income taxes for the period prior to the Closing Date
in connection with the sale, delivery or transfer by the Sellers to NBI of the
Stock and shall save NBI and any other holder of the Stock harmless without
limitation as to time against any and all liabilities with respect to such
taxes. NBI agrees to use reasonable commercial efforts to maintain and
preserve existing financial records of the Company that are transferred to NBI
for a period of five (5) years after the Closing Date.
4.B. Broker. Each of Sellers, jointly and severally, stipulates and
represents to NBI that neither of them has dealt with any real estate agent,
salesperson, finder or broker in connection with this transaction other than
Herbert J. deMarrais and James O. Courtney, Jr. (collectively, the "Broker").
Each Seller agrees and covenants to pay her pro rata share of a five percent
(5%) commission, in the total amount of $121,500, to said Broker (which amount
shall be evenly divided between Herbert J. deMarrais and James O. Courtney,
Jr.) pursuant to a separate agreement between Sellers and said Broker. NBI
represents to Sellers that it has not dealt with any real estate agent,
salesperson, finder or broker in connection with this transaction. Each of the
Sellers and Purchaser, severally and for itself only, agrees to indemnify and
hold the other harmless from and against all loss, damage and liability
incurred by reason of a breach of the representations and warranties contained
in this Section 4.2.
4.C. Non-Competition. The Sellers covenant and agree that they
shall not own or participate in the operation of any hotel or motel business
within a ten-mile radius of the Property for a period of two (2) years after
the Closing Date without prior written consent of NBI, its successors or
assigns.
4.D. Tax Indemnity. From and after the Closing Date, the Sellers
agree to indemnify NBI against all taxes imposed on the Sellers with respect to
any taxable period that ends on or before the Closing Date. Any indemnity
payment made hereunder by the Sellers to NBI shall be treated as an adjustment
to the Purchase Price for tax purposes, but if the recipient of such payment
is required to include such amount in its gross income for federal, state or
local income tax purposes, then there shall be paid to such recipient an
additional amount so that after the payments are made to NBI it has received,
after taxes, an amount equal to the amount indemnified.
4.E. Lost Cerificates. Calderone stipulates, represents and warrants
that stock certificate Numbers 14, 25, 35 and 43 have been misplaced or lost.
Calderone covenants and agrees to deliver such certificates to NBI in the event
of their discovery and further covenants and agrees to use her best efforts to
effect the transfer of the ownership of the Calderone Shares to NBI as
contemplated hereunder, including, without limitation, the attachment of a
codicil setting forth the terms of this Agreement to any will executed by
Calderone and the inclusion
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of a copy of this Agreement among her estate-planning documents. The terms and
conditions of this Section 4.5 shall survive the Closing hereunder.
V. CONDITIONS PRECEDENT
--------------------
5.A. The obligation of NBI to purchase the Stock pursuant to Section
2.1 hereof is subject to the following conditions:
(a) NBI shall have received certificates registered in NBI's name
representing Gilmour Shares;
(b) All directors and officers of the Company shall have tendered
their resignation to NBI;
(c) All Company bank accounts, deposits and similar assets shall have
been transferred into the name of NBI or such other entity as NBI shall have
designated;
(d) Sellers' representations shall be true and correct to the
Knowledge of Sellers on such date and Sellers shall have fully performed their
obligations under this Agreement; and
(e) The Closing shall occur on or before August 4, 1995.
VI. SECURITIES LAW MATTERS
----------------------
Legends. Each certificate evidencing shares of Stock shall bear a
legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED BY THE HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO THE DISTRIBUTION OF SUCH SECURITIES. THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
("THE ACT") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION THEREFROM."
17
<PAGE>
VII. INDEMNIFICATION
---------------
Calderone, severally and for herself only, agrees to indemnify and
hold harmless NBI from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against NBI in any manner relating to or arising out of any untrue
representation, breach of warranty or failure to perform any covenants by
Calderone contained herein or in any certificate or document delivered pursuant
hereto relating to her ownership of Stock. The terms and conditions of this
Section shall survive the Closing or the termination of this Agreement.
VIII. SELLERS' PROPORTIONATE JOINT LIABILITY
--------------------------------------
In the event of any joint liability of Gilmour and Calderone under
the terms of this Agreement, any monetary liability of Gilmour and of Calderone
shall be limited to their respective percentage of ownership of shares of Stock
in the Company.
IX. MISCELLANEOUS
-------------
9.A. Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by another, or whenever any
of the parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and either
shall be delivered in person with receipt acknowledged or by registered or
certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback addressed as follows:
If to NBI at:
1880 Industrial Circle
Longmont, Colorado 80501
Attn: Mr. Jay H. Lustig
Telecopy Number: (303) 684-2804
with a copy to:
Weil, Gotshal & Manges
701 Brickell Avenue, Suite 2100
Miami, Florida 33131
Attn: Morris D. Weiss, Esq.
Telecopy Number: (305) 374-7159
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<PAGE>
If to the Sellers at:
Mrs. Romaine Gilmour
R.D. 2
P.O. Box 70
Somerset, Pennsylvania 15501
Mrs. Rose B. Calderone
R.D. 2
P.O. Box 743
Belle Vernon, Pennsylvania 15012
with a copy to:
c/o Courtney and Courtney
142 North Court Avenue
Somerset, Pennsylvania 15501
Attn: James O. Courtney, Jr., Esq.
Telecopy Number: (814) 445-6211
(Attorney for Romaine Gilmour)
Jack Bergstein, Esq.
Schoonamaker Ave.
Monessen, Pennsylvania 15062
(Attorney for Rose B. Calderone)
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the
United States mail.
9.B. Costs. Each party to this Agreement shall bear its own costs.
9.C. Binding Effect; Benefits. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their respective successors and permitted assigns. Nothing
in this Agreement, express or implied, is intended or shall be construed to
give any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
9.D. Waiver. Either the Sellers (collectively) or NBI may by written
notice to the other (a) extend the time for the performance of any of the
obligations or other actions of
19
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the other under this Agreement; (b) waive compliance with any of the conditions
or covenants of the other contained in this Agreement; and (c) waive or modify
performance of any of the obligations of the other under this Agreement.
9.E. Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by NBI and the Sellers.
9.F. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either NBI or the Sellers without the prior written consent of the
other parties.
9.G. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania, without
regard to the principles thereof regarding conflict of laws.
9.H. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
9.I. Severability. In the event that any one or more of the
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
9.J. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.K. Representation. It is recognized by the parties hereto that
James O. Courtney, Jr., Esq., is only acting as attorney for and representing
Romaine Gilmour and that he is not acting as attorney for or representing Rose
B. Calderone.
20
<PAGE>
IN WITNESS WHEREOF, NBI, Gilmour and Calderone have executed this
Agreement as of the day and year first above written.
NBI:
NBI INC.
Attest:
By: \s\ Mert Cogan By: \s\ Jay H. Lustig
---------------- -----------------------------
Mert Cogan Jay H. Lustig
Secretary President
[SEAL]
SELLERS:
\s\ Romaine Gilmour
----------------------
ROMAINE GILMOUR
\s\ Rose B. Calderone
-----------------------
ROSE B. CALDERONE
21
<PAGE>
SCHEDULE 3.5
Litigation
----------
NONE.
SCHEDULE 3.8
Citations re Licenses
---------------------
NONE.
EXHIBIT A
Legal Description of Property
-----------------------------
See attached.
22
<PAGE>
EXHIBIT B
Contracts, Licenses and Leases
------------------------------
1. Commercial Service Contract between GE Service and Belle Vernon Motel
Corp., with an effective date of May 6, 1993, and an expiration date of May
6, 1998.
2. Agreement dated September 18, 1986 between Broadcast Music, Inc. and Belle
Vernon Motel Corp. d/b/a Holiday Inn.
3. Agreements identified on the schedule attached hereto.
4. AT&T Hospitality Commission Agreement dated September 16, 1990, as amended
on July 15, 1993.
5. License to operate a public eating and drinking place issued by the
Commonwealth of Pennsylvania Department of Environmental Resources in
favor of Holiday Inn Belle Vernon, with an expiration date of July 31,
1996.
6. License No. 65249550 issued by the Commonwealth of Pennsylvania Department
of Revenue authorizing Belle Vernon Motel Corp. to collect local and/or
state sales, use and hotel occupancy taxes, with an expiration date of
March 1999.
7. Receipt dated July 12, 1994 issued by the Department of Treasury, Bureau
of Alcohol, Tobacco and Firearms for payment of Special Occupational Tax by
Belle Vernon Motel Corp.
8. Liquor License No. H-4878, AP-4878 and SS-4878 issued by the Commonwealth
of Pennsylvania, Pennsylvania Liquor Control Board on May 1, 1995, in
favor of Belle Vernon Motel Corp., with an expiration date of April 30,
1996.
9. License Agreement dated January 24, 1986 between Holiday Inns, Inc., a
Tennessee corporation, as Licensor, and Belle Vernon Motel Corporation, a
Pennsylvania corporation, as Licensee (the "Franchise Agreement").
10. Commonwealth of Pennsylvania, Department of Environmental Resources
National Pollutant Discharge Elimination System Permit No. PA0097781
issued to Belle Vernon Motel Corporation.
11. Lease Agreement dated May 16, 1969 between William F. Sullivan, Rosemary
C. Sullivan, James L. Smith and Thelma W. Smith, as Lessor, and the
Company, as Lessee, recorded on July 6, 1969 in Deed Book Volume 2015, Page
378, as amended by
23
<PAGE>
Amendment to Lease dated October 14, 1970 recorded on October 16, 1970 in
Deed Book Volume 2052, 1179 and assigned by Assignment of Lease dated March
2, 1973, executed by William F. Sullivan, Rosemary C. Sullivan, James L.
Smith and Thelma W. Smith in favor of Pittsburgh Penn Center Corporation,
recorded on March 14, 1973 in Deed Book Volume 2120, Page 566, all in the
Recorder of Deeds Office of Westmoreland County, Pennsylvania.
12. Additional licenses identified on the attachment hereto.
EXHIBIT C
Labor Contract
--------------
See attached.
