<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
------------------
Commission File No. 0-23204
VISTA 2000, INC.
----------------
(Exact name of registrant as specified in its charter)
Delaware 58-1972066
- -------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
736 Johnson Ferry Road
Marietta, Georgia 30068
-----------------------
(Address of principal executive offices)
(770) 971-4344
--------------
(Issuer's telephone number)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for at least
the past 90 days. Yes No X
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at September 28, 1996
- ----- ----------------------------------
Common Stock, $.01 par value 18,074,970
<PAGE>
PART I.-FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
September 28,
1996 December 30,
(Unaudited) 1995
------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,003 $ 871
Accounts receivable, net of allowance for doubtful
accounts and returns of $1,485 and $2,230, respectively 15,739 15,910
Inventories 28,296 33,378
Prepaid expenses 1,709 217
Other current assets 271 1,174
------------------------------
Total current assets 47,018 51,550
------------------------------
Property and Equipment, at cost 15,004 13,721
Less: accumulated depreciation 1,958 680
------------------------------
Net property and equipment 13,046 13,041
------------------------------
Other Assets 3,149 720
------------------------------
$ 63,213 $ 65,311
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 704 $ 607
Accounts payable 7,206 12,542
Accrued payroll and related expenses 2,929 4,053
Accrued liabilities 2,685 3,955
------------------------------
Total current liabilities 13,524 21,157
------------------------------
Long-term debt, net of current portion 22,571 23,029
Commitments and Contingencies
Stockholders' Equity
Preferred stock $1 par value, 500,000 shares authorized,
4,220 and 18,418 shares issued and outstanding, respectively 3,984 5,981
Common stock, $.01 par value, authorized 50,000,000 shares,
issued and outstanding, 18,074,970 and 11,626,475 , respectively 181 116
Additional paid-in capital 62,007 36,201
Accumulated deficit (38,219) (20,939)
Currency translation (19) (19)
------------------------------
27,934 21,340
Less: treasury shares and warrants - at cost 816 215
------------------------------
Total Stockholders' equity 27,118 21,125
------------------------------
$ 63,213 $ 65,311
==============================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
VISTA 2000, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Nine Months Nine Months
ended ended
Quarter ended Quarter ended September 28, September 30,
September 28, September 30, 1996 1995 (as
1996 (Unaudited) 1995 (as restated) (Unaudited) restated)
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $ 27,219 2,218 $ 82,491 2,256
Cost of Sales 19,545 1,879 61,438 2,115
--------------------------------------------------------------------
Gross profit (loss) 7,674 339 21,053 141
Operating expenses 8,265 2,382 27,965 4,869
Loss on sale of operating assets of FSPI 8,783 8,783
Write down of Intelock assets 680 680
--------------------------------------------------------------------
Operating loss (10,054) (2,043) (16,375) (4,728)
Other income and (expense)
Interest expense (494) (3) (1,477) (34)
Other income (expense), net (44) (257) 107 (257)
Gain (loss) on sale of assets (19) 466
--------------------------------------------------------------------
Net loss $ (10,611) (2,303) $ (17,279) (5,019)
====================================================================
Weighted average shares outstanding 17,953,870 6,302,464 15,869,245 4,954,669
Loss per common share:
Net loss (0.59) (0.37) (1.09) (1.01)
====================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Vista 2000, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity (Deficit)
Quarter ended September 28, 1996
(Dollars and share amounts in thousands)
<TABLE>
<CAPTION>
Preferred Stock
---------------------------------------------------------------------------------
Series A Series C Series D Common Stock
Shares Dollars Shares Dollars Shares Dollars Shares Dollars
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 29, 1996 1 $ 122 - $ 1,098 3 $ 2,764 18,075 $ 181
Coversions of preferred stock to common stock
Acquisition of treasury stock
Exercise of stock options
Exercise of warrants
Compensatory stock options
Foreign currency translation adjustment
Net (Loss)
=================================================================================
Balance at September 28, 1996 1 $ 122 - $ 1,098 3 $ 2,764 18,075 $ 181
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
Treasury Stock Additional Cumulative Total
and Warrants Paid-in Accumulated Translation Stockholders'
Shares Dollars Capital (Deficit) Adjustment Equity (Deficit)
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 29, 1996 (121) $ (816) $ 61,972 $ (27,608) $ (20) $ 37,693
Coversions of preferred stock to common stock -
Acquisition of treasury stock -
Exercise of stock options -
Exercise of warrants -
Compensatory stock options 35 35
Foreign currency translation adjustment 1 1
Net (Loss) (10,611) (10,611)
---------------------------------------------------------------------------------
Balance at September 28, 1996 (121) $ (816) $ 62,007 $ (38,219) $ (19) $ 27,118
=================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
VISTA 2000, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Nine Months
Quarter ended Quarter ended ended September ended September
September 28, September 30, 28, 1996 30, 1995 (as
1996 (Unaudited) 1995 (as restated) (Unaudited) restated)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows used by operating activities:
Net loss $ (10,611) $ (2,303) $ (17,279) $ (5,019)
Adjustments to reconcile net loss to net cash used
by continuing operations:
Depreciation 469 259 1,632 289
(Gain) Loss on disposal of property and equipment 9,426 -- 8,941 --
Stock based compensation expense 35 -- 1,636 582
(Increase) decrease in operating assets:
Accounts receivable (1,839) (710) (206) (675)
Inventories 24 (1,415) (6,709) (1,580)
Prepaid expenses and other current assets (13) (22) (589) (80)
Deferred charges and other assets 54 146 (168)
Increase (decrease) in operating liabilities:
Accounts Payable 239 796 (2,270) 1,004
Accrued liabilities (335) 2,270 (2,400) 2,195
-------------------------------------------------------------------
Net cash used by operating activities (2,605) (1,071) (17,098) (3,452)
-------------------------------------------------------------------
Cash flows used by investing activities:
Acquisitions, net of cash acquired
American Consumer Products, Inc. -- (13,925) (13,925)
Cash restricted for tender offer ACPI (13,900) (13,900)
Accrual for ACPI tender offer 13,900 13,900
Alabaster Industries, Inc. (157) (157)
Intelock Technologies, Inc. -- 754
Purchases of property and equipment (327) (2,085) (3,942) (2,251)
Deposit on real property under contract for purchase (2,845)
-------------------------------------------------------------------
Net cash used by investing activities (327) (16,167) (6,787) (15,579)
-------------------------------------------------------------------
Cash flows provided by financing activities:
Net proceeds (payments) from short-term borrowings 188 (4,800) (612) (4,896)
Net proceeds (payments) from long-term debt 716 (217) 257 (107)
Net proceeds from sale of property and equipment 1,800 2,735
Proceeds from issuance of common stock, net of issue costs 1,917 1,800 4,369
Proceeds from issuance of preferred stock, net of issue costs 20,417 19,400 20,417
Proceeds from exercise of stock options and warrants -- 1,038 --
Purchase of treasury stock (45) (601) (186)
-------------------------------------------------------------------
Net cash provided by financing activities 2,704 17,272 24,017 19,597
-------------------------------------------------------------------
Effect of exchange rates on cash and cash equivalents 1 -- 0 --
-------------------------------------------------------------------
Net increase (decrease) in cash during period (227) 34 132 566
Cash and cash equivalents at the beginning of the period 1,230 981 871 449
-------------------------------------------------------------------
Cash and cash equivalents at the end of the period $ 1,003 $ 1,015 $ 1,003 $ 1,015
===================================================================
Supplemental disclosure:
Interest paid $ 494 $ 3 $ 1,477 $ 31
Noncash investing and financing activities:
Conversion of debt to common stock $ -- $ -- $ -- $ 720
Acquisition of business:
Fair value of assets acquired $ -- $ 61,380 $ -- $ 63,330
Cash paid (14,668) 14,689)
Common stock issued (800) (1,897)
-------------------------------------------------------------------
Liabilities assumed $ -- $ 45,912 $ -- $ 46,744
===================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Vista 2000, Inc. And Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
(Dollar amounts in thousands except share and per share data)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements as of September 28,
1996 and for the quarter then ended include the accounts of Vista and its
wholly-owned subsidiaries, ACPI, Alabaster, FSPI and Intelock.
The accompanying consolidated financial statements as of September 30,
1995 and for the quarter then ended include the accounts of Vista, ACPI,
Alabaster and FSPI. ACPI was acquired on September 30, 1995, therefore the
consolidated financial statements include only ACPI's balance sheet accounts.
PMI is accounted for as a purchase using the equity method of accounting,
therefore the operating results of PMI are not included in the consolidated
financial statements of Vista. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
Income Taxes
The Company accounts for income taxes under the asset and liability
method, in accordance with Statement of Financial Accounting Standards Number
109 ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using statutory tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. A
valuation allowance is provided for deferred tax assets when utilization of such
asset is not reasonably assured.
Net Loss Per Common Share
Net loss per common share has been calculated using the weighted average
number of shares of common stock outstanding during each period. Fully diluted
net income per common share is not disclosed because the effect of common stock
equivalents would be antidilutive.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from the these estimates.
Stock Based Compensation
The Company's Stock Option Plans are accounted for under APB Opinion 25,
Accounting for Stock Issued to Employees, and related interpretations.
Unaudited Interim Financial Information
The interim financial information as of and for the three months and nine
months ended September 28, 1996 is unaudited and reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods presented. The results for these interim periods are not necessarily
indicative of the results of a full year.
7
<PAGE>
Vista 2000, Inc. And Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
(Dollar amounts in thousands except share and per share data)
(2) Prior Period Adjustments and Form 10-QSB Amendments
The audited financial statements previously issued for the year ended
September 30, 1994 have been restated to reflect two prior period accounting
adjustments. First, previously recognized revenue from the sale of an exclusive
license agreement for one of the Company's products, consideration for which was
substantially in the form of a $1,155 note receivable, has been reversed as a
result of a 1996 investigation initiated by the audit committee of the Board of
Directors. Second, $635 of previously reported sales have been reversed also as
a result of the audit committee investigation referred to above. The effects of
these two prior period adjustments on operations results in a reduction of
revenue, an increase in net loss and an increase in accumulated deficit all in
the amount of $1,790.
The comparative quarterly amounts included in this form 10-Q for the
quarter ended September 30, 1995 have been restated to exclude a portion of the
operating results of Alabaster and all of the operating results of ACPI, whose
dates of acquisition had been incorrectly reported in the previously issued form
10-QSB dated September 30, 1995. Additionally, FSPI sales, cost of goods sold
and net income were overstated by $605, $318 and $287, respectively, due to the
recording of fictitious sales. These restatements resulted in the following
changes in the amounts previously reported in the form 10-QSB issued for the
quarter ended September 30, 1995.
As As
restated reported
-------- --------
Current assets $ 54,829 $ 72,105
Property and equipment - net 13,105 15,792
Other assets 15,174 5,985
Current liabilities 32,539 30,616
Additional paid-in capital 16,263 35,697
Accumulated deficit (11,295) (1,410)
Sales 2,218 16,907
Cost of goods sold 1,879 11,681
Operating expenses 2,382 4,145
Net income (loss) (2,303) 882
Net income (loss) per common share $ (0.37) $ 0.20
(3) Inventories
Inventories consist of the following at September 28, 1996:
Raw materials $ 6,266
Work-in-process 1,462
Finished goods 23,186
Reserve for obsolescence (2,618)
------
$28,296
=======
8
<PAGE>
Vista 2000, Inc. And Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
(Dollar amounts in thousands except share and per share data)
(4) Stockholder's Equity
The company issued warrants, during 1995, to various consultants to
acquire up to 645,529 common shares at prices per share ranging from $2.00 to
$12.00. As of September 28, 1996, there were 375,529 of these warrants issued
and outstanding.
Upon completion of the Company's initial public offering, the company
agreed to sell to the underwriters warrants to acquire up to 100,000 shares of
common stock at an exercise price per share of $9.08. Each common share carried
two (2) warrants for the purchase of up to 200,000 shares of the Company's
common stock at $11.55 per share.
During the Company's initial public offering, which occurred in October,
1994, there were warrants issued for the purchase of 2,300,000 shares of the
Company's common stock. For the first two years after issuance the exercise
price per share was $7.00. During the subsequent two year period ending October
26, 1998, the exercise price increases to $10.00 per share. As of September 28,
1996, all of these warrants were issued and outstanding.
In March 1994, the Company issued 235,598 of its 1994 Convertible
Debenture Warrants to all the former debenture holders that acquired common
stock of the Company on September 30, 1993 pursuant to their right of
conversion. The 1994 Warrants provide for the purchase of one share of common
stock at an exercise price of $2.50 per share and may be exercised for a three
year period commencing 24 months from the date of issuance, which was March
1994. As of September 28, 1996, all of these warrants were issued and
outstanding.