EXHIBIT D
Employee Benefit Plans and Pension Plans
----------------------------------------
See attached.
24
<PAGE>
EXHIBIT 10.2 TO FORM 8-K
ASSET PURCHASE AND SALE AGREEMENT
THIS AGREEMENT, dated as of the 29th day of June, 1995, by and between
Lawrence F. Ranallo, Trustee in Bankruptcy (the "Trustee") of Pittsburgh Food &
Beverage Company, Inc., a Pennsylvania corporation, (hereinafter referred to as
"PFB"), and L.E. Smith Glass Company, a Pennsylvania corporation (hereinafter
referred to as "Smith"), (PFB and Smith are hereinafter individually and
collectively referred to as "Seller"), and American Glass, Inc., a Delaware
corporation (hereinafter referred to as "Buyer").
WHEREAS, Smith owns and operates a hand-pressed glass manufacturer (the
"Business"), which Business has its principal office located in Mt. Pleasant,
Westmoreland County, Pennsylvania;
WHEREAS, Seller desires to sell, transfer, assign and convey to Buyer, and
Buyer desires to purchase from Seller subject to the terms and conditions set
forth herein, certain specified assets of Smith, including the real property
described in Exhibit "A," free and clear of all liens, claims, encumbrances, and
interests of any kind or nature including, without limitation, any liens,
claims, encumbrances or interests (except for the "Permitted Encumbrances" and
"Assumed Liabilities" as hereinafter defined), whether presently known or
unknown, in any way relating to or arising out of the operations of the Business
prior to the Effective Closing Date (as defined herein).
WHEREAS, the Trustee will obtain approval from the United States
Bankruptcy Court for the Western District of Pennsylvania in the matter of
Pittsburgh Food and Beverage, Inc. Case No. 95-20543-JLC ("PFB Bankruptcy
Case"), authorizing said Trustee to enter into this Agreement and to sell the
Assets hereunder ("Sale Order"), after due notice to all known creditors of PFB
and Smith and subject to higher and better offers at said bankruptcy sale.
The Sale Order shall be substantially in the form attached hereto. Prior to
submitting the Motion for Sale to the Bankruptcy Court, Seller shall provide
Buyer with a copy of the proposed service list for persons and entities which
are to receive notice of the proposed sale. If Buyer desires to add additional
persons or entities to such notice list, Buyer shall immediately notify
Seller, in writing, of the additional persons or entities which Buyer seeks to
add to such notice list, and such persons or entities shall be added to the
notice list by Seller.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and the payments hereinafter provided, and intending to be legally bound, the
parties hereto agree as follows:
1. SALE AND PURCHASE OF ASSETS. At the Actual Closing (as defined
herein) hereinafter provided for, Seller shall sell, transfer, assign and convey
to Buyer, and Buyer shall purchase all of Seller's right, title and interest in
and to all of the assets, properties, business, franchises, rights, privileges,
whether real, personal or mixed, tangible or intangible, of every kind, nature
and description, and wherever situated, which are used in or related to the
operation of the Business or in which Smith has any right, title or interest,
free and clear of all
25
<PAGE>
mortgages, pledges, security interests, liens, claims, demands, charges and
encumbrances (hereinafter individually referred to as a "Lien" and, collectively
as "Liens"), (except for the Permitted Encumbrances on the real property and the
Assumed Liabilities as defined herein) (collectively, hereinafter referred to as
the "Assets"), including, without limitation the following:
1.1. All property and assets of the Business of every kind and
description (except for the "Excluded Assets" as hereinafter defined) wherever
located, including franchises, licenses, permits, trademarks, technology,
tradenames, processes, inventions, royalties and other intangible personal
property, business name(s), patents, and including but not limited to the
molds, inventory, furniture, fixtures, equipment and vehicles and the assets
described generally in the attached Exhibit "B" as well as the real property
described on Exhibit "A";
1.2. All rights under Seller's contracts relating to the Business,
including all leases, agreements, and purchase and sale orders of Seller
relating to the sale or purchase of products, materials or services produced or
used in connection with the Business, and including without limitation those
contracts, orders and agreements specifically identified on Exhibit "C" which
is attached hereto and made a part hereof (the "Assigned Contracts"), as well
as all oral employment arrangements, if any, with Michael C. Miller, President,
Pamela Mahbod, National Sales Manager - Giftware, and Norman Pennington,
National Sales Manager - Lighting. To Seller's Knowledge (as defined in
Paragraph 7.14 hereof), there are no currently existing written employment
agreements between Smith and the aforesaid employees. Each of the above
referenced employees is presently employed pursuant to oral employment
agreements which, to Seller's Knowledge, may be terminated by either party;
1.3. All customer files, lists and records of the Business (except
for the specific records hereinafter identified as being part of the Excluded
Assets);
1.4. Those accounts receivable of Smith which are less than ninety
one (91) days past due at the time of Effective Closing and, except for the
Excluded Assets, all notes receivable and other claims receivable or assertable.
It is the intention of the Buyer and Seller that the Seller not transfer to
Buyer, and the Buyer not purchase from Seller, any inter-company notes
receivable or claims receivable or assertable which may be owing between Smith
and any other companies owned, controlled, affiliated with or otherwise related
to Michael P. Carlow, Larry Ousky, or Frank Carlow. If an inter-company note
receivable or claims receivable or assertable is inadvertently transferred to
Buyer at the Actual Closing, such note receivable, claims receivable or
assertable shall be returned to Seller if such transfer is discovered by Buyer
or Seller prior to the Final Adjustment (as defined in Paragraph 2 hereof). If
such transfer is not discovered by Buyer or Seller prior to the Final
Adjustment, the Buyer may retain such inter-company note receivable or claim
receivable or assertable;
1.5. Governmental licenses and permits identified on Exhibit "D"
relating to the Business, to the extent transferrable;
1.6. Such other assets, tangible or intangible, including contract
rights, agreements, Smith's Blue Cross/Blue Shield Select Blue Plan, and
licenses, oral or written, relating to the Business;
1.7. Except for Excluded Assets, all books, business records and
files of the Business;
1.8. Any goodwill of Smith;
1.9. All other assets and properties reflected on Smith's Audit Report
dated March
26
<PAGE>
31, 1995 (the "March 31 1995 Financial Statement");
1.10. The company store adjacent to the manufacturing operations of
the Business; and
1.11. The Business telephone number, mailing address and all
advertising for the Business.
The Assets to be purchased hereunder shall not include the following
specific assets (the "Excluded Assets"): (i) any claims (including but not
limited to notes receivable and other claims receivable or assertable, except
that any inter-company notes receivable or claims receivable or assertable
which are inadvertently transferred to Buyer shall be subject to the terms of
Paragraph 1.4 hereof), rights, or causes of action which Smith has or may have
against PFB or any other companies owned, controlled, affiliated with, or
otherwise related to Michael P. Carlow, Larry Ousky, or Frank V. Carlow; (ii)
any and all claims for preferential transfers, fraudulent transfers and similar
claims against any person or entity as may be asserted by Seller; (iii) all
cash on hand or in bank accounts or cash funds as of the Effective Closing Date
(except for cash from insurance proceeds or payments received or receivable by
Smith in respect of Assets that are damaged, destroyed, lost or stolen between
March 31, 1995 and the Effective Closing Date so long as (a) such Asset was
included in the March 31, 1995 Financial Statements, and (b) the insurance
proceeds have not been utilized by Seller to repair or replace the damaged,
destroyed, lost or stolen Asset), (iv) the corporate minute books and stock
books and other records pertaining to the corporate existence of Smith and PFB;
(v) pre-paid state and federal taxes, and all rights to any tax credit or
attributes including refunds of federal and state taxes previously paid by
Seller; (vi) prepaid insurance; (vii) other prepaid expenses which are to be
prorated and allocated to Seller pursuant to Paragraph 11 hereof; (viii) all
existing contract deposits and contract prepayments made by Seller, provided
that to the extent any such contract deposit or prepayment is refundable to
Seller or applicable to future obligations of Seller, such deposit or
prepayment shall remain in place and Buyer shall provide Seller with a credit
(on a dollar for dollar basis) at the Effective Closing for the amount of such
contract deposit or prepayment (to the best of Seller's Knowledge, there are no
existing contract deposits or contract prepayments as of the date of this
Agreement); (ix) all insurance policies and all refunds arising from the
cancellation of Seller's insurance policies as of the Effective Closing Date;
and (x) the purchase price hereunder and all rights accruing to Seller or the
Trustee under this Agreement.
SELLER MAKES NO WARRANTY OF MERCHANTABILITY OF ANY OF THE ASSETS TO BE SOLD
OR OF THE FITNESS OF ANY OF THE ASSETS TO BE SOLD FOR ANY PURPOSE. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD THAT THE ASSETS TO BE
SOLD AND EACH COMPONENT THEREOF ARE TO BE SOLD PURSUANT TO THIS AGREEMENT IN AN
"AS IS" AND "WHERE IS" CONDITION.
2. PURCHASE PRICE. As full consideration for the Assets of Seller, and
subject to the Bonus (as defined herein) Buyer will pay $5,725,000.00 (the
"Purchase Price"), as hereinafter adjusted, which Purchase Price shall be
increased or decreased (on a dollar for dollar basis) by (a) the increase or
decrease in accounts receivable less than ninety one (91) days past due as set
forth on the March 31, 1995 Financial Statements attached hereto as Exhibit "E"
(being the amount of $1,353,066.00) as compared to the schedule of accounts
receivable to be prepared by Seller setting forth those accounts receivable
which are less than ninety one (91)
27
<PAGE>
days past due as of the Effective Closing Date (for the purposes of valuing
Smith's accounts receivable, all accounts receivable less than ninety one (91)
days past due at the Effective Closing Date shall be valued at full face value,
and all accounts receivable in excess of ninety (90) days past due at the
Effective Closing Date shall be retained by Seller); and (b) the increase or
decrease in inventory as set forth on Exhibit "E" (being the amount of
$1,706,427.00) as compared to the schedule of inventory to be prepared by Seller
as of the Effective Closing Date; and (c) the increase in fixed assets caused by
the verifiable capital expenditures made by Seller for the sole purpose of
improving the equipment and/or facilities of the Business between March 31, 1995
and the Effective Closing Date; and (d) the Bonus of $25,000.00 in the event
that either (i) the Trustee files a Chapter 11 Petition for Smith and obtains
approval of a sale order, substantially in the form of the Sale Order, from the
Bankruptcy Court presiding over the Smith Case, or (ii) the Actual Closing Date
occurs on or prior to August 10, 1995.
The items set forth in subparagraphs 2(a) through 2(c) shall be
referred to collectively herein as the "Adjustment Categories." All of the
above described adjustments, which adjustments are to be made to the items set
forth in subparagraphs 2(a) through 2(c) above for the calculation of the
difference between the March 31, 1995 dollar amounts and the Effective Closing
Date dollar amounts, shall be made at Actual Closing pursuant to the usual and
customary accounting practices of the Business, consistently applied (the
"Initial Adjustment").
Within forty five (45) days after the Actual Closing, the Seller and
the Buyer shall jointly produce a statement setting forth final calculations of
the adjustments that should have been made on the Effective Closing Date. The
final calculations shall be based upon information which is either finalized or
which becomes available after the Actual Closing regarding the Adjustment
Categories as utilized for the calculation of the difference between the March
31, 1995 dollar amounts and the Effective Closing Date dollar amounts. Such
statement shall be prepared pursuant to the usual and customary accounting
practices of the Business, consistently applied (the "Final Adjustment"). Buyer
and Seller mutually agree to provide each other with access to Smith's books and
records for purpose of preparing such statement and Final Adjustment. If Seller
and Buyer are unable to agree upon the Final Adjustment within such forty five
(45) day period, the specific matters in dispute shall be submitted to a
mutually acceptable accounting firm or arbitrator for resolution. The costs
associated with the accounting firm or arbitrator shall be borne equally by
Seller and Buyer. Within five (5) business days following resolution by the
accounting firm or arbitrator or five (5) business days after the preparation
and delivery of the statement and Final Adjustment in the event there is no
dispute, a supplemental closing shall take place at the same location as the
Actual Closing at which time the Seller or Buyer, as applicable, shall pay the
other party such amount(s) as is/are necessary to adjust the Purchase Price and
pay the other party the amount that should have been paid on the Actual Closing
Date. The Buyer and Seller agree that no Final Adjustment shall be made with
respect to individual items which are less than the amount of $15,000.00;
provided, however, that if the aggregate of the individual items which are less
than $15,000.00 is in excess of the sum of $75,000.00, then the Final Adjustment
shall include those individual items which are less than the amount of
$15,000.00. Seller agrees that any claim by Buyer against Seller regarding such
Final Adjustment shall be entitled to classification as an administrative claim
with priority over the administrative claim of PNC Bank (said priority of
Buyer's administrative claim
28
<PAGE>
being in an amount up to a maximum of $100,000.00), and the Sale Order
confirming the sale shall so state in the PFB Bankruptcy Case.
The Purchase Price shall be paid as follows:
2.1. ONE HUNDRED NINETY THOUSAND DOLLARS ($190,000.00) in cash, wire
transfer, or by cashier's check payable to Trustee, upon the signing of this
Purchase Agreement by the Trustee, the receipt of which, is acknowledged. Such
monies shall be held by the Trustee in trust in an interest bearing account
with all earnings thereon to inure to the benefit of the Buyer. The Trustee
acknowledges that Buyer has already deposited Ten Thousand Dollars ($10,000.00)
in connection with the diligence process, which shall be aggregated with the
foregoing deposit resulting in a total initial deposit of Two Hundred Thousand
Dollars ($200,000.00) (the "Deposit"). If Buyer is not selected at the
Bankruptcy Court hearing established for the purpose of selecting a purchaser
for the Assets or if the Seller does not perform its obligations hereunder,
then the Deposit (together with interest thereon) shall be promptly refunded to
Buyer.
2.2. The cash portion of the Purchase Price shall be reduced by the
dollar amount of the Seller's liabilities which are assumed by Buyer at
Effective Closing. The Buyer shall assume no liabilities, payments or
obligations of Seller (whether absolute, contingent or otherwise and whether
arising out of the business, the ownership or operation of any of the Assets,
the consummation of the transactions under this Agreement or otherwise) other
than the specific liabilities (hereinafter called the "Assumed Liabilities")
identified on Schedule 2.2. To Seller's Knowledge, Schedule 2.2 accurately sets
forth the Assumed Liabilities. If the Assumed Liabilities are in excess of the
sum of $5,725,000.00 as of the Effective Closing Date, then Buyer may, at its
election, terminate this Agreement by written notice to Seller delivered at or
prior to the Effective Closing Date and the Deposit shall be returned to Buyer.
If the Assumed Liabilities have been increased to a sum in excess of
$5,725,000.00 as a result of civil disorder, acts of God, insurrection, war or
riots, then either Buyer or Seller may terminate this Agreement by written
notice to the other given at or prior to the Effective Closing Date and the
Deposit shall be returned to Buyer. If Buyer elects to consummate the
transaction notwithstanding that the Assumed Liabilities are in excess of
$5,725,000.00 on the Effective Closing Date, Buyer agrees that the Trustee shall
have no liability to Buyer as a result of the Assumed Liabilities being in
excess of $5,725,000.00 unless the Trustee's fraud or unlawful acts directly
caused the Assumed Liabilities to exceed $5,725,000.00 as of the Effective
Closing Date.
2.3. The balance of the Purchase Price (plus or minus the
aggregate net increase or decrease of the adjustments described in this
Agreement at 2(a) through 2(c) hereinabove, plus the Bonus, if any) to be
determined as of the Effective Closing Date and paid at Actual Closing, in
cash, federal funds, wire transfer or by cashier's check.
2.4. The Purchase Price shall not be allocated among the personal
property and the real estate pursuant to this Agreement.
29
<PAGE>
3. ASSUMED CONTRACTS.
As of the Effective Closing Date the Buyer shall assume the following
contracts of Seller, and all liabilities thereunder, which contracts constitute
a portion of the Assumed Liabilities as shown on Schedule 2.2:
3.1. The Collective Bargaining Agreement between Smith and the
American Flint Glassworks Union effective June 1, 1995 to September 1, 1998;
3.2. All of Seller's obligations under the Credit and Security
Agreement by and between Integra Business Credit Company ("IBCC") and Smith
dated as of September 2, 1993 (the "Integra Agreement"); provided that IBCC or
its assigns consents to the assignment and assumption and releases Smith, the
Trustee and their affiliates from said obligation thereof;
3.3. All of Seller's obligations under the following automobile
installment agreements: (a) in the principal amount of $29,195.00, payable in
monthly installments of $790.00, including interest at 8.5% through November,
1998, and (b) in the principal amount of $12,318.00, payable in monthly
installments of $535.00, including interest at 8.25% through May 1997; provided
that either (i) the holder of such installment agreements or its assigns
consents to the assignment and assumption thereof, or (ii) the Bankruptcy Court
presiding over the PFB Bankruptcy Case or the Smith bankruptcy, if any,
authorizes such assumption and assignment pursuant to Section 365 of the
Bankruptcy Code, and in either event as described in (i) or (ii) above, Smith,
the Trustee and their affiliates are released from said obligation thereof;
3.4. All of Seller's obligations under the Promissory Note payable to
Libbey Glass, Inc. in the original principal amount of $743,213.81 dated
September 2, 1993; provided that Libbey Glass, Inc. or its assigns consents to
the assignment and assumption and releases Smith, the Trustee and their
affiliates from said obligation thereof;
3.5. All of Seller's obligations under the Release and Settlement
Agreement by and between Smith and Frick Hospital and Community Health Center
dated May 31, 1995; provided that Frick Hospital and Community Health Center or
its assigns consents to the assignment and assumption and releases Smith, the
Trustee and their affiliates from said obligation thereof;
3.6. Pitney Bowes.
(a) Star 110 UPS Shipping and Mailing System, fifty one (51) month
lease payable quarterly at $1,794.58 per quarter, effective
October 10, 1992.
(b) 9032 Copy Machine and 9300 Fax Machine, thirty six (36) month
lease at $1,036.68 per quarter, effective October 10, 1992.
provided that either (i) Pitney Bowes or its assigns consents to the assignment
and assumption thereof, or (ii) the Bankruptcy Court presiding over the PFB
Bankruptcy Case or the Smith bankruptcy, if any, authorizes such assumption and
assignment pursuant to Section 365 of the Bankruptcy Code, and in either event
as described in (i) or (ii) above, Smith, the Trustee and their affiliates are
released from said obligation thereof;
3.7. AGA. On site oxygen plan to produce oxygen for ten (10) year
period to begin following the date of first production, probably in July or
August 1995. Charge per month is $4,368.00 for equipment maintenance (which
shall be treated as an ongoing operating
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expense of Smith, and Buyer shall not receive a dollar for dollar credit at the
Effective Closing for such contract); provided that either (i) AGA or its
assigns consents to the assignment and assumption thereof, or (ii) the
Bankruptcy Court presiding over the PFB Bankruptcy Case or the Smith bankruptcy,
if any, authorizes such assumption and assignment pursuant to Section 365 of the
Bankruptcy Code, and in either event as described in (i) or (ii) above, Smith,
the Trustee and their affiliates are released from said obligation thereof;
3.8. Energy Sales Company contract dated August 23, 1994; provided
that either (i) Energy Sales Company or its assigns consents to the assignment
and assumption thereof, or (ii) the Bankruptcy Court presiding over the PFB
Bankruptcy Case or the Smith bankruptcy, if any, authorizes such assumption and
assignment pursuant to Section 365 of the Bankruptcy Code, and in either event
as described in (i) or (ii) above, Smith, the Trustee and their affiliates are
released from said obligation thereof;
3.9. The Assigned Contracts from and after the date of Effective
Closing.