On March 11, 1994, the Board of Directors authorized a one-for-two reverse
common stock split. On November 30, 1993, the Board of Directors authorized a
two-for-three reverse common stock split. All references to number of shares and
to stock warrants as well as per share information have been adjusted to reflect
the stock splits on a retroactive basis.
Warrants for the purchase of 26,085 shares of Company common stock that
were issued during 1993 in conjunction with debentures sold by the Company were
issued and outstanding at September 28, 1996. The warrants, which carry an
exercise price of $9.00 each, may be exercised in whole or in part at any time
during the two year period ending January 1997.
The Company has adopted stock option plans providing for the issuance of
options covering up to 1,450,000 shares of common stock to be issued to
officers, directors, or consultants to the Company. Various vesting conditions
apply to these options, based on either tenure or certain performance criteria.
For options granted at strike prices less than the fair market value of the
underlying shares on the date of the grant, the difference in value is
recognized as compensation expense over the applicable vesting periods. This
resulted in charges to operating expense amounting to $35 for the quarter ended
September 28, 1996.
During 1995, the board approved the adoption of an Employee Stock Purchase
plan and authorized the Company to reserve 2,000,000 shares for this plan.
9
<PAGE>
Vista 2000, Inc. And Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1996
(Dollar amounts in thousands except share and per share data)
(4) Stockholder's Equity-(continued)
Stock Options
Stock option transactions during the quarter ended September 28, 1996 are
summarized as follows:
Outstanding at June 29, 1996 598,950
Granted 0
Exercised (0)
Canceled (0)
-------
Outstanding at September 28, 1996 598,950
=======
Series Convertible Preferred Stock
The Company has designated 142,000 of its 500,000 authorized preferred
shares as follows:
Shares Authorized Liquidation preference per share
----------------- --------------------------------
Series A 100,000 $100
Series B 20,000 $1,000
Series C 2,000 $10,000
Series D 20,000 $1,000
The remaining 358,000 authorized preferred shares have not been designated
as a series. The preferred stock is recorded net of issuance costs.
The preferred stock is convertible into Company common stock based on a
formula defined in the several subscription agreements. The preferred stock is
convertible at various times after its issuance. The conversion price is based
on a discount to the market price of the Company's common stock on the date of
conversion. Because the Company's common stock has been delisted by NASDAQ,
there is uncertainty as to the number of shares of the Company's common stock
required to be issued in a preferred stock conversion.
The Company may not pay any common stock dividends unless all preferred
stock dividends have been paid.
(5) Related Party Transactions
ACPI leases two facilities from related parties. One building houses its
corporate headquarters and certain manufacturing and distribution operations.
The other building houses certain warehousing and distribution operations. The
leases have initial lease terms expiring in 1999 and 2001 and three five-year
renewal options. In accordance with a 1995 agreement, the Company made a cash
deposit payment to acquire these two facilities during the quarter ended March
30, 1996 of approximately $2,845. The balance of the approximate $7,000 purchase
price is to be satisfied through the assumption or refinance of certain mortgage
liabilities by the Company.
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
All statements, other than statements of historical fact, included in this
Quarterly Report including, without limitation, the statements under "
"Management" Discussion and Analysis of Financial Condition and Results of
Operations" are, or may be deemed to be, forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. Important factors
that could cause actual results to differ materially from those discussed in
such forward-looking statements ("Cautionary Statements") include: the general
strength or weakness of the consumer products industry and the pricing policies
of competitors. All subsequent written and oral forward-looking statements
attributable to Vista or persons acting on the behalf of Vista are expressly
qualified in their entirety by such Cautionary Statements.
Sales and Cost of Sales
1996 Compared to 1995 Total revenues in the quarter ended September 28,
1996 were $27,219,000 versus $2,218,000 for the quarter ended September 30,
1995. The increase is substantially attributable to the 1995 acquisitions of
ACPI and Alabaster subsequent to June 30, 1995. In addition operations and sales
of FSPI commenced during the third quarter of 1995. Cost of sales for the
September 1996 period were $19,545,000 compared to a cost of sales in the 1995
period of $1,879,000. 1996 gross margins are approximately 28% which is close to
the historical rates generated by ACPI. ACPI contributed approximately 94% of
consolidated revenues during the September 1996 quarter.
Operating expenses
Operating expenses (selling, general and administrative expenses) totaled
$8,265,000 for the quarter ending September 28, 1996, as compared to $2,382,000
for the same quarterly period of 1995. The increase is substantially
attributable to the 1995 acquisitions of ACPI and Alabaster subsequent to June
30, 1995. In addition operations and sales of FSPI commenced during the third
quarter of 1995.
Liquidity and Capital Resources
As of the September 1996 quarter the Company had $1,003,000 in cash and
equivalents. Under the ACPI revolving line of credit, which extends through
April 1997, the maximum amount of the line was $28,900,000. The line
availability as of September 28, 1996, was $25,800,000, of which $22,500,000 had
been drawn. Management is negotiating renewal of the line of credit with several
potential lenders, however there can be no assurance that the line of credit
will be renewed or replaced.
11
<PAGE>
PART II. --OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company is involved in lawsuits in the ordinary
course of business. Such lawsuits have not resulted in any material losses to
date, and the Company does not believe that the outcome of any existing lawsuits
would have a material adverse effect on its business.
During the quarter ended June 29, 1996, the Company together with certain
former officers, directors and third parties was named as a defendant in
approximately seventeen (17) class action lawsuits, filed by persons and
entities who purchased the common stock and warrants of the company during the
period November 11, 1994, through and including April 15, 1996, in the United
States District Court for the Northern District of Georgia. On July 9, 1996, the
district court ordered that the complaints be consolidated for all purposes. On
July 23, 1996, the plaintiffs filed a consolidated class action complaint
("Complaint") alleging violations of Section 10(b) of the Securities Exchange
Act of 1934, and Rule 10b-5 promulgated thereunder, and an additional claim
under Georgia common law for alleged negligent misrepresentations. The complaint
named as defendants the Company; Richard P. Smyth, the former Chairman of the
Board and Chief Executive Officer of the Company; Arnold E. Johns formerly
President and a director of the Company; Roemmich & Seymour ("R&S"), P.C.
("R&S"), the Company's former outside auditor; and the principals of R&S, Roger
Roemmich and J. Alan Seymour.
The Complaint alleged that throughout the period from November 11, 1994
through April 15, 1996, Vista issued materially false and misleading financial
statements that caused the market price of Vista securities to trade at
artificially inflated prices.
On August 29, 1996 the district court certified plaintiffs as
representatives of a of a class of all persons who purchased the Company's
common stock and/or warrants during the period from October 24, 1994 through
June 8, 1996 except the defendants, all present and former officers, directors
and employees of the Company, all underwriters of the Offering, members of the
immediate families of each of the foregoing and any person, firm, trust,
corporation, officer, director or other individual or entity in which any of the
defendants has a controlling interest or which is related to or affiliated with
any of the defendants, and the legal representatives, heirs,
successors-in-interest or assigns of any such excluded party. Also specifically
excluded from the Class were all individuals or entities who acquired Vista
common stock and/or warrants through Vista's employee profit sharing,
retirement, benefit or incentive program.
On March 14, 1997, a settlement was confirmed by the entry of a Final
Judgment and Order of Dismissal with Prejudice. The settlement provides, among
other things, that the Company will issue shares of its common stock (and
provide certain anti-dilution protection) to the plaintiffs and the Class in
order to convey ownership of 40% of the Company's common stock. The Company's
insurance carrier also contributed $300,000 to the settlement. The settlement is
in satisfaction of all claims of the Class.
12
<PAGE>
Item 1. Legal Proceedings-(continued)
The Company has been notified by the Securities and Exchange Commission
("SEC") that it has commenced a formal private investigation of the Company. The
Company intends to cooperate with the SEC in this matter. The Company cannot
predict the eventual outcome of this investigation. Independently, the Company
through its Audit Committee has conducted an internal investigation of the facts
and circumstances surrounding the investigation.
Management and legal counsel are unable to determine the possible outcome
of these matters at this time. Accordingly, no liability for possible losses has
been accrued for these matters.
Item 2. Changes in Securities
There have been no material modifications in the instruments defining the
rights of shareholders. None of the rights evidenced by the shares of the
Company's common stock have been materially limited or qualified by the issuance
or modification of any other class of securities.
Item 3. Defaults Upon Senior Securities
There have been no material defaults in the payment of principal,
interest, sinking fund installment or any other material default not cured
within 30 days, with respect to any indebtedness of the Company exceeding five
percent (5%) of the total assets of the Company.
Item 4. Submission of Matters to a Vote of Security holders
During the period covered by this report, no matters were submitted to the
vote of the Security holders of the Company.
Item 5. Other Information
On June 7, 1996, Vista elected six (6) new directors to its Board of
Directors, bringing the total number of directors to nine (9). These new
directors had not previously been associated with the Company, other than as
stockholders. On July 17, 1996, the remaining three (3) original directors
resigned their positions. Their positions have not been subsequently filled. On
November 12, 1996, one (1) of the new directors resigned leaving five (5)
directors serving on the board of directors.
On August 23, 1996, the Company sold substantially all the assets of FSPI.
The proceeds from the sale consisted of $2,700,000 in assumption of trade
obligations and $1,900,000 in cash and a note receivable. The company recognized
a non-recurring loss on the sale of about $8,800,000.
13
<PAGE>
Item 5. Other Information-(continued)
During the quarter ended September 28, 1996, the Company's subsidiary,
Intelock, ceased operations due to a lack of working capital. The write down of
the assets of Intelock resulted in a non-recurring charge to earnings of about
$680,000. The company is actively seeking a purchaser for the remaining
inventory and equipment owned by Intelock.
Item 6. Exhibits and Reports on Form 8-K
(a) See Index to Exhibits
(b) During the three months ended September 28, 1996, the company did not
file any form 8-K's.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VISTA 2000, INC.
Dated: April 18, 1997 By: /s/ G. Louis Graziadio, III
--------------- ------------------------------------
G. Louis Graziadio, III
Chief Executive Officer (principal
executive officer)
Dated: April 18, 1997 By: /s/ Larry C. Cobb
--------------- ------------------------------------
Larry C. Cobb
Interim Chief Financial Officer
(principal financial officer)
15
<PAGE>
INDEX TO EXHIBITS
(2) Plan of Acquisition, Reorganization, Arrangements, Liquidation or
Succession. Not applicable.
(3) (i) Articles of Incorporation
3.1(a) Certificate of Incorporation (Exhibit 3.1)
(ii) By-Laws
3.2(a) By-Laws (Exhibit 3.2)
(4) Instruments defining rights of security holders, including
indentures
4.1(c) Specimen of Common Stock Certificate (Exhibit 4.1)
4.2(a) Form of Warrant Agreement covering Series A Warrants (Exhibit 4.2)
4.3(c) Specimen of Series A Warrant (Exhibit 4.3)
4.4(b) Form of Preferred Stock Certificate covering Series A Preferred
Stock (Exhibit 4.1)
4.5(b) Form of Preferred Stock Certificate covering Series B Preferred
Stock (Exhibit 4.2)
4.6(b) Form of Preferred Stock Subscription Agreement covering Series B
Preferred Stock (Exhibit 4.3)
4.7(b) Form of Preferred Stock Certificate covering Series C Preferred
Stock (Exhibit 4.4)
4.8(b) Form of Preferred Stock Certificate covering Series D Preferred
Stock (Exhibit 4.5)
4.9(b) Form of Preferred Stock Subscription Agreement covering Series D
Preferred Stock (Exhibit 4.6)
(10) Material Contracts
10.1(a) Lease Agreement, dated January 5, 1993 between Roswell Business
Centers Associates, LP and the Company as amended. (Exhibit 10.1)
10.2(a) Patent Rights Purchase Agreement, dated October 1, 1993 between
Blue Ridge Ventures, Inc. and the Company. (Exhibit 10.2)
10.3(a) 1993 Incentive Stock Option Plan (Exhibit 10.4)
<PAGE>
10.4(b) 1993 Non-Employee Director Stock Option Plan, as amended. (Exhibit
10.2)
10.5(a) Form of Series 1992B 15% Subordinated Debenture, as amended.
(Exhibit 10.8)
10.6(a) Form of 1992B Warrant to Purchase Common Stock. (Exhibit 10.9)
10.7(a) Form of Series 1993A 15% Subordinated Convertible Debenture.
(Exhibit 10.10)
10.8(a) Form of 1993A Warrant to Purchase Common Stock. (Exhibit 10.11)
10.9(d) Form of Employment Agreement to be entered into between the
Company and Robert M. Fuller, Richard P. Smyth and Norman W.
Wicks, respectively. (Exhibit 10.12)
10.10(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Robert M. Fuller and the Company. (Exhibit 10.27)
10.11(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Richard P. Smyth and the Company. (Exhibit 10.28)
10.12(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Norman W. Wicks and the Company. (Exhibit 10.29)
10.13(b) Prospectus for the Company's 1993 Incentive Stock Option Plan and
1993 Non- Employee Director Stock Option Plan. (Exhibit 10.1)
10.14(b) First Amendment to the Company's 1993 Incentive Stock Option Plan.
(Exhibit 10.1)
10.15(b) Employment Agreement between the Company and Arnold E. Johns, Jr.
(Exhibit 10.4)
10.16(b) Employment Agreement between the Company's subsidiary, American
Consumer Products, Inc., and Richard Bern. (Exhibit 10.5)
10.17(b) Employment Agreement between the Company's subsidiary, Alabaster
Industries, Inc., and Daniel A. Norris. (Exhibit 10.6)
10.18(b) Employment Agreement between the Company's subsidiary, American
Consumer Products, Inc., and Stephen W. Cole. (Exhibit 10.7)
10.19(f) Employment Agreement between the Company and Robert E. Altenbach.
(Exhibit 10.19)
10.20 Asset Purchase Agreement between Vista 2000, Inc., Family Safety
Products, Inc. and Therm Acquisition, Inc. dated August 23, 1996.
<PAGE>
10.21 Loan and Security Agreement between Alabaster Industries, Inc.
and Century Business Credit Corporation dated September 20,
1996.
(11) Statement re Computation of Per Share Earnings
11.1 Statement re computation of per share earnings is included herein
as Exhibit 11.1 of this Report.
(15) Letter re Unaudited Interim Financial Information Incorporated by
reference, see Page 7 of this Form 10-Q for the Quarter ended
September 28, 1996.
(18) Letter re Change in Accounting Principles
Not applicable.
(19) Report Furnished to Security Holders
Not applicable.
(21) Subsidiaries of the Registrant
21.1(e) Subsidiaries of the Registrant. (Exhibit 21.1)
(23) Consents of Experts and Counsel Not applicable.
(24) Power of Attorney
Not applicable.
(27) Financial Data Schedule (Filed only by Electronic Filers)
27.1 Financial Data Schedule
(99) Additional Exhibits
None.
- ------------------
(a) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Registration Statement on Form SB-2
(Registration No. 33-73118-A). The exhibit number contained in parenthesis
refers to the exhibit number in such Registration Statement.
(b) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 8-K dated June 29, 1996.
The exhibit number contained in parenthesis refers to the Exhibit number
in such Form 8-K.
<PAGE>
(c) Exhibit previously filed as part of and is incorporated by reference to
Amendment No. 2 to the Company's Registration Statement on Form SC-2
(Registration No. 33-73118-A). The exhibit number contained in parenthesis
refers to the exhibit numbers in such Registration Statement.
(d) Exhibit previously filed as part of and is incorporated by reference to
Amendment No. 1 to the Company's Registration Statement on Form SC-2
(Registration No. 33-73118-A). The exhibit number contained in parenthesis
refers to the exhibit numbers in such Registration Statement.
(e) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-K for the fiscal year
ended December 30, 1995. The exhibit number contained in parenthesis
refers to the Exhibit number in such Form 10-K.
(f) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-Q for the quarter
ended March 30, 1996. The exhibit number contained in parenthesis refers
to the Exhibit number in such Form 10-Q.
<PAGE>
EXHIBIT 10.20
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 23th day of August, 1996, by and among Family
Safety Products, Inc., a Georgia corporation ("Seller"), Vista 2000, Inc., a
Delaware corporation ("Shareholder"), and Therm Acquisition, Inc., a Michigan
corporation ("Purchaser").
RECITALS
Seller is engaged in the business of designing, developing, manufacturing
and marketing personal safety, home security and other consumer products (the
"Business").
Purchaser desires to purchase, and Seller desires to sell, substantially
all of the assets of Seller employed or held in connection with the Business,
except as expressly excluded herein, and, as part of such purchase and sale,
Purchaser is willing to assume certain obligations and liabilities of the
Business, to the extent set forth herein.
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
ARTICLE I
SALE AND PURCHASE OF THE BUSINESS
1.1 Sale and Purchase of Assets. Subject to the terms and conditions of
this Agreement, at the Closing (as defined below), Seller shall sell and
transfer to Purchaser, and Purchaser shall purchase and acquire from Seller, all
of Seller's rights, title and interest in and to all of the assets and
properties of Seller employed or held in connection with the Business, except
for the Excluded Assets (as defined below). The assets and properties of Seller
to be transferred to Purchaser hereunder hereinafter are referred to
collectively as the "Assets". The Assets shall include, without limitation, the
following:
(a) all the furnishings, furniture, office supplies, factory supplies,
vehicles, tools, jigs, spare parts, test equipment, machinery and equipment,
communications equipment, computers and computer peripheral equipment and other
fixed assets listed on Schedule 1.1(a);
(b) all quantities of inventory, including raw materials, work-in-
process, finished goods, stores and supplies, listed on Schedule 1.1(b);
<PAGE>
(c) all accounts receivable arising out of the operations of the Business,
including all accounting records of Seller, credit files, notes, guarantees and
collateral relating thereto as listed on Schedule 1.1(c);
(d) all research, development and commercially practiced processes, trade
secrets, know-how, inventions, and manufacturing, engineering and other
technical information, whether owned by Seller or licensed from third parties by
Seller and relating to CO and radon testing units marketed by Seller, as listed
on Schedule 1.1(d) (the "Technology") and all notebooks, records, reports and
data relating to the Technology;
(e) the trademarks, trade names, service marks, and copyrights, and
registrations and applications for such trademarks, trade names, service marks
and copyrights, owned by Seller, as listed on Schedule 1.1(e);
(f) all contracts, agreements, personal property leases, arrangements
and/or commitments of any kind and all customer and supplier contracts,
including, without limitation, those contracts listed on Schedule 1.1(f);
(g) all customers and vendor lists relating to the Business and all files
and documents (including credit information) and other business and financial
records, files, books and documents.
(h) all municipal, state and federal franchises, licenses, authorizations
and permits and licenses.
(i) all computer software owned and/or developed by Seller or licensed to
Seller.
1.2 Excluded Assets. Notwithstanding the foregoing, the follow ing assets,
rights and properties shall be specifically excluded from the transactions
contemplated by this Agreement (the "Excluded Assets"):
(a) cash, bank accounts, certificates of deposit, treasury bills and notes
and marketable securities;
(b) inter-company receivables;
(c) all prepaid taxes, tax refunds and tax returns;
(d) all prepaid charges, sums and fees other than prepaid insurance
premiums; and
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(e) minute books, stock ledger records and related records of Seller;
(f) all books and records which Seller is required by law to retain;
(g) those assets, rights and properties listed on Schedule 1.2 hereto; and
(h) deposits made by Seller with third parties.
1.3 Consents and Authorizations. To the extent that the assignment or
transfer of any contract, license, permit, qualification, lease or the like to
be assigned to Buyer pursuant to this Agreement shall require the consent of any
other party, this Agreement shall not constitute a contract to assign the same
if an attempted assignment or transfer would constitute a breach thereof. Seller
shall be responsible, and Buyer shall cooperate where appropriate, to obtain any
and all consent necessary to any such assignment or transfer.
1.4 Assumed Liabilities of Purchaser.
(a) At the Closing, Purchaser shall (i) assume and be solely liable and
responsible for those liabilities and obligations in respect of the Business
referred to in Schedule 1.4 hereof (the "Trade Payables"), but with respect to
those Trade Payables identified in Schedule 1.4(a), in no event in excess of the
dollar amount set opposite each obligation; and (ii) subject to paragraph (c) of
this Section 1.4, assume and be liable for all claims (and resulting liabilities
and obligations) for breach of warranty (express or implied), property damage
and/or bodily harm first made on or after the Closing Date, whether arising from
the sale of products of the Business prior to or on or after the Closing Date
(the items in clauses (i) and (ii) hereof being referred to collectively as the
"Assumed Liabilities").
(b) The obligations of Purchaser to pay and discharge the Trade Payables
shall be secured by an irrevocable standby letter of credit (the "Letter of
Credit") in the amount of Two Million Two Hundred Forty-Three Thousand Dollars
($2,243,000) having an initial term of one year, to be issued in favor of Seller
by Comerica Bank within thirty (30) days of the Closing. The Letter of Credit
shall contain provisions under which it may be drawn upon by Seller only upon
(i) receipt by the Bank of certified copies of final judgments rendered against
Seller with respect to any Trade Payable; or (ii) if with respect to any of the
Trade Payables litigation is either pending or a judgment with respect to a
Trade Payable has been rendered but is not final, Seller shall, if the Letter of
Credit is not renewed for additional term of one year, have the right to draw
upon the Letter of Credit in the amount certified to the Bank as being
outstanding. Any draw request made under this paragraph (ii) may be made only
during the last five (5)
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<PAGE>
business days the Letter of Credit remains outstanding during its initial one
year term. Seller's draw request shall be accompanied by certified copies of
pending complaints or judgments. Buyer's liability with respect to the Assumed
Liabilities should be reduced dollar for dollar by the amount of any draw made
by Seller upon the Letter of Credit.
(c) With respect to those liabilities and obligations of Seller assumed by
Purchaser under clause (a)(ii), exclusive of liabilities based upon breach of
warranty (express or implied), Purchaser shall at the closing in full discharge
of its obligations with respect to such liabilities, deliver to Seller and
Shareholder evidence that Purchaser has in effect insurance covering such
matters with policy limits no less than Two Million Dollars ($2,000,000) and
deductibles no greater than One Thousand Dollars ($1,000) and naming Seller and
Shareholder as additional loss payees. Under no circumstances shall Seller,
Shareholder or any third party have direct recourse against Purchaser or any of
its Assets for any liabilities, exclusive of warranty claims, for any of
Seller's liabilities assumed under clause (a)(ii) hereof. Such insurance shall
remain in effect no less than three (3) years following the Closing Date.
Except for the Assumed Liabilities, Purchaser shall not be liable or
responsible for any liabilities or obligations of Seller (such liabilities and
obligations being referred to as the "Excluded Liabilities") in respect of the
ownership and operation of the Business prior to the Closing Date (such
liabilities and obligations being referred to as the "Excluded Liabilities").
1.5 No Warranties. Other than as explicitly provided herein, neither
Seller nor Shareholder, makes any representation as to, warranty of or covenant
(whether express of implied) with respect to the Assets or the Business.
The Assets to be acquired by Purchaser hereunder are transferred on an "AS
IS, WHERE IS" basis. The parties acknowledge and agree that the Purchase Price
represent the mutually agreed upon fair market value of the Assets, and neither
party (or their respective permitted successors or assigns) shall have the right
at any time in the future to make any claim or raise any dispute with respect to
the adequacy or fairness of the consideration paid for the Assets.
4
<PAGE>
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price.
(a) The purchase price for the Assets shall be One Million Nine Hundred
Thousand Dollars ($1,900,000.00) (the "Purchase Price"), subject to adjustment
as provided in Section 2.2 below.
(b) The Purchase Price shall be paid by Purchaser to Seller as follows:
(i) At the Closing, Purchaser shall pay, by wire transfer of
immediately available funds to an account designated by Seller, an
aggregate amount equal to One Million Eight Hundred Thousand Dollars
($1,800,000.00); and
(ii) At the Closing, Purchaser shall deliver to Seller its duly
executed non-negotiable promissory note in the aggregate principal amount
of One Hundred Thousand Dollars ($100,000.00), in the form of Exhibit A
attached hereto, with interest on the unpaid principal balance thereof to
accrue at an annual rate equal to eight percent (8%) per annum (the
"Promissory Note"). Repayment of the Promissory Note shall be secured by a
security interest in all of the assets of Purchaser and Purchaser shall
execute a security agreement (the "Security Agreement") in the form of
Exhibit B attached hereto.