3.10. Seller's Blue Cross/Blue Shield Select Blue plan effective June
1, 1995; provided that Blue Cross/Blue Shield or its assigns consents to the
assignment and assumption and releases Smith, the Trustee and their affiliates
from said obligation thereof; and
3.11. Seller's 401(k) retirement plans for hourly and non-union
employees effective as of May 1, 1989 and January 1, 1989, respectively;
provided that the trustee of each of such 401(k) plans or its assigns consents
to the assignment and assumption and releases Smith, the Trustee and their
affiliates from said obligation thereof.
4. RETAINED LIABILITIES. Without limiting the generality of the
foregoing section, and regardless of whether any of the following may be
disclosed to Buyer or whether Buyer may have knowledge of the same, Buyer shall
not assume (and shall not be deemed to have assumed) any liabilities, payments
or obligations of Seller other than the Assumed Liabilities, and specifically
Buyer shall not assume (and shall not be deemed to have assumed) any of the
following (collectively, the "Retained Liabilities"):
4.1. Any liability or obligation of Seller or any other member of
Seller's consolidated group related to or arising from any Federal, state,
local or foreign taxes or assessments attributable to any period or portion
thereof terminating on or before the Effective Closing Date and any interest,
penalties and additions to tax with respect thereto, including without
limitation Pennsylvania sales tax;
4.2. Except as set forth in the Assumed Liabilities, any employee
benefit plan (as defined in Section 3(3) of ERISA) or multi-employer plan (as
defined in Section 3(37) of ERISA) of Smith or any similar program, policy or
arrangement, and any related trust or funding arrangement covering any of the
employees of Seller or any liability or obligation thereunder or with respect
thereto;
4.3. Except for the Assumed Liabilities, any liability or obligation
arising out of or based upon suits, claims, proceedings or actions, including
without limitation claims for negligence by Smith (and Smith's employees),
Seller's refusal to honor warranty obligations or product liability in respect
of products manufactured, assembled, delivered, sold or shipped by Smith, or
services provided by Smith (and Smith's employees), on or before the Effective
Closing Date;
4.4. Any liability or obligation related to or arising from the
guarantee (including without limitation any similar obligation) by Seller of
any obligation or indebtedness
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of Seller or any of its affiliates or any of their respective assets; and
4.5. Any Assumed Liability which Seller specifically elects, in
writing at the Actual Closing, to treat as a Retained Liability; provided,
however, that the amount of such Assumed Liabilities which Seller elects to
treat as a Retained Liability shall not exceed the sum of $150,000.00 for the
worker's compensation claim as listed on Schedule 2.2.
5. CLOSING. The actual date of Closing ("Actual Closing" or "Actual
Closing Date") of this transaction shall be (i) no earlier than the date which
is eleven (11) days nor later than thirty (30) days after the Bankruptcy Court
sale of the Assets; or (ii) on such other date mutually agreed to by the parties
in writing. The Buyer and Seller shall each use commercially reasonable efforts
to proceed to the Closing of the transaction contemplated by this Agreement.
Time is of the essence with regard to the Closing contemplated hereby.
Notwithstanding anything to the contrary contained in this Agreement, in the
event that the Actual Closing occurs after July 31, 1995, all Assets and
liabilities of Seller shall be calculated as of the close of business on July
31, 1995 for the purpose of determining the Purchase Price, Initial Adjustment
and the Final Adjustment, and the closing shall be effective as of the close of
business on July 31, 1995 (the "Effective Closing" or "Effective Closing
Date"). From August 1, 1995 through and including the Actual Closing Date,
Buyer shall pay to Seller interest, calculated at a rate equal to the then
current money market account rate paid by Merrill Lynch Money Market Ready Asset
Account on the cash portion of the Purchase Price as set forth in Section 2.3
hereof. If no Actual Closing occurs, then Buyer shall not be obligated to pay
the interest as set forth in the preceding sentence. At the Actual Closing,
title and possession of the Assets shall be irrevocably sold, transferred,
assigned and conveyed to Buyer. The Actual Closing shall be at the offices of
Sable, Makoroff & Gusky, P.C., Seventh Floor, Frick Building, Pittsburgh, PA
15219, or such other location as the parties may mutually agree.
6. BUYER'S CONDITIONS OF CLOSING. The obligations of the Buyer
hereunder to purchase the Assets and close hereunder shall be subject to the
satisfaction (or waiver by Buyer) of the following conditions:
6.1. No action or proceeding shall have been instituted before any
court, agency or other governmental or administrative body to restrain or
prohibit the transactions contemplated hereby; provided, however, in the event
that a sale of the Assets is conducted by the Bankruptcy Court, an appeal from
the Sale Order approving such sale shall not be a failure by Seller to fulfill
this condition and the parties shall proceed to Actual Closing unless expressly
stayed, enjoined or otherwise prohibited by court order.
6.2. The representations and warranties of the Seller contained in
this Agreement shall be true and correct in all respects as of the Actual
Closing Date, with the same effect as though such representations and
warranties had been made on such date.
6.3. All documents contemplated by this Agreement shall be reasonably
satisfactory in form and substance to (a) the Buyer and its counsel, and (b) the
Seller and its counsel. The Buyer shall have received copies of all of such
documents and other evidence as the Buyer and its counsel may reasonably
request in order to establish the consummation of such transactions.
6.4. All filings, if any, required to be made by Seller or any of its
affiliates with any governmental or regulatory authority in order for the
consummation of the purchase
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and sale of the Assets not to be illegal or prohibited shall have been made and
the waiting periods thereunder (including any extension thereof), if any, shall
either have expired or been terminated. Seller shall have obtained, if
specifically required to be obtained by Seller under the terms of this
Agreement, those consents, approvals or orders of any other governmental or
regulatory authority, the granting of which is required by applicable law in
order for the consummation of the purchase and sale of the Assets not to be
illegal or prohibited.
6.5. Seller shall have complied with and performed in all material
respects all the terms, covenants and conditions of this Agreement to be
complied with and performed by it by Actual Closing.
6.6. Seller shall have delivered to Buyer such assignments,
consents, bills of sale, certificates of title and other documents or
instruments of transfer, each of which shall contain warranties of title as
shall be effective to indefeasibly vest in Buyer all of Seller's right, title
and interest in and to all of the Assets being conveyed hereunder, free and
clear of all liens, claims and encumbrances (except for the Permitted
Encumbrances with respect to the real property and the Assumed Liabilities);
6.7. Seller shall have delivered to Buyer the third party consents
listed on Schedule 6.7 hereto or have obtained an order from the Bankruptcy
Court that any such consent not so delivered is not required under the
Bankruptcy Code for the assignment to Buyer of the related contract or lease.
6.8. Seller shall have delivered to Buyer all contracts, files,
commitments and rights pertaining to Seller's Business and other data and
instruments relating to its operations;
6.9. Seller shall have delivered to Buyer the Certificates of Good
Standing for Smith;
6.10. Seller shall have delivered to Buyer a Resolution of Board of
Directors of Smith, if necessary, along with a Certificate of Incumbency of
Directors and Officers, authorizing execution, delivery and performance of this
Agreement and all documents required for Actual Closing;
6.11. Seller shall have delivered to Buyer a Certified copy of
Minutes of Shareholders' meetings of Smith authorizing the entry and completion
of all transactions hereunder;
6.12. Seller shall have transferred all Assets and use rights of the
Business; and
6.13. The Trustee shall have obtained the Sale Order from the
Bankruptcy Court presiding over the PFB bankruptcy case and, if filed, the
Smith bankruptcy case, authorizing the sale of the Assets to the Buyer, after
due notice to all known creditors and subject to higher and better offers at
such bankruptcy sale.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SMITH. Smith hereby
represents, warrants, covenants and agrees as follows. Each of the following
representations and warranties shall be true on the date of this Agreement and
as of the Date of Actual Closing.
7.1. Smith owns the Assets and will sell the same free and clear of
all claims, Liens (as defined herein), mortgages, security interests,
encumbrances, claims and demands of any nature (except for the Permitted
Encumbrances with respect to the real property and the Assumed Liabilities).
7.2. Smith is a corporation duly existing, qualified and in good
standing under
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the laws of the Commonwealth of Pennsylvania, and is and shall be duly empowered
to execute this Agreement and to do any and all things required or desirable for
consummation of all transactions contemplated thereby.
7.3. The execution and performance of this Agreement and the documents
necessary to close have been and will be duly authorized by all prerequisite
corporate proceedings by Seller, including the approval of Smith's Board of
Directors and a majority of its stockholders, if necessary, and, when so
delivered, constitute a legal and binding obligation.
7.4. Execution and delivery of this Agreement and consummation of the
transactions contemplated hereby do not conflict with or result in a breach of
any of the terms, provisions, or conditions of Smith's Certificate of
Incorporation, By-laws, or any statute, regulation, or court or administrative
order or applicable process, nor does execution of this Agreement and
consummation of the transaction contemplated hereby constitute a default
thereunder; Buyer acknowledges that each representation of Smith is made to the
best of Smith's actual knowledge.
7.5. The Assets and the Business shall be operated and maintained in
accordance with Smith's normal operating standard until the Actual Closing,
except reasonable wear and tear incurred in the normal course of Smith's
Business is permitted; provided that Seller shall only make payments and
disbursements that are (i) lawful, (ii) in the ordinary course of business, and
(iii) consistent with historical practices. In no event will Seller make any
material draw requests out of the ordinary course of business under the Integra
Agreement.
7.6. The Seller shall maintain its books, accounts and records in the
ordinary course consistent with past practice. Smith shall perform in all
material respects its obligations under all Material Contracts to which it is a
party or to which it is bound. Smith shall not adopt any new employee benefit
plan or amend to increase the compensation or benefits payable under an
existing employee benefit plan other than pursuant to policies of Smith in
effect on the date of this Agreement. If the Workers' Adjustment Retraining
Notification Act (the "Warn Act") applies to the transaction contemplated by
this Agreement, Seller will provide the appropriate notice. To Seller's
Knowledge, Smith has not effected a "plant closing", "employment loss" or "mass
layoff" as defined in the Warn Act for which a notice was required pursuant to
the Warn Act. Buyer has informed Seller that Buyer does not presently intend
to effect a "plant closing", "employment loss" or "mass layoff" as defined in
the Warn Act, and, accordingly, Buyer and Seller acknowledge that no such notice
is required as a result of the transaction contemplated by this Agreement.