(c) Concurrently with the execution of this Agreement, Purchaser is
depositing with Weil, Gotshall & Manges, as escrow agent, (the "Escrow Agent")
the sum of Three Hundred Thousand Dollars ($300,000.00) (the "Deposit"), such
sum to be paid to Seller at the Closing and credited against the amounts owing
pursuant to Section 2.1(b)(i) hereof. If the Closing does not occur for whatever
reason (other than by reason of a breach by Seller of the terms hereof or the
failure of any condition precedent to the obligations of Purchaser to occur
hereunder), such amount shall be paid to Seller as compensation for the costs
and expenses and lost opportunity suffered by Seller. In the event a dispute
shall arise between the Purchaser, the Seller, and the Shareholder concerning
the disposition of the Deposit, the Escrow Agent shall be relieved of all
liability for its disposition upon interpleading the same into a court of
competent jurisdiction. Purchaser, Seller and Shareholder do hereby agree to
indemnify, defend and hold Escrow Agent harmless from all claims, liabilities
and causes of actions connected with its undertaking as Escrow Agent.
5
<PAGE>
2.2 Purchase Price Adjustments.
(a) As promptly as practicable after the Closing Date, Purchaser will
cause to be prepared (i) a statement of the accounts payable less prepaid
expenses plus accounts receivable of the Business as of the Closing Date (the
"Closing Payables/Receivables Statement") and (ii) a statement of the
inventories of the Business as of the Closing Date (the "Closing Inventories
Statement" and, together with the Closing Payables/Receivables Statement, the
"Closing Statements").
(b) In connection with the preparation of the Closing Inventories
Statement, on dates agreed between the Purchaser and Seller, Purchaser and
Seller, together with their respective auditors and agents if either so desires,
shall conduct a joint physical inspection and count of the inventories. The
Closing Statements shall be prepared and the valuations therein made in
accordance with Schedule 2.2. As set forth in such Schedule 2.2, inventory
reflected on the Closing Inventories Statement shall have the values assigned to
such inventory on Seller's June 30, 1996 balance sheet (to the extent the
inventory as of the Closing Date was in existence on such date) and the books
and records of Seller and the purpose of the preparation of the Closing
Inventories Statement solely is to determine the existence of the items of
inventory as of the Closing Date.
(c) As promptly as practicable, but no later than twenty (20) business
days after the Closing Date, Purchaser will cause the Closing Statements to be
delivered to Shareholder.
(d) If Shareholder disagrees with the Closing Statements delivered
pursuant to Section 2.2(c) hereof, Shareholder may, within twenty (20) business
days after its receipt thereof, deliver a written notice to Purchaser
disagreeing with such statement or statements. Any such notice of disagreement
shall specify those items or amounts as to which the Shareholder disagrees, and
Shareholder shall be deemed to have agreed with all other items and amounts
contained in the Closing Statements.
(e) If a notice of disagreement shall be timely delivered pursuant to
Section 2.2(d) hereof, the parties shall, during the ten (10) business days
following such delivery, use their reasonable best efforts to reach agreement on
the disputed items. If, during such period, the parties are unable to reach such
agreement, a nationally recognized accounting firm to which the parties mutually
agree (the "Accounting Referee") shall promptly review this Agreement and the
disputed items or amounts. In connection therewith, the Accounting Referee shall
consider only those items or amounts in the Closing Statements as to which
Shareholder has disagreed. The Accounting Referee shall deliver to Shareholder
and Purchaser, as promptly as practicable, a report setting forth its
adjustments, if
6
<PAGE>
any, to the Closing Statements and the calculations supporting such adjustments.
Such report shall be final and binding upon the parties hereto. The cost of such
review and report shall be borne by the party whose calculation or calculations,
taken together, are furthest from those of the Accounting Referee. As used
herein, "Final Accounts Payables plus Accounts Receivables" and "Final
Inventories" shall mean (i) if no notice of disagreement is delivered by
Shareholder within the period provided in Section 2.2(d), as shown in
Purchaser's calculation delivered pursuant to Section 2.2(c) or (ii) if such
notice of disagreement is delivered by Shareholder, either (A) as agreed in
writing by the Purchaser and Shareholder or (B) as shown in the Accounting
Referee's calculation delivered pursuant to this Section 2.2(e).
(f) If the Final Accounts Payable minus Accounts Receivable is greater
than Two Million Six Thousand Five Hundred Eleven Dollars ($2,006,511), then
Seller shall pay to Purchaser, as an adjustment to the Purchase Price, in the
manner as provided in Section 2.2(i), the amount of such excess. If the Final
Accounts Payable minus Accounts Receivable is less than Two Million Six Thousand
Five Hundred Eleven Dollars ($2,006,511), then Purchaser shall pay to Seller, as
an adjustment to the Purchase Price, in the manner as provided in Section
2.2(h), the amount of such difference.
(g) If during the period commencing August 16, 1996, and ending on the
Closing Date, Seller shall discharge any obligations with respect to any account
payable(s) which are Assumed Liabilities by payment in cash, the Purchase Price
shall be increased dollar for dollar in the manner as provided in Section 2.2(h)
in the amount of any such cash payment, but in no event in excess of
Seventy-Five Thousand Dollars ($75,000.00).
(h) Any amounts due and owing to Purchaser pursuant to Section 2.2(f) in
an amount up to One Hundred Thousand Dollars ($100,000.00) shall result in a
reduction in the principal amount of the Promissory Note by such amount to be
effective as of the date of the issuance of the Promissory Note. If any amounts
pursuant to such sections are due and owing to Purchaser in excess of One
Hundred Thousand Dollars ($100,000.00) or if any amounts are due and owing to
Seller, the payment shall be made by wire transfer (to accounts designated by
Purchaser or Seller, as the case may be) of immediately available U.S. funds on
the first business day following the date on which the amount of such payments
are finally determined. The amount of actual cash payments shall bear interest
for the period from and including the Closing Date to but excluding the payment
date at 8% per annum. Such interest will be payable at the same time as the
payment to which it related and shall be calculated daily on the basis of a year
of 365 days and the actual number of days for which due.
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(i) If the valuation of the Final Inventory as calculated pursuant to
Section 2.2(b) is less than Eleven Million Seven Hundred Fifty Thousand Dollars
($11,750 000.00) Purchaser may rescind this transaction and Seller and
Shareholder shall repay Purchaser all amounts paid to Seller under this
Agreement.
ARTICLE III
CLOSING
3.1 Date of Closing. Subject to the satisfaction of each of the conditions
set forth in Article VII, the closing of the sale and purchase of the Assets
hereunder (the "Closing") shall take place at the offices of Borre, Peterson,
Fowler & Reens, P.C. (or at such other place as the parties may agree in
writing), at 10:00 a.m., local time, on or before August 26, 1996 (the "Closing
Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SELLER
Seller and Shareholder represent and warrant to Purchaser as follows:
4.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all requisite corporate power and authority to own, lease and
operate its Assets and to carry on the Business as now conducted.
4.2 Authorization of Agreement. Each of Seller and Shareholder has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement (collectively, the "Seller Documents"), and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been, and each of the Seller Documents will be at or prior to the Closing, duly
and validly executed and delivered by Seller and Shareholder, as the case my be,
and this Agreement constitutes, and each of the Seller Documents when so
executed and delivered will constitute, the legal, valid and binding obligations
of Seller and Shareholder as the case may be, enforceable against Seller and
Shareholder, as the case may be in accordance with their respective terms.
8
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4.3 Conflicts; Consents of Third Parties.
(a) Neither the execution and delivery by Seller of this Agreement and the
Seller Documents, the consummation by Seller of the transactions contemplated
hereby and thereby, nor compliance by Seller with any of the provisions hereof
or thereof will (i) conflict with, or result in the breach of, any provision of
the certificate of incorporation or by-laws of Seller; (ii) violate any statute,
rule, regulation, judgment or order of any governmental body by which Seller is
bound; or (iii) result in the creation of any lien upon the Assets.
(b) No consent, waiver, approval, order, permit or authorization of, or
declaration or filing with, or notification to, any person or governmental body
is required on the part of Seller in connection with the execution and delivery
of this Agreement or the Seller Documents, or the compliance by Seller with any
of the provisions hereof or thereof.
4.4 Ownership and Transfer of Assets. Exclusive of the Inventory, except
as otherwise disclosed on Schedule 4.4, Seller is the owner of all the Assets,
free and clear of any and all mortgages, liens, security interests, charges and
encumbrances. To the best of Seller's knowledge, Seller is the owner of the
Inventory, free and clear of any and all mortgages, liens, security interests,
charges and encumbrances. All of Seller's Tangible Assets are located at the
locations listed on Schedule 4.4.
Schedule 4.4 specifies whether each Asset is owned or leased by Seller.
All leases, subleases and other agreements under which Seller is lessee or
lessor of any property, real or personal, are in full force and effect and
constitute legal, valid and binding obligations of Seller enforceable in
accordance with their respective terms, and grant the leasehold estates they
purport to grant free and clear of all mortgages, liens, security interests,
charges or encumbrances whatsoever, except as stated in said Schedule 4.4. There
is not, under any of such instruments claimed a default or any event of default
or event which with notice or lapse of time or both would constitute an event of
default.
4.5 Litigation. Except as disclosed on Schedule 4.5, there is no claim,
action, suit, investigation, inquiry, review or proceeding pending, or to the
best knowledge of Seller threatened, against Seller or any of the Assets which,
if adversely determined, would have a material adverse effect on the Assets or
could prevent, hinder or delay consummation of the transactions contemplated by
this Agreement. Seller is not a named subject of any judgment, order, writ,
injunction or decree of any governmental, administrative or judicial authority.
9
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4.6 Accounts Receivable. To the best of Seller's knowledge, the accounts
receivable of the Business have arisen from bona fide business transactions.
4.7 Labor Practices. Except as set forth on Schedule 4.7 attached hereto,
Seller is not now nor has it ever been a party to any collective bargaining
agreement, nor to the best of Seller's knowledge, are there pending any union
organizational activities or efforts to effect a representation election.
4.8 Taxes. Seller has filed all personal property, ad valorem, sales and
use and franchise tax returns and has paid all taxes shown to be due by said
return. Such returns reflect all taxes due and payable with respect to the
periods covered thereby and there are no liabilities, claims, interest or
penalties pending, assessed or asserted or threatened against the Seller in
connection with any such taxes nor any basis therefore. There are no federal or
state tax liens recorded or assessed.
4.9 Liabilities of Seller. Disclosed on Schedule 4.9 attached hereto are
all of Seller's known creditors, including amounts due each creditor.
4.10 Inventory. Since June 30, 1996, only those units of inventory
identified on Schedule 4.10 have been sold or otherwise disposed of by Seller.
4.11 Accuracy and Completeness of Representations and Warranties. To the
best knowledge of Seller, no representation or warranty made by Seller in this
Agreement or in any other Schedule referenced herein prepared by Seller contains
any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements contained therein, in the light of the
circumstances in which they are made, not misleading relating to the business or
affairs of Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and Shareholder that:
5.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Michigan.
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5.2 Authorization of Agreement. Purchaser has full corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Purchaser in connection with the consummation of the
transactions contemplated hereby and thereby (the "Purchaser Documents"), and to
consummate the transactions contemplated hereby and thereby. The execu tion,
delivery and performance by Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary corporate action on behalf
of Purchaser. This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly executed and delivered by Purchaser and this
Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, legal, valid and binding obligations of Purchaser,
enforce able against Purchaser in accordance with their respective terms.
5.3 Conflicts; Consents of Third Parties.
(a) Neither the execution and delivery by Purchaser of this Agree ment and
of the Purchaser Documents, the consummation by Purchaser of the transactions
contemplated hereby and thereby, or compliance by Purchaser with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the certificate of incorporation or by-laws of Purchaser, (ii)
conflict with, violate, result in the breach or termination of, constitute a
default under, or give rise to any right of acceleration under, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which Purchaser is a party or by which Purchaser or its properties or assets is
bound or (iii) violate any statute, rule, regulation, judgment or order of any
governmental body by which Purchaser is bound.
(b) Except as set forth on Schedule 5.3, no consent, waiver, approval,
order, permit or authorization of, or declaration or filing with, or notifi
cation to, any person or governmental body is required on the part of the
Purchaser in connection with the execution and delivery of this Agreement or the
Purchaser Documents or the compliance by Purchaser with any of the provisions
hereof or thereof.
5.4 Litigation. To the best knowledge of Purchaser, there are no legal
proceedings pending or threatened that are reasonably likely to prohibit or
restrain the ability of Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
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ARTICLE VI
COVENANTS
6.1 Access to Information. Seller agrees that, prior to the Closing Date,
Purchaser shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the Assets, Business and operations of Seller and such
examination of the books, records and financial condition of the Business as it
reasonably requests and to make extracts and copies of such books and records.
Any such investigation and examination shall be conducted during regular
business hours and under reasonable circumstances, and Seller shall cooperate
fully therein.
6.2 Conduct of the Business Pending the Closing. Except as otherwise
expressly contemplated by this Agreement or with the prior written con sent of
Purchaser, prior to Closing Seller shall conduct the Business only in the
ordinary course consistent with past practice and not on a liquidation or other
basis, which would result in the accelerated disposition of the Assets. Seller
agrees immediately to terminate any contracts it may have with any organization
attempting to dispose of the Assets on a discounted basis.