7.7. Seller shall not sell, dispose of, transfer or encumber any of
the Assets after the execution of this Agreement except in the regular course
of its Business or with the express written approval of Buyer.
7.8. Smith holds all necessary licenses and permits to operate its
Business. A true and correct list of such licenses and permits is attached
hereto as Exhibit "D".
7.9. The execution, delivery and performance of this Agreement
between the parties constitutes a legal, valid, binding and enforceable
obligation, and the execution, delivery and performance of this Agreement is
not a violation of any other document, agreement or instrument, and there is no
voluntary agreement between Seller and any other party for the sale of any of
the Assets to be sold under this Agreement subject however to Bankruptcy Court
approval and process.
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7.10. Smith believes the Exhibits to this Agreement set forth are
true, complete and accurate information describing the matters set forth
therein.
7.11. Set forth on Exhibit "F" hereto is a list of all insurance
policies and bonds in force covering Smith and any of its properties, operations
or personnel. Also set forth on Exhibit "F" hereto is a listing of when each
such policy or bond became effective and changes of coverage or premiums over
the past three years. Policies thereon described evidence insurance in such
amounts and against such risks and losses as are generally maintained with
respect to comparable businesses and properties. Seller shall use commercially
reasonable efforts to assign Smith's Blue Cross/Blue Shield Select Blue Plan to
Buyer. Seller shall not assign any other insurance policies to Buyer. Buyer
acknowledges that the assignment of such Blue Cross/Blue Shield Plan is subject
to the consent of the underwriter as set forth in each policy, and that said
underwriter may elect to withhold its consent to the requested assignment. In
the event that the underwriter does not consent to Seller's requested assignment
of the Blue Cross/Blue Shield policies, Buyer shall obtain its own insurance
policy in lieu of the policy for which the underwriter has withheld its consent.
7.12. On information and belief, no representation or warranty by
Smith, or in any certificate, exhibit, schedule or other document furnished or
to be furnished by Smith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein not misleading.
7.13. Investments. Smith does not own any interest in any
corporation or business activity, nor is it a participant in any partnership or
joint venture with any third party.
7.14. Certain Contracts. Schedule 714 sets forth a complete and
correct list of all contracts, agreements, leases or commitments (other than
real property leases), whether in the ordinary course of business or not, to
which Smith is a party, or which is binding upon any material part of the Assets
or property of Smith, involving a present or future obligation to pay funds or
to deliver goods or services, or otherwise representing an aggregate
expenditure of an amount or value in excess of $25,000.00. ("Material
Contracts"); provided, however, that purchase orders of less than $60,000.00
entered into in the ordinary course of business shall not be Material
Contracts. All of the Material Contracts are legally valid and binding, in
full force and effect and enforceable against Smith and, to the best of
Seller's Knowledge (as hereinafter defined), all other parties thereto, in
accordance with their respective terms (except as the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditor rights
generally and laws restricting the availability of equitable remedies and may
be subject to general principles of equity whether or not such enforceability
is considered in a proceeding at law or in equity). As used in this Agreement,
the term "Seller's Knowledge" shall mean and be limited to the actual knowledge
of Michael C. Miller, President, Richard Paul, Chief Financial Officer, Pamela
Mahbod, National Sales Manager - Giftware, and Norman Pennington, National
Sales Manager - Lighting. Except for the existing default by Smith under the
terms of its agreement with IBCC, to Seller's Knowledge there is no existing
default or breach by Seller under any of the Material Contracts, and, except as
set forth on Schedule 7.14, Seller has not received any notice, claim or
allegation of default or material breach thereof by Seller. To Seller's
Knowledge, there is no existing default or breach under any of the Material
Contracts by any other party thereto. A true and complete copy of each Material
Contract (together with all amendments and waivers thereto) has been delivered,
or made available, to Buyer prior to
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the date hereof.
7.15. Tax Matters. Smith's accrual for ad valorem personal property
taxes with respect to a tax period (or portion thereof) ending on or before the
Effective Closing Date will be adequate to cover all liability for such taxes,
and any interest or penalties thereon.
7.16. Litigation. Except as disclosed in Schedule 716 (i) there is
no action, suit, proceeding, arbitration or litigation pending or, to Seller's
Knowledge, threatened against Smith; (ii) neither Smith nor any of its
directors, officers, employees, agents or affiliates has been charged with
violations of any provision of any federal, state, local or foreign law or
administrative ruling or regulation that will have a material adverse effect on
the Assets or the Business; and (iii) Smith has not received any currently
effective written notice of any default, nor, to Seller's Knowledge, is it in
default, under any order, writ, injunction, decree or permit of any court or of
any commission or other administrative or regulatory agency. An action, suit,
proceeding, arbitration or litigation shall be considered "threatened" for
purposes of this Section 7.16 if any of the current officers of Smith has
received notice indicating that an action, suit, proceeding or arbitration may
be commenced.
7.17. Insurance. All insurance policies that currently insure Smith
are listed in Exhibit F (the "Policies") and Seller shall use commercially
reasonable efforts to maintain the Policies in full force and effect until (but
not after) the Effective Closing Date. To Seller's Knowledge, the Policies
cover risks in the operation and conduct of the businesses of a size and nature
similar to Smith. There is no material breach or default with respect to any
provision contained in any Policy, and all premiums, to the extent due and
payable, have been paid or the liability therefor properly accrued.
7.18. Employee Benefit Plans. Except as set forth on Schedule 718,
Smith has not previously and does not as of the applicable date have any
pension, retirement, profit-sharing, employee stock ownership plan, deferred
compensation, stock bonus or other similar plan; medical, vision, dental or
other health plan; life insurance plan; vacation, severance, or other similar
plan or arrangement; stock option, stock appreciation or other similar plan or
arrangement; and no employee benefit plan, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
7.19. Collective Bargaining Agreements; Employment Agreements.
Except as set forth in Schedule 719, Smith is not a party to (i) any collective
bargaining agreement or (ii) any employment agreement or other similar
arrangement, with or for the benefit of any officer, employee or director that
is not subject to cancellation within 90 days by Smith without penalty or
increased cost (collectively, "Collective Bargaining Agreement"). Schedule 719
sets forth a complete and correct list of each Collective Bargaining Agreement
to which Smith is a party.
7.20. Compliance with Law. Except as set forth in Schedule 7.20,
within the thirteen months preceding the date of this Agreement, the Seller has
not been cited, fined or otherwise notified of any asserted past or present
failure to comply with any laws, rules or regulations related to the Business
where the penalty for the violation could have a material adverse effect on the
Assets or the Business and, to Seller's Knowledge, no proceeding with respect
to any such violation (regardless of the date of commencement) is pending or
threatened.
7.21. Permits. Exhibit D sets forth a complete and correct list of
all material
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approvals, permits and licenses (including all export and re-export licenses)
(collectively, "Permits") granted to Seller from any federal, state or local
governmental authority and relating to the Assets or the Business, and
applications for any of the foregoing, which Permits constitute all of the
approvals, permits and licenses sufficient and adequate to carry on the Business
as presently conducted and to own the Assets. Except as disclosed in Exhibit D
to Seller's Knowledge, all Permits necessary in the conduct of the Business as
presently conducted have been obtained and are in full force and effect, and,
within the thirteen months preceding the date of this Agreement, the Seller has
not been cited, fined or otherwise notified of any asserted past or present
material violation of any Permit, and no proceeding is pending or, to Seller's
Knowledge, threatened to revoke or limit any such permit.
7.22. Environmental Matters. Except as set forth in the last sentence
of this Paragraph 7.22 regarding the Seller's Knowledge concerning the draft
environmental report dated November 16, 1994, prepared by ATEC Associates, Inc.,
Seller makes no representation or warranty as to the environmental condition of
the Assets. Seller has provided Buyer with a copy of the draft report dated
November 16, 1994 prepared by ATEC Associates, Inc. To Seller's Knowledge,
without additional investigation, the above referenced ATEC draft report
accurately set forth the condition of the real property as of the date of said
draft report.
7.23. Approvals and Consents. Seller shall use commercially
reasonable efforts to obtain the Sale Order and to obtain or assist in
obtaining any and all assignments, consents, waivers, releases, amendments,
approvals, authorizations, permits, orders and consents of all third parties and
governmental authorities required to be obtained by Seller hereunder and
necessary to the consummation of the transactions contemplated by this
Agreement; provided, however, that Seller shall not be obligated to actually
obtain any permits, licenses, approvals or other items which are to be obtained
by Buyer pursuant to Paragraph 12 hereof to pay any consideration to any person
in connection therewith. Seller shall also use commercially reasonable efforts
to incorporate into any plan or plans of reorganization proposed for either or
both of the entities comprising the Seller and proposed or filed by or on behalf
of the Trustee to incorporate the same protections afforded Purchaser under the
Sale Order pursuant to such plan and the applicable confirmation order.
8. NO REPRESENTATION OR WARRANTY; EXPRESS OR IMPLIED. Except as
otherwise expressly provided in this Agreement, the Seller makes, has made, or
shall be deemed to make or have made, no representation or warranty, express or
implied, as to the title, value, condition, design, operation, merchantability,
suitability or fitness for a particular use or quality of any of the purchased
assets, or as to the absence of latent or patent or other defects, whether or
not discoverable, or any other representation or warranty whatsoever with
respect to the purchased Assets. Except as otherwise expressly provided in this
Agreement, all Assets being sold pursuant to this Agreement are sold, "AS IS,
WHERE IS" on the Effective Closing Date and in their then present condition and,
except to the extent otherwise expressly stated, the foregoing provisions are
intended, understood, acknowledged and agreed to be a complete exclusion and
negation of any warranties by the Seller, express or implied, with respect to
the Assets whether arising under the Uniform Commercial Code or any similar law
now or hereafter in effect, or otherwise.
9. REPRESENTATIONS AND WARRANTIES OF BUYER.
9.1. Buyer is a corporation duly existing, qualified and in good
standing under
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the laws of Delaware, and is and shall be duly empowered to execute this
Agreement and to do any and all things required or desirable for consummation of
all transactions contemplated thereby.
9.2. The execution and performance of this Agreement and the documents
necessary to close have been and will be duly authorized by all prerequisite
corporate proceedings by Buyer, including the approval of Buyer's Board of
Directors and a majority of its stockholders and, when so delivered, constitute
a legal and binding obligation.
9.3. The execution, delivery and performance of this Agreement
between the parties constitutes a legal, valid, binding and enforceable
obligation, and the execution, delivery and performance of this Agreement is
not a violation of any other document, agreement or instrument. The execution
and delivery of this Agreement and consummation of the transactions
contemplated hereby do not conflict with or result in a breach of any of the
terms, provisions, or conditions of Buyer's Certificate of Incorporation, By-
laws, or any statute, regulation, or court or administrative order or process
applicable, nor does execution of this Agreement and consummation of the
transaction contemplated hereby constitute a default thereunder; Seller
acknowledges that each representation of Buyer is made to the best of its
actual knowledge.
9.4. There is no litigation, proceeding or governmental investigation
pending or so far as known to Buyer, threatened, against or relating to Buyer
which would affect Buyer's ability to enter into or consummate the transaction
contemplated by this Agreement, nor is there any basis known to Buyer for such
action. Buyer is qualified to obtain all licenses and permits required for the
ownership and operation of the Business.
10. TRANSFER. Simultaneously with the payment of the balance of the
Purchase Price on the date of Actual Closing as specified hereinabove, after
taking into account the Assumed Liabilities and other adjustments that are
contemplated by this Agreement, Seller shall convey by special warranty deed all
of the real property described on Exhibit "A" and by bill of sale all of the
personal property described in Exhibit "B" to Buyer or by assignment or
endorsement of certificates of title, as the case may be, free of all Liens
(except for the Permitted Encumbrances with respect to the real property).
"Permitted Encumbrances" shall mean all exceptions, restrictions, easements,
rights of way and encumbrances against the real property specified in
preliminary reports of title insurance, survey report and survey plans delivered
to Buyer concurrent with the execution of this Agreement by the Trustee which
do not singularly or in the aggregate cause the title to the real property to be
unmarketable and such other imperfections in title, if any, which do not
substantially and materially interfere with either the title or present or
continued use of the real property in the manner in which such property is
currently used.
Seller and Buyer shall equally share the cost, if any, of any real estate
transfer taxes. Seller's share of such transfer taxes shall be deducted from
the Purchase Price at Actual Closing.
11. PRORATION OF CERTAIN ITEMS. Prepaid items, real property taxes,
utilities, and other accrued but unpaid (as of the Effective Closing Date)
expenses which are not assumed by Buyer as an Assumed Liability and which are
customarily prorated, shall be prorated as of the Effective Closing Date such
that Seller is responsible for such expenses accruing prior to the Effective
Closing and Buyer is responsible for expenses for Assets accruing from and after
the Effective Closing.
12. LICENSES AND PERMITS. After the Actual Closing, Buyer shall, at its
own
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expense obtain all licenses and permits required by law for its use of the
Assets to be sold either by arranging for the transfer from Seller to Buyer of
any of the licenses and permits or by applying for and obtaining new licenses
and permits. Seller shall cooperate in such efforts to the extent reasonably
requested by Buyer, and Buyer shall reimburse Seller for all reasonable out of
pocket expenses incurred and paid by Seller in connection with such
cooperation. Nothing in this Agreement shall require Seller to extend or renew
any of the licenses or permits identified on Exhibit "D", nor shall this
Agreement prevent or inhibit Seller from seeking the return of any bonds or
other security posted in connection with the licenses and permits.
13. INDEMNIFICATION.
13.1. Indemnification by Seller. Seller shall indemnify Buyer and
hold it harmless from and against and in respect of any and all damages, claims,
losses, expenses, obligations and liabilities (including reasonable attorneys'
fees) claimed or assessed against Buyer or to which Buyer may be subject in
connection with any and all claims, suits or asserted liabilities which arise
from or are related to claims of any person or entity in connection with the
liabilities to be retained by Seller as described on Exhibit "G" attached
hereto and made a part hereof including all federal, state, local or foreign
taxes or assessments attributable to any period or portion thereof terminating
on or before the Effective Closing Date (the "Retained Liabilities").
13.2. Indemnification by Buyer. Buyer shall indemnify Seller and
hold them harmless from and against and in respect of any and all damages,
claims, losses, expenses, obligations and liabilities, including reasonable
attorneys' fees, claimed or assessed against Seller or to which Seller may be
subject in connection with any and all claims, suits or asserted liabilities
which arise from or related to claims of any person or entity whomsoever in
connection with the ownership or operation of the Assets or Business after the
Effective Closing Date or the Assumed Liabilities.
14. CLOSING CONDITIONS AND DOCUMENTS. Each party hereto shall use
commercially reasonable efforts to cause all of the obligations imposed upon it
in this Agreement to be duly complied with, to satisfy such conditions to
closing which such party is obligated to satisfy hereunder and otherwise
consummate the transactions contemplated by this Agreement which such party is
obligated to consummate, including the execution of such documents as may
reasonably be necessary or desirable to effectuate the purposes of this
Agreement.
15. PAYROLL MATTERS. Seller shall remain responsible for all payroll
matters prior to Effective Closing, and Buyer shall be responsible therefor
after Closing only to the extent of obligations arising after the Effective
Closing in respect of employees that continue working for Buyer at Buyer's
request.
16. INSPECTION; CONFIDENTIALITY. Seller shall afford to Buyer and its
counsel, auditors and authorized representatives full access to all properties,
management personnel as designated by Seller, records and documents of the
Business, and shall furnish such financial and other information with respect
to the Business, personnel, and property thereof as Buyer may reasonably
require.
In connection with the negotiation of this Agreement, the preparation for
the consummation of the transactions contemplated hereby, and the performance of
obligations hereunder, each party acknowledges that it will have access to
confidential information relating to the other party. Each party hereto shall
treat such information as confidential, preserve the confidentiality thereof
and not duplicate or disclose such information in connection with the
39
<PAGE>
transactions contemplated hereby, except to advisors, lenders consultants and
affiliates who also agree to treat such information as confidential. Seller, at
a time and in a manner which it reasonably determines and after prior notice to
and consultation with Buyer, may notify employees, unions, bargaining agents and
the public at large of the fact of the subject transaction. In the event of the
termination of this Agreement for any reason whatsoever, each party shall return
to the others all documents, work papers and other material (including all
copies thereof) obtained in connection with the transactions contemplated hereby
and will use all reasonable efforts, including instructing its employees and
others who have had access to such information, to keep confidential and not to
use any such information, unless such information is now, or is hereafter
disclosed, through no act or omission of such party, in any manner making it
available to the general public.
17. UNENFORCEABILITY OF ANY PROVISIONS. The unenforceability or
invalidity of any provision of this Agreement shall not affect the
enforceability and validity of the remainder of this Agreement, which shall
continue in full force and effect.
18. BUYER'S CLOSING OBLIGATIONS. At Actual Closing, Buyer shall deliver
to Seller:
18.1. Payment of the balance of the Purchase Price, after taking
the Assumed Liabilities into account, and all other sums due pursuant to this
Agreement;
18.2. Resolution of Board of Directors of Buyer authorizing the
execution of this Agreement and all documents required for closing;
18.3. Execution of all agreements executed by Seller which require
Buyer's agreement and execution;
18.4. Certificate of Good Standing:,
18.5. Instruments of assumption evidencing Buyer's assumption of
the Assumed Liabilities. All such instruments shall be in form and substance
mutually satisfactory to (a) Seller and its counsel and (b) Buyer and its
counsel.
19. BREAK-UP FEE, OVERBID PROCEDURES.
19.1. Break-up Fee Event. Whether or not the transaction
contemplated by this Agreement is consummated, the Seller acknowledges and
agrees that Buyer has made a substantial investment of management time and
incurred substantial out-of-pocket expenses in connection with the negotiation
and execution of this Agreement and the efforts to consummate this transaction.
If the Bankruptcy Court enters an order approving the sale of all or
substantially all of the Assets, in either case in a transaction not involving
Buyer, or any affiliate of Buyer (a "Break-up Fee Event"), Seller shall request
that the Bankruptcy Court approve the payment of a fee to Buyer in the amount of
$50,000.00 (the "Break-up Fee"). The Break-up Fee (if not paid promptly upon
demand) will be granted administrative expense priority, and will be an "Allowed
Administrative Claim" under section 503(b) of the Bankruptcy Code, in the
Seller's bankruptcy cases; however, Buyer will only be entitled to receive one
total Break-up Fee.
19.2. Overbid Procedures. Notwithstanding anything to the contrary
herein, and subject to approval of the Bankruptcy Court, Seller agrees that the
following procedure shall be utilized in connection with the consideration by
the Bankruptcy Court of any acquisition proposal from any other party:
19.2.1. An initial offer must at least equal to the Purchase
Price plus
40
<PAGE>
$75,000.00; and
19.2.2. Any subsequent offer must offer consideration having a
fair market value at least equal to $25,000.00 more than the Purchase Price or
the highest then-pending overbid, whichever is applicable, in each case as
determined by the Bankruptcy Court.
All such overbids must be accompanied by a cash deposit or letter of
credit in the amount of $200,000.00. Any overbid which is not accompanied by
such deposit or letter of credit shall not be considered an eligible bid.
19.3. SELLER COVENANT NOT TO COMPETE.
19.3.1. Seller agrees that, for a period of five (5) years
after the Effective Closing Date, it shall not compete with the Business
through the manufacture, marketing or distribution of any products or services
competitive with those presently manufactured or marketed by Smith.
19.3.2. Seller agrees that a monetary remedy for a breach of
the agreement set forth in this Section will be inadequate and impracticable
and further agrees that such a breach would cause the Buyer irreparable harm,
and that the Buyer shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event of such a
breach, Seller agrees that the Buyer shall be entitled to such injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions as a court of competent jurisdiction shall determine.
19.3.3. If any provision of this Section is invalid in part,
it shall be curtailed, both as to time and location, to the minimum extent
required for it to be valid, effective and enforceable in the particular
jurisdiction in which such restrictions are adjudged to be void or
unenforceable.