6.3 Best Efforts. Seller and Purchaser will cooperate and use their
respective best efforts to fulfill the conditions precedent to the other party's
obligations hereunder, including but not limited to securing as promptly as
practicable all consents, approvals, waivers and authorizations required in
connection with the transactions contemplated hereby.
6.4 Publicity; Confidentiality.
(a) Neither Seller nor Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other party hereto, which
approval will not be unreasonably withheld or delayed, unless disclosure is
otherwise required by applicable law or stock exchange rule; provided that,
prior to making any public announcement required by law or stock exchange rule,
the party intending to make such release shall use its best efforts to consult
with the other party with respect to the text thereof.
(b) Until the Closing Date, Purchaser shall maintain the confidentiality
of the matters set forth herein (except to the extent otherwise publicized by
Shareholder) and shall not in any event contact any suppliers, customers or
other third parties with a relationship to the Business.
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6.5 Tax Matters.
(a) Allocation of Purchase Price. The Purchase Price (including the amount
of the Assumed Liabilities) shall be allocated among the Assets in accordance
with Section 1060 of the Internal Revenue Code and as set forth on Schedule 6.5
hereto. Purchaser and Seller shall file, and shall cause their affiliates to
file, all tax returns and statements, forms and schedules in connection
therewith in a manner consistent with such allocation of the Purchase Price and
shall take no position contrary thereto.
(b) Preparation of Tax Returns; Payment of Taxes. After the Closing Date,
Seller or its affiliates shall pay all taxes as levied by any foreign, federal,
state, municipal or local taxing authority in any jurisdiction with respect to
the ownership, use or lease of the Assets on or prior to the Closing Date and
Purchaser or its affiliates shall pay all such taxes with respect to the
ownership, use, or lease of the Assets after the Closing Date.
(c) Transfer Taxes. Purchaser shall be liable for and shall pay (and shall
indemnify and hold harmless Seller and Shareholder against) all sales, use,
stamp, documentary, filing, recording, transfer or similar fees or taxes or
governmental charges (including, without limitation, real property transfer
gains taxes, real estate and motor vehicle registration, title recording or
filing fees and other amounts payable in respect of transfer filings) as levied
by any taxing authority or governmental agency in connection with the
transactions contemplated by this Agreement (other than taxes measured by or
with respect to income imposed on Seller or its affiliates).
6.6 Noncompetition. Seller and Shareholder agree that for a period of
three (3) years from the Closing Date, they shall not engage anywhere where the
Business presently conducts business, in the manufacture and/or sale of smoke
alarms, radon detectors, carbon monoxide detectors, Combustible Gas Detectors or
trigger guards on a wholesale or retail basis (a "Competing Business"); provided
that nothing herein shall prohibit (x) the acquisition or ownership of up to 5%
of the outstanding voting securities of any corporation or other entity which is
publicly owned or (y) the acquisition by Seller or Shareholder of a diversified
company (the "Acquired Company") that owns a Competing Business, provided that
the Competing Business is disposed of within twelve (12) months after the
acquisition date.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part):
(a) all representations and warranties of Seller contained herein shall be
true and correct as of the date hereof;
(b) all representations and warranties of Seller contained herein shall be
true and correct in all material respects at and as of the Closing Date with the
same effect as though those representations and warranties had been made again
at and as of that time;
(c) Seller shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date;
(d) Purchaser shall have been furnished with certificates of the Seller
and of the Shareholder (dated the Closing Date and in form and substance
reasonably satisfactory to Purchaser) executed by an officer of the Seller and
the Shareholder certifying as to the fulfillment of the conditions specified in
Sections 7.1(a), 7.1(b) and 7.1(c) hereof;
(e) There shall not be in effect any order by a governmental body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(f) Seller shall have complied with its obligations pursuant to Section
8.1 hereof;
(g) Seller and Purchaser shall have entered into a lease in respect of the
premises described in Schedule 7.1(g) hereof on terms mutually acceptable to the
parties; and
(h) Purchaser shall have been furnished with an opinion dated as of the
Closing of Robert Altenbach, P.C., counsel to the Seller, acceptable to
Purchaser.
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7.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agree ment are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by Seller in whole or in
part):
(a) all representations and warranties of Purchaser contained herein shall
be true and correct as of the date hereof;
(b) all representations and warranties of Purchaser contained herein shall
be true and correct in all material respects at and as of the Closing Date with
the same effect as though those representations and warranties had been made
again at and as of that date;
(c) Purchaser shall have performed and complied in all material respects
with all obligations and covenants required by this Agreement to be per formed
or complied with by Purchaser on or prior to the Closing Date;
(d) Seller shall have been furnished with a certificate (dated the Closing
Date and in form and substance reasonably satisfactory to Seller) executed by an
officer of Purchaser certifying as to the fulfillment of the conditions
specified in Sections 7.2(a), 7.2(b) and 7.2(c);
(e) There shall not be in effect any order by a governmental body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consum mation of the transactions contemplated hereby;
(f) Purchaser shall have complied with its obligations pursuant to Section
8.2 hereof;
(g) Seller and Purchaser shall have entered into a lease in respect of the
premises described in Schedule 7.1(g) hereof on terms mutually acceptable to the
parties; and
(h) Seller shall have been furnished with an opinion dated as of the
Closing of Borre, Peterson, Fowler & Reens, P.C., counsel to the Purchaser,
acceptable to Purchaser.
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ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by Seller. At the Closing, Seller shall
deliver, or cause to be delivered, to Purchaser the following:
(a) with respect to the Assets, such deeds, bills of sale, assignments,
special warranty deeds, certificates of title and other good and sufficient
instruments of transfer and conveyance, in form and substance reasonably
satisfactory to Purchaser and its counsel, as shall be effective to vest in
Purchaser, and to evidence the vesting in Purchaser of, good and marketable
title to the Assets as provided for, and subject to the limitations and
exceptions set forth, in this Agreement;
(b) the certificate referred to in Section 7.1(d) hereof; and
(c) the lease referred to in Section 7.1(g).
8.2 Documents and other Items to be Delivered by Purchaser. At the
Closing, Purchaser shall deliver to Seller the following:
(a) payment of the cash portion of the Purchase Price as required by
Section 2.1(b)(i);
(b) its duly executed Promissory Note in the principal amount of One
Hundred Thousand Dollars ($100,000.00);
(c) the Security Agreement;
(d) the duly endorsed insurance policy and/or other documents required by
Section 1.4; and
(e) the certificate referred to in Section 7.2(d) hereof.
ARTICLE IX
INDEMNIFICATION
9.1 Survival. The representations and warranties of Seller and Purchaser
shall survive the Closing for a period of one (1) year after the Closing Date.
Notwithstanding anything to the contrary herein, any representation or warranty
which is the subject of a claim or dispute which is asserted in writing
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prior to the expiration of the one-year period set forth above shall survive
with respect to such claim or dispute until the final resolution and
satisfaction thereof.
9.2 Indemnification.
(a) Subject to the provisions of Sections 9.3 and 9.4 hereof, each Seller
and Shareholder hereby jointly and severally agree to indemnify and hold
harmless Purchaser and its affiliates and their respective directors, officers,
employees, agents, successors and assigns (collectively, the "Purchaser
Indemnified Parties") from and against and in respect of any and all losses
resulting from, arising out of, based on or relating to:
(i) the failure of any representation or warranty of Seller set
forth in this Agreement, any Seller Document or any certificate or
instrument delivered by or on behalf of Seller pursuant to this Agreement
to be true and correct in all respects on the date hereof and on and as of
the Closing Date;
(ii) the breach of any covenant or other agreement on the part of
Seller under this Agreement or any Seller Document;
(iii) any Excluded Liability; or
(iv) the Excluded Assets or the ownership, operation, lease or use
thereof, or any action taken with respect thereto, by Seller or any other
Person.
(b) Purchaser hereby agrees to indemnify and hold harmless Seller,
Shareholder and their respective affiliates, and their respective directors,
officers, employees, agents, successors and assigns (collectively, the "Seller
Indemnified Parties") from and against and in respect of any and all losses
resulting from, arising out of, based on or relating to:
(i) the failure of any representation or warranty of Purchaser set
forth in this Agreement or any Purchaser Document or any certificate and
instrument delivered by or on behalf of Purchaser pursuant to this
Agreement, to be true and correct in all respects on the date hereof and
on and as of the Closing Date;
(ii) the breach of any covenant or other agreement on the part of
Purchaser under this Agreement or any Purchaser Document;
(iii) any Assumed Liability; or
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<PAGE>
(iv) the enforcement of any of Seller's or Shareholder's rights to
indemnification under this Agreement.
9.3 Determination of Damages and Related Matters. In calculating any
amounts payable to Purchaser pursuant to Section 9.2(a) or payable to Seller
pursuant to Section 9.2(b), Seller or Purchaser, as the case may be, shall
receive credit for (i) any actual reduction in tax liability as a result of the
facts giving rise to the claim for indemnification, and (ii) any insurance
recoveries actually received by the party to be indemnified, and no amount shall
be included for Purchaser's or Seller's, as the case may be, special or
consequential damages.
9.4 Limitation on Indemnification Liabilities. Seller shall not be liable
under Section 9.2(a)(i) or (a)(ii) hereof unless the aggregate dollar amount of
all losses, liabilities, damages or expenses (including reasonable attorneys'
fees) indemnified against under such respective Sections exceeds $25,000, and
then Seller and Shareholder shall be liable for the entire amount of such
losses.
9.5 Procedure for Indemnification Claims.
(a) General. For purposes of this Section 9, "indemnified party" or
"indemnified parties" shall refer to the person or persons seeking
indemnification under Section 9.2 or 9.3 above, and "indemnifying party" shall
refer to the person from whom indemnification is sought.
(b) Claims Procedure. If at any time a claim should be made or threatened,
or an action or proceeding should be commenced or threatened, by a third party
against an indemnified party which could result in liability of an indemnifying
party under this Section 9, the party seeking indemnification shall give the
indemnifying party prompt written notice of such claim, action or proceeding.
(c) Defense of Claims. The indemnifying party shall be entitled, at its
own expense, to participate in the defense or settlement of any such claim,
action or proceeding. The indemnifying party, however, shall not be entitled to
control the defense or settlement of such claim, action or proceeding unless
said claim, action or proceeding: (i) seeks solely monetary damages, (ii)
cannot, in the reasonable judgment of the indemnified parties, subject the
indemnified parties to liability or, in the case of a claim with respect to
which Seller is the indemnifying party, adversely affect the Assets or Buyer's
business, operations, condition, prospects or business relationships and (iii)
is a claim, action or proceeding for which the indemnifying party has expressly
acknowledged in writing its obligation to indemnify the indemnified parties.
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(d) Cooperation. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any third
party legal proceeding, claim or demand subject to this Section 9. Such
cooperation shall include mutual access by each of Seller and Buyer to all
documents reasonably required by either party to fulfill its obligations under
this Section 9.
9.6 Treatment of Payment.
(a) Seller and Purchaser agree to treat any indemnity payment made
pursuant to Section 9.2 of this Agreement as an adjustment to the Purchase Price
for federal, state, local and foreign income tax purposes.
(b) Any indemnity payment finally determined to be due and owing to
Purchaser shall be made first in the form of a reduction in the principal
amount, if any, then due and owing under the Promissory Note.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Except as otherwise provided in this Agreement, Seller and
Purchaser shall each bear their own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby.