19.4. NOTICES. Notice required or permitted hereunder shall be in
writing and shall be delivered by hand or deposited in the United States mail
addressed to the
Seller: Lawrence F. Ranallo, Trustee
c/o Price Waterhouse LLP
600 Grant Street
44th Floor
Pittsburgh, PA 15219
Telecopy: (412) 391-0604
with a copy to: Alan B. Gordon, Esquire
Sable, Makoroff & Gusky, P.C.
Seventh Floor
Frick Building
Pittsburgh, PA 15219
Telecopy: (412) 281-2859
41
<PAGE>
Buyer: Jay H. Lustig
American Glass, Inc.
P.O. Box 505
Belle Vernon, PA 15012
Telecopy: (310) 260-6025
with a copy to: Morris D. Weiss, Esquire
Weil, Gotshal & Manges
701 Brickell Avenue
Suite 2100
Miami, Florida 33131
Telecopy: (305) 374-7159
Any notice given by delivery, mail or courier shall be effective when received.
Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.
19.5. ASSIGNMENT. Except with the express written consent of the
other party hereto, this Agreement shall not be assignable or otherwise
transferred in whole or in part. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Notwithstanding the foregoing, Buyer shall have the right to have the real
property described in Exhibit "A" and the other Assets acquired hereunder
conveyed to a third person or entity which is controlled by or is under common
control with Buyer; provided, however, that any assignment shall not discharge
assignor's liability or obligation to any other party to this Agreement, and all
assignees must specifically acknowledge that said assignees shall assume all
obligations and liabilities of this Agreement.
19.6. BROKERAGE. Seller and Buyer represent that there is no
broker or agent involved in effecting this transaction. Seller and Buyer hereby
agree to indemnify and hold each other harmless for any liability or claim for
the payment of any commission, including interest and attorneys' fees, arising
from the conduct of the other party. These representations are made as part of
the consideration of this transaction. This paragraph shall survive the passage
of title and delivery of the deed and other conveyancing documents.
19.7. HEADINGS. All headings used herein are for convenience and
reference only and shall not be deemed to have any substantive effect.
20. ENTIRE AGREEMENT. This Agreement executed by the parties, and the
exhibits and documents delivered pursuant hereto, constitute the entire contract
between the parties hereto, pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings,
negotiations, and discussions, whether written or oral, of the parties and there
are no representations, warranties, or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein. No supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the parties to be bound thereby.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
22. INSTRUMENTS OF FURTHER ASSURANCE. Each of the parties hereto agrees,
upon the request of the other party hereto, from time to time to execute and
deliver to
42
<PAGE>
such other party all such instruments and documents of further assurance or
otherwise as shall be reasonable under the circumstances, and to do any and all
such acts and things as may reasonably be required to carry out the obligations
of such requested party hereunder and to consummate the transactions provided
for herein.
23. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. The Buyer
and Seller agree that a signature delivered via facsimile shall constitute an
original signature on this Agreement.
24. PUBLICITY. After the filing date of the Motion for Sale, either party
may issue a press release or other public announcement regarding this Agreement
and the transaction contemplated hereby; provided, however, that (i) Seller's
press release or public announcement may not, without the consent of Buyer,
describe or characterize Buyer or Jay H. Lustig other than to identify them by
name; and (ii) Buyer's press release or public announcement may not, without the
consent of Smith and the Trustee, describe or characterize Smith or the Trustee
other than to identify them by name.
NOTICE - THIS DOCUMENT MAY NOT SELL, CONVEY, TRANSFER, INCLUDE OR INSURE THE
TITLE TO THE COAL AND RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR
REFERRED TO HEREIN, AND THE OWNER OR OWNERS OF SUCH COAL MAY HAVE THE COMPLETE
LEGAL RIGHT TO REMOVE ALL OF SUCH COAL AND, IN THAT CONNECTION, DAMAGE MAY
RESULT TO THE SURFACE OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON
OR IN SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR
MODIFY ANY LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR
RESERVED BY THIS INSTRUMENT. (This Notice is set forth in the manner provided
in Section 1 of the Act of July 17, 1957, P.L. 984, as amended, and is not
intended as notice of unrecorded instruments, if any.)
43
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned have
executed this Agreement as of the date first written above.
WITNESS: SELLER:
PITTSBURGH FOOD & BEVERAGE, INC.
___________________________ By: /s/ Lawrence F. Ranallo, Trustee
---------------------------------
Lawrence F. Ranallo, Trustee
SELLER:
ATTEST: L.E. SMITH GLASS COMPANY
___________________________ By: /s/ Michael C. Miller, President
Secretary ---------------------------------
ATTEST: BUYER:
AMERICAN GLASS, INC.
___________________________ By: /s/ Jay H. Lustig
Secretary ---------------------------------
Title: President
------------------------
44
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION OF REAL PROPERTY
----------------------------------
EXHIBIT B
---------
TANGIBLE AND INTANGIBLE PERSONAL PROPERTY
-----------------------------------------
All property and assets of the Business of every kind and description
(except for the "Excluded Assets" as hereinafter defined) wherever located,
including franchises, licenses, permits, trademarks, technology, tradenames,
processes, inventions, royalties and other intangible personal property,
business name(s), patents, and including but not limited to the molds,
inventory, furniture, fixtures, equipment and vehicles.
All rights under Seller's contracts relating to the Business, including all
leases, agreements, and purchase and sale orders of Seller relating to the sale
or purchase of products, materials or services produced or used in connection
with the Business, and including without limitation those contracts, orders and
agreements set further on Exhibit "C" to this Agreement.
All customer files, lists and records of the Business (except for the
specific records hereinafter identified as being part of the Excluded Assets);
Those accounts receivable of Smith which are less than ninety one (91) days
past due at the time of Effective Closing, and all notes receivable and other
claims receivable (other than inter-company notes receivable and claims
receivable which may be owing between Smith and any other companies owned,
controlled, affiliated with or otherwise related to Michael P. Carlow, Larry
Ousky, or Frank Carlow);
Governmental licenses and permits relating to the Business, to the extent
transferrable;
Such other assets, tangible or intangible, including contract rights,
agreements, and licenses, oral or written, relating to the Business;
Except for Excluded Assets, all books, business records and files of the
Business;
Any goodwill of Seller;
Except for Excluded Assets, all deposits and prepayments of Seller to be
prorated at Effective Closing in accordance with Paragraph 11 of the foregoing
Asset Purchase and Sale Agreement;
All other assets and properties reflected on Seller's Audit Report dated
March 31, 1995 (the "March 31 1995 Financial Statement");
The company store adjacent to the manufacturing operations of the Business;
and
The Business telephone number, mailing address and all advertising for the
Business.
45
<PAGE>
EXHIBIT C
---------
CONTRACTS TO BE ASSIGNED TO AND ASSUMED BY BUYER
------------------------------------------------
SPECIFIC CONTRACTS
------------------
The Collective Bargaining Agreement between Smith and the American Flint
Glassworks Union effective June 1, 1995 to September 1, 1998;
All of Seller's obligations under the Credit and Security Agreement by and
between Integra Business Credit Company ("IBCC") and Smith dated as of September
2, 1993 (the "Integra Agreement"); provided that IBCC or its assigns consents to
the assignment and assumption and releases Smith, the Trustee and their
affiliates from said obligation thereof;
All of Seller's obligations under the following automobile installment
agreements: (a) in the principal amount of $29,195.00, payable in monthly
installments of $790.00, including interest at 8.5% through November, 1998, and
(b) in the principal amount of $12,318.00, payable in monthly installments of
$535.00, including interest at 8.25% through May 1997; provided that either (i)
the holder of such installment agreements or its assigns consents to the
assignment and assumption thereof, or (ii) the Bankruptcy Court presiding over
the PFB Bankruptcy Case or the Smith bankruptcy, if any, authorizes such
assumption and assignment pursuant to Section 365 of the Bankruptcy Code, and in
either event as described in (i) or (ii) above, Smith, the Trustee and their
affiliates are released from said obligation thereof;
All of Seller's obligations under the Promissory Note payable to Libbey
Glass, Inc. in the original principal amount of $743,213.81 dated September 2,
1993; provided that Libbey Glass, Inc. or its assigns consents to the assignment
and assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof;
All of Seller's obligations under the Release and Settlement Agreement by
and between Smith and Frick Hospital and Community Health Center dated May 31,
1995; provided that Frick Hospital and Community Health Center or its assigns
consents to the assignment and assumption and releases Smith, the Trustee and
their affiliates from said obligation thereof;
Pitney Bowes.
------------
(a) Star 110 UPS Shipping and Mailing System, fifty one (51) month
lease payable quarterly at $1,794.58 per quarter, effective
October 10, 1992.
(b) 9032 Copy Machine and 9300 Fax Machine, thirty six (36) month
lease at $1,036.68 per quarter, effective October 10, 1992.
provided that either (i) Pitney Bowes or its assigns consents to the
assignment and assumption thereof, or (ii) the Bankruptcy Court presiding over
the PFB Bankruptcy Case or the Smith bankruptcy, if any, authorizes such
assumption and assignment pursuant to Section 365 of the Bankruptcy Code, and in
either event as described in (i) or (ii) above, Smith, the Trustee and their
affiliates are released from said obligation thereof;
AGA. On site oxygen plan to produce oxygen for ten (10) year period to
begin following the date of first production, probably in July or August 1995.
Charge per month is $4,368.00 for equipment maintenance (which shall be treated
as an ongoing operating expense of Smith, and Buyer shall not receive a dollar
for dollar credit at the Effective Closing for such contract); provided that
either (i) AGA or its assigns consents to the assignment and assumption thereof,
or (ii) the Bankruptcy Court presiding over the PFB Bankruptcy Case or the Smith
bankruptcy, if any, authorizes such assumption and assignment pursuant to
Section 365 of the Bankruptcy Code, and in either event as described in (i) or
(ii) above, Smith, the Trustee and their affiliates are released from said
obligation thereof;
Energy Sales Company contract dated August 23, 1994; provided that either
(i) Energy Sales Company or its assigns consents to the assignment and
assumption thereof, or (ii) the Bankruptcy Court presiding over the PFB
Bankruptcy Case or the Smith bankruptcy, if any, authorizes such assumption and
assignment pursuant to Section 365 of the Bankruptcy Code, and in either event
as described in (i) or (ii) above, Smith, the Trustee and their affiliates are
released from said obligation thereof;
Seller's Blue Cross/Blue Shield Select Blue plan effective June 1, 1995;
provided that Blue Cross/Blue Shield or its assigns consents to the assignment
and assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof; and
46
<PAGE>
Seller's 401(k) retirement plans for hourly and non-union employees
effective as of May 1, 1989 and January 1, 1989, respectively; provided that the
trustee of each of such 401(k) plans or its assigns consents to the assignment
and assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof.
GENERAL CATEGORY
----------------
All Permitted Encumbrances and all purchase and sale orders entered into in
the ordinary course of Seller's Business relating to the sale or purchase of
products, materials or services produced or used in connection with the
Business, as well as all oral employment arrangements with Michael C. Miller,
President, Pamela Mahbod, National Sales Manager - Giftware and Norman
Pennington, National Sales Manager - Lighting. To Seller's Knowledge (as
defined in the foregoing Asset Purchase and Sale Agreement), there are no
currently existing written employment agreements between Smith and the aforesaid
employees. Each of the above referenced employees is presently employed
pursuant to oral employment agreements which, to Seller's Knowledge, may be
terminated by either party;
EXHIBIT D
---------
LIST OF PERMITS AND LICENSES
----------------------------
To the best of Seller's Knowledge (as defined in the foregoing Asset
Purchase and Sale Agreement), none.
EXHIBIT E
---------
FINANCIAL STATEMENTS OF L.E. SMITH GLASS COMPANY
------------------------------------------------
DATED MARCH 31, 1995
--------------------
EXHIBIT F
---------
INSURANCE POLICIES AND BONDS
----------------------------
47
<PAGE>
EXHIBIT G
---------
LIABILITIES TO BE RETAINED BY L.E. SMITH GLASS COMPANY
------------------------------------------------------
Any liability or obligation of Seller or any other member of Seller's
consolidated group related to or arising from any Federal, state, local or
foreign taxes or assessments attributable to any period or portion thereof
terminating on or before the Effective Closing Date and any interest, penalties
and additions to tax with respect thereto, including without limitation
Pennsylvania sales tax;
Except as set forth in the Assumed Liabilities, any employee benefit plan
(as defined in Section 3(3) of ERISA) or multi-employer plan (as defined in
Section 3(37) of ERISA) of Smith or any similar program, policy or arrangement,
and any related trust or funding arrangement covering any of the employees of
Seller or any liability or obligation thereunder or with respect thereto;
Except for the Assumed Liabilities, any liability or obligation arising out
of or based upon suits, claims, proceedings or actions, including without
limitation, claims for negligence by Smith, Seller's refusal to honor warranty
obligations or product liability in respect of products manufactured, assembled,
delivered, sold or shipped by Smith, or services provided by Smith, on or before
the Effective Closing Date;
Any liability or obligation related to or arising from the guarantee
(including without limitation any similar obligation) by Seller of any
obligation or indebtedness of Seller or any of its affiliates or any of their
respective assets; and
Any Assumed Liability which Seller specifically elects, in writing at
the Actual Closing, to treat as a Retained Liability; provided, however, that
the amount of such Assumed Liabilities which Seller elects to treat as a
Retained Liability shall not exceed the sum of $150,000.00 for the worker's
compensation liability as shown on Schedule 2.2.
48
<PAGE>
SCHEDULE 2.2
------------
ASSUMED LIABILITIES
-------------------
SCHEDULE 6.7
REQUIRED THIRD PARTY CONSENTS
-----------------------------
The Collective Bargaining Agreement between Smith and American Flint Glassworks
Union effective June 1, 1995 to September 1, 1998.
49
<PAGE>
SCHEDULE 7.14
MATERIAL CONTRACTS
------------------
The Collective Bargaining Agreement between Smith and the American Flint
Glassworks Union effective June 1, 1995 to September 1, 1998;
All of Seller's obligations under the Credit and Security Agreement by and
between Integra Business Credit Company ("IBCC") and Smith dated as of September
2, 1993 (the "Integra Agreement"); provided that IBCC or its assigns consents to
the assignment and assumption and releases Smith, the Trustee and their
affiliates from said obligation thereof;
All of Seller's obligations under the following automobile installment
agreements: (a) in the principal amount of $29,195.00, payable in monthly
installments of $790.00, including interest at 8.5% through November, 1998, and
(b) in the principal amount of $12,318.00, payable in monthly installments of
$535.00, including interest at 8.25% through May 1997; provided that either (i)
the holder of such installment agreements or its assigns consents to the
assignment and assumption thereof, or (ii) the Bankruptcy Court presiding over
the PFB Bankruptcy Case or the Smith bankruptcy, if any, authorizes such
assumption and assignment pursuant to Section 365 of the Bankruptcy Code, and in
either event as described in (i) or (ii) above, Smith, the Trustee and their
affiliates are released from said obligation thereof;
All of Seller's obligations under the Promissory Note payable to Libbey Glass,
Inc. in the original principal amount of $743,213.81 dated September 2, 1993;
provided that Libbey Glass, Inc. or its assigns consents to the assignment and
assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof;
All of Seller's obligations under the Release and Settlement Agreement by and
between Smith and Frick Hospital and Community Health Center dated May 31, 1995;
provided that Frick Hospital and Community Health Center or its assigns consents
to the assignment and assumption and releases Smith, the Trustee and their
affiliates from said obligation thereof;
Pitney Bowes.
------------
(a) Star 110 UPS Shipping and Mailing System, fifty one (51) month lease payable
quarterly at $1,794.58 per quarter, effective October 10, 1992.
(b) 9032 Copy Machine and 9300 Fax Machine, thirty six (36) month lease at
$1,036.68 per quarter, effective October 10, 1992.
provided that either (i) Pitney Bowes or its assigns consents to the assignment
and assumption thereof, or (ii) the Bankruptcy Court presiding over the PFB
Bankruptcy Case or the Smith bankruptcy, if any, authorizes such assumption and
assignment pursuant to Section 365 of the Bankruptcy Code, and in either event
as described in (i) or (ii) above, Smith, the Trustee and their affiliates are
released from said obligation thereof;
AGA. On site oxygen plan to produce oxygen for ten (10) year period to begin
following the date of first production, probably in July or August 1995. Charge
per month is $4,368.00 for equipment maintenance (which shall be treated as an
ongoing operating expense of Smith, and Buyer shall not receive a dollar for
dollar credit at the Effective Closing for such contract); provided that either
(i) AGA or its assigns consents to the assignment and assumption thereof, or
(ii) the Bankruptcy Court presiding over the PFB Bankruptcy Case or the Smith
bankruptcy, if any, authorizes such assumption and assignment pursuant to
Section 365 of the Bankruptcy Code, and in either event as described in (i) or
(ii) above, Smith, the Trustee and their affiliates are released from said
obligation thereof;
50
<PAGE>
Energy Sales Company contract dated August 23, 1994; provided that either (i)
Energy Sales Company or its assigns consents to the assignment and assumption
thereof, or (ii) the Bankruptcy Court presiding over the PFB Bankruptcy Case or
the Smith bankruptcy, if any, authorizes such assumption and assignment pursuant
to Section 365 of the Bankruptcy Code, and in either event as described in (i)
or (ii) above, Smith, the Trustee and their affiliates are released from said
obligation thereof;
Seller's Blue Cross/Blue Shield Select Blue plan effective June 1, 1995;
provided that Blue Cross/Blue Shield or its assigns consents to the assignment
and assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof; and
Seller's 401(k) retirement plans for hourly and non-union employees effective as
of May 1, 1989 and January 1, 1989, respectively; provided that the trustee of
each of such 401(k) plans or its assigns consents to the assignment and
assumption and releases Smith, the Trustee and their affiliates from said
obligation thereof.
The following purchase and sale orders (which are in excess of $60,000.00):
1. Ambrosia Industries
(P.O. #89972)
2. Tuesday Morning, Inc.
(P.O. #63610)
3. Partylite Gifts, Inc.
(P.O. #63911)
SCHEDULE 7.16
LITIGATION
----------
1) L.E. Smith is a party in an Age Discrimination and Civil Rights action
filed with the Equal Employment Opportunity Commission by Robert E. Gianni.
Mr. Gianni is a former employee of L.E. Smith. His employment termination
arose out of a restructuring plan which included the elimination of his
position. In light of these facts, any recovery is doubtful.
2) Pursuant to a letter dated as of June 20, 1995 given by Tim McCarthy,
President of Izabel Lam, L.E. Smith has been notified that Izabel Lam
intends to file an action against L.E. Smith for alleged breach of contract
and intellectual property infringement.
51
<PAGE>
SCHEDULE 7.18
EMPLOYEE BENEFIT PLANS
----------------------
EFFECTIVE DATE
L.E. Smith Glass Company 401K retirement May 1, 1989
plan for hourly employees
L.E. Smith Glass Company 401K retirement January 1, 1989
plan for non-union employees
Blue Cross/Blue Shield Select Blue June 1, 1995
SCHEDULE 7.19
COLLECTIVE BARGAINING AGREEMENTS AND EMPLOYMENT AGREEMENTS
----------------------------------------------------------
The Collective Bargaining Agreement between Smith and the American Flint
Glassworks Union effective June 1, 1995 to September 1, 1998;
All employment arrangements, if any, with Michael C. Miller, President, Pamela
Mahbod, National Sales Manager -Giftware, and Norman Pennington, National Sales
Manager - Lighting . To Seller's Knowledge (as defined in the foregoing Asset
Purchase and Sale Agreement), there are no currently existing written employment
agreements between Smith and the aforesaid employees. Each of the above
referenced employees is presently employed pursuant to oral employment
agreements which, to Seller's Knowledge, may be terminated by either party;
SCHEDULE 7.20
COMPLIANCE WITH LAW
-------------------
None
52