10.2 Specific Performance. Seller and Shareholder each acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to
Purchaser and that Purchaser will not have an adequate remedy at law. Therefore,
the obligations of Seller under this Agreement, including, without limitation,
Seller's obligation to sell the Assets to Purchaser, shall be enforceable by a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
10.3 Further Assurances. The parties hereto undertake to cooperate in good
faith to ensure that they do such acts and things as may reasonably be necessary
to complete the sale and purchase of the Assets. Seller and Purchaser will use
their reasonable best efforts to obtain any consent, substitution, approval or
amendment required to novate or assign all agreements, leases, licenses and
other rights of any nature whatsoever relating to the Assets, rights and other
things of the Business of value to Purchaser; provided, however, that neither
Seller nor Purchaser shall be obligated to pay any consideration therefor
(except for filing fees and other similar charges) to the third party from whom
such consents, approvals, substitutions and amendments are requested. If Seller
or Purchaser is unable to obtain any such required consent, approval,
substitution or amendment, Seller shall continue to be bound by such agreements,
19
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leases, licenses and other rights and, unless not permitted by law or the terms
thereof, Purchaser shall, as agent for Seller or as subcontractor, pay, perform
and discharge fully all the obligations of Seller thereunder from and after the
Closing and indemnify and hold harmless Seller and its subsidiaries from and
against, all losses, claims, damages, taxes, liabilities and expenses whatsoever
arising out of or in connection with Purchaser's performance of or omission to
perform its obligations thereunder and hereunder. Seller shall, without further
consideration, pay and remit to Purchaser promptly all money, rights and other
consideration received in respect of such performance after payment of any taxes
due from Seller with respect to such receipt. Seller shall exercise their rights
and options under all such agreements, leases, licenses and other rights and
commitments referred to in this Section 10.3 only as reasonably directed by
Purchaser and at Purchaser's expense. If and when any such consent shall be
obtained or such agreement, lease, license or other rights shall otherwise
become assignable or able to be novated, Seller shall promptly assign all its
rights and obligations thereunder to Purchaser without payment of further
consideration and Purchaser shall, without the payment of any further
consideration, assume such rights and obligations. To the extent that the
assignment of any contract or agreement or the proceeds thereof pursuant to this
Section 10.3 is prohibited by law, the assignment provisions of this paragraph
shall operate to create a subcontract with the Purchaser to perform each
relevant, unassignable contract or agreement, and the subcontract price shall be
equal to the money (after tax), rights and other consideration received by
Seller with respect to the performance by Purchaser under such subcontract.
10.4 Worker Adjustment and Retraining Notification Act. If the notice
requirements of 29 USC ss.ss.2101-2109 ("WARN") are triggered by virtue of this
Agreement, Seller shall have the obligation of performing and complying with all
applicable provisions of WARN. If Seller fails to satisfy such requirements,
such failure shall be deemed a material breach of the Agreement and Seller and
Shareholder shall be liable to Purchaser for all direct and indirect damages,
monetary or otherwise, incurred by Purchaser as a result of such breach.
10.5 Entire Agreement; Amendments and Waivers. This Agreement (including
the schedules and exhibits hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any
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provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
10.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Alabama without giving effect to
principles of conflicts of law.
10.7 Headings. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
10.8 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally or
mailed by certified mail, return receipt requested, to the parties (and shall
also be transmitted by facsimile to the persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
If to Purchaser: Therm Acquisition, Inc.
2879 Remico
Grandville, MI 49418
with a copy to: James B. Peterson
Borre, Peterson, Fowler & Reens, P.C.
44 Lafayette, N.E., P.O. Box 1767
Grand Rapids, MI 49501-1767
If to Seller Vista 2000, Inc.
or Shareholder: 736 John Ferry Road
Building C
Marietta, Georgia 30068
Attention: Robert E. Altenbach, Esq.
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Any party may by notice change the address to which notice or other
communications to it are to be delivered or mailed.
10.9 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
10.10 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by any party hereto without the
prior written consent of the other parties hereto and any attempted assignment
without the required consents shall be void.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
FAMILY SAFETY PRODUCTS, INC.
By: /s/ James C. Melton, Sr.
-----------------------------------
Name: James Melton
Title: President
VISTA 2000, INC.
By: /s/ G. Louis Graziadio, III
-----------------------------------
Name: G. Louis Graziadio
Title: Chief Executive Officer
(principal executive officer)
THERM ACQUISITION, INC.
By: /s/ James R. Workman
-----------------------------------
Name: James R. Workman
Title: President
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================================================================================
LOAN AND SECURITY AGREEMENT
================================================================================
CENTURY BUSINESS CREDIT CORPORATION
and
ALABASTER INDUSTRIES, INC.
================================================================================
Dated: September 20, 1996
================================================================================
<PAGE>
Table of Contents
1. (a) General Definitions............................................... 1
(b) Accounting Terms.................................................. 8
(c) Other Terms....................................................... 8
2. Revolving Credit Advances and Demand Loan............................... 8
3. Repayment of the Revolving Credit Advances and Demand
Loan.................................................................... 9
4. Procedure for Revolving Credit Advances................................. 10
5. Interest and Fees....................................................... 10
(a) Interest.......................................................... 10
(b) Fees.............................................................. 11
(i) Minimum Loan Fee.......................................... 11
(ii) Closing Fee............................................... 11
(iii) Collateral Monitoring Fee................................. 11
(iv) Minimum Default Loan Fee.................................. 11
(v) Overadvance Fee........................................... 11
(vi) Financial Information Default............................. 12
6. Security Interest....................................................... 12
7. Representations Concerning the Collateral............................... 12
8. Covenants Concerning the Collateral..................................... 13
9. Collection and Maintenance of Collateral and Records.................... 14
10. Inspections............................................................. 15
11. Financial Information................................................... 15
12. Additional Representations, Warranties and Covenants.................... 16
13. Power of Attorney....................................................... 21
14. Expenses................................................................ 22
15. Assignment By Lender.................................................... 22
16. Waivers................................................................. 23
17. Term of Agreement....................................................... 23
18. Events of Default....................................................... 24
19. Remedies................................................................ 26
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<PAGE>
20. Waiver; Cumulative Remedies............................................. 27
21. Application of Payments................................................. 27
22. Depository Accounts..................................................... 27
23. Lock Box Accounts....................................................... 28
24. Revival................................................................. 28
25. Notices................................................................. 28
26. Governing Law and Waiver of Jury Trial.................................. 29
27. Limitation of Liability................................................. 29
28. Entire Understanding.................................................... 29
29. Severability............................................................ 30
30. Captions................................................................ 30
31. Counterparts............................................................ 30
32. Construction............................................................ 30
33. Publicity............................................................... 30
-ii-
<PAGE>
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made as of September __, 1996 by
and between CENTURY BUSINESS CREDIT CORPORATION ("Lender"), having executive
offices at 119 West 40th Street, New York, New York 10018 and Alabaster
Industries, Inc. ("Borrower"), having its principal place of business at 501
Industrial Road, Alabaster, AL 35007.
WHEREAS, the Borrower has requested that Lender make loans and
advances available to Borrower; and
WHEREAS, Lender has agreed to make such loans and advances to
Borrower on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings and the terms and conditions contained herein, the parties hereto
agree as follows:
1. (a) General Definitions. When used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of any Person means (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (i) to vote five
percent (5.0%) or more of the securities having ordinary voting power for the
election of directors of such Person, or (ii) to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise.
"Amortizing Availability" means $400,000 less $8,333.33 per month
commencing October 1, 1996 and on the first day of each month thereafter,
subject to adjustment as provided in paragraph 8(h) of this Agreement.
"Ancillary Agreements" means all agreements, instruments, and
documents including, without limitation, notes, mortgages, pledges, powers of
attorney, consents, assignments, contracts, notices, security agreements, trust
agreements whether heretofore, concurrently, or hereafter executed by or on
behalf of Borrower or delivered to Lender, relating to this Agreement or to the
transactions contemplated by this Agreement.
"Authority" shall have the meaning set forth in paragraph
12(e)(iii).
"Closing Date" means September __, 1996 or such other date as may be
agreed upon by the parties hereto.
<PAGE>
"Collateral" means and includes:
(A) all Inventory;
(B) all Equipment;
(C) all General Intangibles;
(D) all Receivables;
(E) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned by
Borrower or in which it has an interest) which at any time evidence or contain
information relating to (A), (B), (C) and (D) above or are otherwise necessary
or helpful in the collection thereof or realization thereupon;
(F) documents of title, policies and certificates of
insurance, securities, chattel paper, other documents or instruments evidencing
or pertaining to (A), (B), (C), (D) and (E) above;
(G) all guaranties, liens on real or personal property,
leases, and other agreements and property which in any way secure or relate to
(A), (B), (C), (D), (E) and (F) above, or are acquired for the purpose of
securing and enforcing any item thereof;
(H) (i) all cash held as cash collateral to the extent not
otherwise constituting Collateral, all other cash or property at any time on
deposit with or held by Lender for the account of Borrower (whether for
safekeeping, custody, pledge, transmission or otherwise), (ii) all present or
future deposit accounts (whether time or demand or interest or non-interest
bearing) of Borrower with Lender or any other Person including those to which
any such cash may at any time and from time to time be credited, (iii) all
investments and reinvestments (however evidenced) of amounts from time to time
credited to such accounts, and (iv) all interest, dividends, distributions and
other proceeds payable on or with respect to (x) such investments and
reinvestments and (y) such accounts; and
(I) all products and proceeds of (A), (B), (C), (D), (E), (F),
(G) and (H) above (including, but not limited to, all claims to items referred
to in (A), (B), (C), (D), (E), (F), (G) and (H) above) and all claims of
Borrower against third parties (x) for (i) loss of, damage to, or destruction
of, and (ii) payments due or to become due under leases, rentals and hires of
any or all of (A), (B), (C), (D), (E), (F), (G) and (H) above and (y) proceeds
payable under, or unearned premiums with respect to policies of insurance in
whatever form.
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<PAGE>
"Contract Rate" means an interest rate per annum equal to the
greater of (A) nine percent (9.0%) or (B) the (i) Prime Rate plus (ii) three and
one-quarter percent (3.25%).
"Customer" means and includes the account debtor with respect to any
of the Receivables and/or prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with the Borrower,
pursuant to which the Borrower is to deliver any personal property or perform
any services.
"Default Rate" means a rate equal to three percent (3.0%) per annum
in excess of the Contract Rate.
"Demand Loan" means the demand loan made by Lender to Borrower
pursuant to paragraph 2(d).
"Demand Loan Amount" means $600,000.
"Eligible Inventory" means Inventory which the Lender, in its sole
and absolute discretion, determines: (a) is subject to the security interest of
Lender and is subject to no other liens or encumbrances whatsoever (other than
Permitted Liens); (b) is in good condition and meets all standards imposed by
any governmental agency, or department or division thereof having regulatory
authority over such Inventory, its use or sale including but not limited to the
Federal Fair Labor Standards Act of 1938 as amended, and all rules, regulations
and orders thereunder; (c) is currently either usable or salable in the normal
course of Borrower's business; and (d) not to be ineligible for any other
reason.
"Eligible Receivables" means and includes each Receivable which
conforms to the following criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) merchandise or services shall
not have been rejected or disputed by the Customer and there shall not have been
asserted any offset, defense or counterclaim; (d) continues to be in full
conformity with the representations and warranties made by the Borrower to the
Lender with respect thereto; (e) Lender is, and continues to be, satisfied with
the credit standing of the Customer in relation to the amount of credit
extended; (f) there are no facts existing or threatened which are likely to
result in any adverse change in a Customer's financial condition; (g) is
documented by an invoice in a form approved by Lender and shall not be unpaid
more than ninety days from invoice date; (h) less than thirty-three percent
(33%) of the unpaid amount of invoices due from such Customer remain unpaid more
than ninety days from invoice date; (i) is not evidenced by chattel paper or an
instrument of any kind with respect to or in payment of the Receivable unless
such instrument is duly endorsed to and in possession of the Lender or
represents a check in payment of a Receivable; (j) if the Customer
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is located outside of the United States, the goods which gave rise to such
Receivable were shipped after receipt by the Borrower from or on behalf of the
Customer of an irrevocable letter of credit, assigned and delivered to the
Lender and confirmed by a financial institution acceptable to the Lender and is
in form and substance acceptable to the Lender, payable in the full amount of
the Receivable in United States dollars at a place of payment located within the
United States; (k) such Receivable is not subject to any lien, other than
Permitted Liens; (l) does not arise out of transactions with any employee,
officer, agent, director, stockholder or Affiliate of the Borrower; (m) is
payable to the Borrower; (n) does not arise out of a bill and hold sale prior to
shipment and, if the Receivable arises out of a sale to any Person to which the
Borrower is indebted, the amount of such indebtedness, and any anticipated
indebtedness, is deducted in determining the face amount of such Receivable; (o)
is net of any returns, discounts, claims, credits and allowances; (p) if the
Receivable arises out of contracts between the Borrower and the United States,
any state, or any department, agency or instrumentality of any of them, Borrower
has so notified Lender, in writing, prior to the creation of such Receivable,
and, if Lender so requests, there has been compliance with any governmental
notice or approval requirements, including without limitation, compliance with
the Federal Assignment of Claims Act; (q) is a good and valid account
representing an undisputed bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect to an unconditional sale and delivery upon the stated terms of goods
sold by the Borrower, or work, labor and/or services rendered by the Borrower;
(r) the total unpaid Receivables from such Customer does not exceed twenty
percent (20%) of all Eligible Receivables except with respect to Receivables due
from Walmart which Receivables shall not exceed twenty-five percent (25%) of all
Eligible Receivables; (s) does not arise out of progress billings prior to
completion of the order; and (t) is otherwise satisfactory to the Lender as
determined in good faith by the Lender in the reasonable exercise of its
discretion.
"Environmental Complaint" shall have the meaning set forth in
paragraph 12(e)(iii).
"Equipment" means and includes all of Borrower's now owned or
hereafter acquired equipment, machinery and goods (excluding Inventory), whether
or not constituting fixtures, including, without limitation: plant and office
equipment, tools, dies, molds, parts, data processing equipment, furniture and
trade fixtures, trucks, trailers, loaders and other vehicles and all
replacements and substitutions therefore and all accessions thereto.
"ERISA" shall have the meaning set forth in paragraph 12(f).
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"Event of Default" shall mean the occurrence of any of the events
set forth in paragraph 18.
"Formula Amount" shall have the meaning set forth in paragraph 2(a).
"GAAP" means generally accepted accounting principles, practices and
procedures in effect from time to time.
"General Intangibles" means and includes all of Borrower's now owned
or hereafter acquired general intangibles including, without limitation,
trademarks, tradenames, tradestyles, trade secrets, equipment formulation,
manufacturing procedures, quality control procedures, product specifications,
patents, patent applications, copyrights, registrations, contract rights, choses
in action, causes of action, corporate or other business records, inventions,
designs, goodwill, claims under guarantees, licenses, franchises, tax refunds,
tax refund claims, computer programs, computer data bases, computer program flow
diagrams, source codes, object codes and all other intangible property of every
kind and nature.
"Guarantor" means Vista and any other Person which may hereafter
guarantee payment or performance of the whole or any part of the Obligations and
"Guarantors" means collectively all such Persons.
"Guaranty Agreements" means the Guaranty Agreements which are
executed by each Guarantor in favor of Lender.
"Hazardous Discharge" shall have the meaning set forth in paragraph
12(e)(iii).
"Incipient Event of Default" means any act or event which, with the
giving of notice or passage of time or both, would constitute an Event of
Default.
"Inventory" means and includes all of Borrower's now owned or
hereafter acquired goods, merchandise and other personal property, wherever
located, to be furnished under any contract of service or held for sale or
lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in Borrower's business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
"Inventory Availability" means the amount of Revolving Credit
Advances against Eligible Inventory Lender may from time to time during the Term
make available to Borrower up to the lesser of (a) $400,000 or (b) up to fifty
percent (50%) of the value of Borrower's Eligible Inventory (calculated on the
basis of the lower
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of cost or market, on a first-in first-out basis) or (c) up to 50% of the sum of
Receivables Availability.
"Letters of Credit" means all letters of credit or guarantees opened
or caused to be opened by Lender for Borrower's account and any drafts and
acceptances thereunder.
"Loans" means the Revolving Credit Advances, the Demand Loan and all
extensions of credit hereunder or under any Ancillary Agreement, including,
without limitation, Letters of Credit.
"Maximum Revolving Amount" means $2,500,000 minus the outstanding
principal amount of the Demand Loan.
"Minimum Average Monthly Loan Amount" means $750,000.
"Minimum Default Average Monthly Loan Amount" means $500,000.
"Obligations" means and includes all Loans, all advances, debts,
liabilities, obligations, covenants and duties owing by Borrower to Lender (or
any corporation that directly or indirectly controls or is controlled by or is
under common control with Lender) of every kind and description (whether or not
evidenced by any note or other instrument and whether or not for the payment of
money or the performance or non-performance of any act), direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, whether existing by operation of law or otherwise
now existing or hereafter arising including, without limitation, any debt,
liability or obligation owing from Borrower to others which Lender may have
obtained by assignment or otherwise and further including, without limitation,
all interest, charges or any other payments Borrower is required to make by law
or otherwise arising under or as a result of this Agreement and the Ancillary
Agreements, together with all reasonable expenses and reasonable attorneys' fees
chargeable to Borrower's account or incurred by Lender in connection with
Borrower's account whether provided for herein or in any Ancillary Agreement.
"Overadvances" shall have the meaning set forth in paragraph
5(b)(v).
"Permitted Liens" means (i) liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (ii) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of Borrower in
conformity with GAAP, (iii) liens in favor of Lender, (iv) liens for taxes (a)
not yet due or (b) being
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diligently contested in good faith, provided that adequate reserves with respect
thereto are maintained on the books of Borrower in conformity with GAAP
provided, that, the lien shall have no effect on the priority of liens in favor
of Lender or the value of the assets in which Lender has a lien and (v) liens
specified on Exhibit 1(A) hereto.
"Permitted Mortgage Financing" means indebtedness of at least
$250,000 incurred by Borrower secured by a mortgage lien on Borrower's real
property and improvements thereon located at 501 Industrial Road, Alabaster,
Alabama provided, that (i) the mortgage only encumbers such real property and
not the Collateral; (ii) at such time as an Event of Default shall have occurred
and be continuing, the proceeds of such mortgage loan are received by Borrower
and remitted to Lender for application to the Loans; and (iii) Lender receives a
mortgagee waiver in form and substance satisfactory to Lender from the holder of
such mortgage lien.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prime Rate" means the prime commercial lending rate of Chase
Manhattan Bank, N.A. as publicly announced in New York, New York to be in effect
from time to time as its "prime" or "base" rate of interest and is neither tied
to any external rate of interest or index nor does it necessarily reflect the
lowest rate of interest actually charged to any particular class or category of
customers. Such rate shall be increased or decreased as the case may be for each
increase or decrease in said rate in an amount equal to such increase or
decrease in said rate; each change to be effective as of the day of the change
in such rate.
"Receivables" means and includes all of Borrower's now owned or
hereafter acquired accounts and contract rights, instruments, insurance
proceeds, documents, chattel paper, letters of credit and Borrower's rights to
receive payment thereunder, any and all rights to the payment or receipt of
money or other forms of consideration of any kind at any time now or hereafter
owing or to be owing to Borrower, all proceeds thereof and all files in which
Borrower has any interest whatsoever containing information identifying or
pertaining to any of Borrower's Receivables, together with all of Borrower's
rights to any merchandise which is represented thereby, and all Borrower's
right, title, security and guaranties with respect to each Receivable,
including, without limitation, all rights of stoppage in transit, replevin and
reclamation and all rights as an unpaid vendor.
"Receivables Availability" means the amount of Revolving Credit
Advances against Eligible Receivables Lender may from time to time during the
term of this Agreement make available to Borrower up to eighty percent (80%) of
the net face amount of Borrower's Eligible Receivables.
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"Revolving Credit Advances" shall have the meaning set forth in
paragraph 2(a).
"Subsidiary" of any Person means a corporation or other entity whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Term" means the Closing Date through September __, 1998 subject to
acceleration upon the occurrence of an Event of Default hereunder or other
termination hereunder.
"UCC" shall mean the Uniform Commercial Code as adopted in the State
of New York as in effect from time to time.
"Validity Guarantor" means Daniel Norris, Richard Street and any
other Persons who may hereafter guarantee the validity of the Receivables and
Inventory of Borrower and "Validity Guarantors" means collectively all such
Persons.
"Validity Guaranty Agreements" shall mean the Guaranty of Validity
Agreements which are executed by each Validity Guarantor in favor of Lender.
"Vista" means Vista 2000, Inc., a Delaware corporation.
"Vista Security Agreement" means the Security Agreement dated
July 31, 1995 between Borrower and Vista.
"Vista Subordinated Debt" means the indebtedness of Borrower to
Vista as evidenced by the Vista Subordinated Note.
"Vista Subordinated Mortgage" means the Mortgage, Security Agreement
and Assignment of Rents and Leases dated August 8, 1995 executed by Borrower in
favor of Vista.
"Vista Subordinated Note" means the promissory note dated July 31,
1995 in the original principal amount of $4,800,000 executed by Borrower in
favor of Vista.
"Vista Subordination Agreement" means the Subordination and
Intercreditor Agreement dated as of the Closing Date among Lender, Vista and
Borrower.
(b) Accounting Terms. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP.
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(c) Other Terms. All other terms used in this Agreement and defined
in the UCC, shall have the meaning given therein unless otherwise defined
herein.
2. Revolving Credit Advances and Demand Loan.
(a) Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, Lender may, in its sole discretion, make revolving credit
advances (the "Revolving Credit Advances") to Borrower from time to time during
the term of this Agreement which, in the aggregate at any time outstanding, will
not exceed the lesser of (x) the Maximum Revolving Amount or (y) an amount equal
to the sum of:
(i) Receivables Availability, plus
(ii) Inventory Availability, plus
(iii) Amortizing Availability, minus
(iv) such reserves as Lender may reasonably deem proper and
necessary from time to time, including, without limitation, the outstanding face
amount of Letters of Credit.
The sum of 2(a)(i), plus (ii), plus (iii), minus (iv) shall be referred to
as the "Formula Amount".
(b) Notwithstanding the limitations set forth above, Lender retains
the right to lend Borrower from time to time such amounts in excess of such
limitations as Lender may determine in its sole discretion.
(c) Borrower acknowledges that the exercise of Lender's
discretionary rights hereunder may result during the term of this Agreement in
one or more increases or decreases in the advance percentages used in
determining Receivables Availability and Inventory Availability and in
Amortizing Availability and Borrower hereby consents to any such increases or
decreases which may limit or restrict advances requested by Borrower.
(d) Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, Lender may, in its sole discretion, make a demand loan to
Borrower in the Demand Loan Amount. The Demand Loan shall be payable upon the
earlier of demand by Lender or the last day of the Term.
(e) If Borrower does not pay any interest, fees, costs or charges to
Lender when due, Borrower shall thereby be deemed to have requested, and Lender
is hereby authorized at its discretion to make and charge to Borrower's account,
a Revolving Credit Advance to Borrower as of such date in an amount equal to
such unpaid interest, fees, costs or charges.
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(f) Any sums expended by Lender due to Borrower's failure to perform
or comply with its obligations under this Agreement, including but not limited
to the payment of taxes, insurance premiums or leasehold obligations, shall be
charged to Borrower's account as a Revolving Credit Advance and added to the
Obligations.
(g) Lender will account to Borrower monthly with a statement of all
Revolving Credit Advances and other advances, charges and payments made pursuant
to this Agreement, and such account rendered by Lender shall be deemed final,
binding and conclusive unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days of the date each account was rendered
specifying the item or items to which objection is made.
(h) During the Term hereof, Borrower may borrow, prepay and reborrow
Revolving Credit Advances, all in accordance with the terms and conditions
hereof.
3. Repayment of the Revolving Credit Advances and Demand Loan.
Borrower shall be required to (a) make a mandatory prepayment hereunder at any
time that the aggregate outstanding principal balance of the Revolving Credit
Advances made by Lender to Borrower hereunder is in excess of the lessor of
Formula Amount or the Maximum Revolving Amount in an amount equal to such
excess, and (b) repay on the expiration of the Term (i) the then aggregate
outstanding principal balance of Revolving Credit Advances and the Demand Loan
made by Lender to Borrower hereunder together with accrued and unpaid interest,
fees and charges and (ii) all other amounts owed Lender under this Agreement and
the Ancillary Agreements. Any payments of principal, interest, fees or any other
amounts payable hereunder or under any Ancillary Agreement shall be made prior
to 12:00 noon New York time on the due date thereof in immediately available
funds.
4. Procedure for Revolving Credit Advances. The Borrower may by
written or telephonic notice request a borrowing of Revolving Credit Advances
prior to 11:00 A.M. New York time on the business day of its request to incur,
on that day, a Revolving Credit Advance. All Revolving Credit Advances shall be
disbursed from whichever office or other place Lender may designate from time to
time and, together with any and all other Obligations of Borrower to Lender,
shall be charged to the Borrower's account on Lender's books. The proceeds of
each Revolving Credit Advance made by the Lender shall be made available to the
Borrower on the day so requested by way of credit to the Borrower's operating
account maintained with such bank as Borrower designated to Lender. Any and all
Obligations due and owing hereunder may be charged to Borrower's account and
shall constitute Revolving Credit Advances.
5. Interest and Fees.
(a) Interest.
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(i) Except as modified by paragraphs 5(a)(iii) and 5(b)(iv)
below, Borrower shall pay interest on the unpaid principal balance of the Loans
for each day they are outstanding at the Contract Rate.
(ii) Interest shall be (a) computed on the basis of actual
days elapsed over a 360-day year, (b) calculated by Lender on a daily basis and
billed to Borrower monthly and (c) payable in arrears on the last day of each
month, or, at Lender's option, Lender may charge Borrower's account for said
interest.
(iii) Upon the occurrence and during the continuance of an
Event of Default, interest shall be payable at the Default Rate; provided that
other than with respect to an Event of Default arising as a result of an
Overadvance or as a result of the occurrence of an event described in paragraph
18(k) as to which no notice shall be required, Lender shall provide Borrower
notice of the occurrence of such Event of Default and shall not commence
charging the Default Rate for a period of two (2) days following the date of
such notice.
(iv) Notwithstanding the foregoing, in no event shall interest
exceed the maximum rate permitted under any applicable law or regulation, and if
any provision of this Agreement or an Ancillary Agreement is in contravention of
any such law or regulation, such provision shall be deemed amended to provide
for interest at said maximum rate and any excess amount shall either be applied,
at Lender's option, to the outstanding Loans in such order as Lender shall
determine or refunded by Lender to Borrower.
(v) Borrower shall pay principal, interest and all other
amounts payable hereunder, or under any Ancillary Agreement, without any
deduction whatsoever, including, but not limited to, any deduction for any
set-off or counterclaim.
(b) Fees.
(i) Minimum Loan Fee. In the event the average closing daily
unpaid balances of all Loans hereunder during any calendar month is less than
the Minimum Average Monthly Loan Amount, Borrower shall pay to Lender a minimum
loan fee at a rate per annum equal to the Contract Rate on the amount by which
the Minimum Average Monthly Loan Amount exceeds such average closing daily
unpaid balances. Such fee shall be calculated on the basis of a year of 360 days
and actual days elapsed and such fee shall be charged to Borrower's account on
the first day of each month with respect to the prior month.
(ii) Closing Fee. Upon execution of this Agreement by Borrower
and Lender, Borrower shall pay to Lender a closing fee in an amount equal to
$43,750 which shall be deemed earned by Lender on the Closing Date and shall be
payable $31,250
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on the Closing Date and $12,500 on the earlier of the first anniversary of the
Closing Date or earlier termination of this Agreement.
(iii) Collateral Monitoring Fee. Upon Lender's performance of
any collateral monitoring and/or verification including, without limitation, any
field examination, collateral analysis or other business analysis, the need for
which is to be determined by Lender and which monitoring is undertaken by Lender
or for Lender's benefit, an amount equal to $600 per day, per person, for each
person employed to perform such monitoring together with all costs,
disbursements and expenses incurred by the Lender and the person performing such
collateral monitoring and/or verification shall be charged to Borrower's
account.
(iv) Minimum Default Loan Fee. In the event that following the
occurrence of an Event of Default the average closing daily unpaid balance of
all Loans hereunder during any calendar month is less than the Minimum Default
Average Monthly Loan Amount, Borrower shall pay to Lender in lieu of interest
charges provided for in Section 5(a) and the fees provided for in Sections
5(b)(i) and 5(b)(iii), a fee equal to two percent (2.0%) per month on the unpaid
principal balance of the Loans. Such fee shall be computed on the basis of a
year of 360 days and actual days elapsed and such fee shall be charged to
Borrower's account on the first day of each month with respect to the prior
month.
(v) Overadvance Fee. Without affecting Borrower's obligation
to immediately repay any Loans which exceed the amounts permitted by paragraph 2
of this Agreement ("Overadvances"), in the event an Overadvance occurs or is
made by Lender, Borrower shall pay interest on the unpaid balance of the Loans
at the Default Rate for as long as such Overadvance remains outstanding and
shall pay Lender a fee in the amount of $250.00 for each month or part thereof
that an Overadvance exists. Such fee shall be charged to Borrower's account upon
the occurrence of each Overadvance.
(vi) Financial Information Default. Without affecting Lender's
other rights and remedies, in the event Borrower fails to deliver the financial
information required by paragraphs 9 and 11 on the date required by this
Agreement, Borrower shall pay Lender a fee in the amount of $100.00 for each
such failure. Such fee shall be charged to Borrower's account upon the
occurrence of each such failure.
6. Security Interest.
(a) To secure the prompt payment to Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Lender a continuing security
interest in and to the Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located, whether or not the same is subject
to Article
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9 of the UCC. All of the Borrower's ledger sheets, files, records, books of
account, business papers and documents relating to the Collateral shall, until
delivered to or removed by Lender, be kept by Borrower in trust for Lender until
all Obligations have been paid in full. Each confirmatory assignment schedule or
other form of assignment hereafter executed by Borrower shall be deemed to
include the foregoing grant, whether or not the same appears therein.
(b) Lender may file one or more financing statements disclosing
Lender's security interest in the Collateral without Borrower's signature
appearing thereon or Lender may sign on Borrower's behalf as provided in
paragraph 13 hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement. If
any Receivable becomes evidenced by a promissory note or any other instrument
for the payment of money, Borrower will immediately deliver such instrument to
Lender appropriately endorsed.
7. Representations Concerning the Collateral. Borrower represents
and warrants (each of which such representations and warranties shall be deemed
repeated upon the making of each request for a Loan and made as of the time of
each and every Loan hereunder):
(a) all the Collateral (i) is owned by Borrower free and clear of
all claims, liens, security interests and encumbrances (including without
limitation any claims of infringement) except (A) those in Lender's favor and
(B) Permitted Liens and (ii) is not subject to any agreement prohibiting the
granting of a security interest or requiring notice of or consent to the
granting of a security interest; and
(b) all Receivables (i) represent complete bona fide transactions
which require no further act under any circumstances on Borrower's part to make
such Receivables payable by the Customers, (ii) to the best of Borrower's
knowledge, are not subject to any present, future or contingent offsets or
counterclaims, and (iii) do not represent bill and hold sales, consignment
sales, guaranteed sales, sale or return or other similar understandings or
obligations of any Affiliate or Subsidiary of Borrower.
8. Covenants Concerning the Collateral. During the Term, Borrower
covenants that it shall:
(a) not dispose of any of the Collateral whether by sale, lease or
otherwise except for (i) the sale of Inventory in the ordinary course of
business, and (ii) the disposition or transfer in the ordinary course of
business during any fiscal year of obsolete and worn-out Equipment having an
aggregate fair market value of not more than $10,000 and only to the extent that
(x) the proceeds of any such disposition are used to acquire replacement
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Equipment which is subject to Lender's first priority security interest or (y)
the proceeds of which are remitted to Lender in reduction of the Obligations;
(b) not encumber, mortgage, pledge, assign or grant any security
interest in any Collateral or any of Borrower's other assets to anyone other
than Lender and except for Permitted Liens;
(c) place notations upon Borrower's books of account and any
financial statement prepared by Borrower to disclose Lender's security interest
in the Collateral;
(d) keep and maintain the Equipment in good operating condition,
except for ordinary wear and tear, and shall make all necessary repairs and
replacements thereof so that the value and operating efficiency shall at all
times be maintained and preserved. Borrower shall not permit any such items to
become a fixture to real estate or accessions to other personal property;
(e) not extend the payment terms of any Receivable without prompt
notice thereof to Lender;
(f) perform all other steps requested by Lender to create and
maintain in Lender's favor a valid perfected first security interest in all
Collateral (except for Permitted Liens);
(g) defend the Collateral against the claims and demands of all
parties; and
(h) cause, at least annually, an appraisal to be performed by an
appraiser satisfactory to Lender, of its Equipment and Lender shall have the
right in its sole discretion based on such appraisal to decrease the amount of
Amortizing Availability to a sum not greater than seventy percent (70%) of the
knockdown liquidation value of the Equipment which is acceptable to Lender in
its sole discretion and on which Lender has a first perfected security interest,
amortizable at a rate to be determined by Lender. In the event Borrower desires
that Lender increase the Amortizing Availability, Borrower shall deliver to
Lender within sixty (60) days of the Closing Date, a Knockdown liquidation value
appraisal of its Equipment performed by an Appraiser satisfactory to Lender and
Lender may in its sole discretion based on such appraisal increase the
Amortizing Availability to a sum not greater than seventy percent (70%) of the
Knockdown liquidation value of the Equipment which is acceptable to Lender in
its sole discretion and on which Lender has a first perfected security interest,
amortizable at a rate equal to 1/48 of the original principal amount of such
Amortizing Availability.
9. Collection and Maintenance of Collateral and Records.
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Lender may at any time verify Borrower's Receivables utilizing an
audit control company or any other agent of Lender. Lender or Lender's designee
may notify customers or account debtors, at any time at Lender's sole
discretion, of Lender's security interest in Receivables, collect them directly
and charge the collection costs and expenses to Borrower's account, but, unless
and until Lender does so or gives Borrower other instructions, Borrower shall
collect all Receivables for Lender, receive all payments thereon for Lender's
benefit in trust as Lender's trustee and immediately deliver them to Lender in
their original form with all necessary endorsements or, as directed by Lender,
deposit such payments as directed by Lender pursuant to paragraphs 22 or 23
hereof. Lender will credit (conditional upon final collection) all such payments
to Borrower's account five (5) business days after receipt by Lender of good
funds in dollars of the United States of America in Lender's account. Any amount
received by Lender after 12:00 noon New York time on any business day shall be
deemed received on the next business day. Promptly after the creation of any
Receivables, Borrower shall provide Lender with schedules describing all
Receivables created or acquired by Borrower and shall execute and deliver
confirmatory written assignments of such Receivables to Lender, but Borrower's
failure to execute and deliver such schedules or written confirmatory
assignments of such Receivables shall not affect or limit Lender's security
interest or other rights in and to the Receivables. Borrower shall furnish, at
Lender's request, copies of contracts, invoices or the equivalent, and any
original shipping and delivery receipts for all merchandise sold or services
rendered and such other documents and information as Lender may require.
Borrower shall also provide Lender on a monthly (within ten (10) days after the
end of each month) or more frequent basis, as requested by Lender, a detailed or
aged trial balance of all of Borrower's existing Receivables specifying the
names and balances due for each account debtor and such other information
pertaining to the Receivables as Lender may request. Borrower shall provide
Lender on a monthly (within ten (10) days after the end of each month), or more
frequent basis, as requested by Lender, a summary report of Borrower's current
Inventory, certified as true and accurate by Borrower's President or Chief
Financial Officer, as well as an aged trial balance of Borrower's existing
accounts payable. Borrower shall provide Lender, as requested by Lender, such
other schedules, documents and/or information regarding the Collateral as Lender
may require.
10. Inspections. At all times during normal business hours, Lender
shall have the right to (a) visit and inspect Borrower's properties and the
Collateral, (b) inspect, audit and make extracts from Borrower's relevant books
and records, including, but not limited to, management letters prepared by
independent accountants, and (c) discuss with Borrower's principal officers, and
independent accountants, Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects. Borrower will deliver
to Lender any instrument
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necessary for Lender to obtain records from any service bureau maintaining
records for Borrower.
11. Financial Information. Borrower shall provide Lender (a) as soon
as available, but in any event within ninety (90) days after the end of each of
Borrower's fiscal years, the balance sheet of Vista and its Subsidiaries on a
Consolidated Basis together with consolidating schedules as at the end of such
fiscal year and the related statements of income, retained earnings and changes
in cash flow of Vista and its Subsidiaries on a Consolidated basis together with
consolidating schedules for such fiscal year, setting forth in comparative form
the figures as at the end of and for the previous fiscal year, which shall have
been reported on by independent certified public accountants who shall be
satisfactory to Lender and shall be accompanied by an audit report issued by
such independent certified public accountants which report with respect to
Borrower shall be unqualified; (b) as soon as available, drafts of Borrower's
balance sheet as at the end of each of Borrower's fiscal years and the related
statements of income, retained earnings and changes in cash flow for such fiscal
year, which have been internally prepared by Borrower; (c) as soon as available,
but in any event within thirty (30) days after the close of each month, the
balance sheet as at the end of such month and the related statements of income,
retained earnings and changes in cash flow for such month, which have been
internally prepared by Borrower. All financial statements required under (a),
(b) and (c) above shall be prepared in accordance with GAAP, subject to year-end
adjustments in the case of monthly statements. Together with the financial
statements furnished pursuant to (a) above, Borrower shall deliver a certificate
of Borrower's certified public accountants addressed to Lender stating that (i)
they have caused this Agreement and the Ancillary Agreements to be reviewed and
(ii) in making the examination necessary for the issuance of such financial
statements, nothing has come to their attention to lead them to believe that any
Event of Default or Incipient Event of Default exists and, in particular, they
have no knowledge of any Event of Default or Incipient Event of Default or, if
such is not the case, specifying such Event of Default or Incipient Event of
Default and its nature, when it occurred and whether it is continuing. At the
times the financial statements are furnished pursuant to (a), (b) and (c) above,
a certificate of Borrower's President or Chief Financial Officer shall be
delivered to Lender stating that, based on an examination sufficient to enable
him to make an informed statement, no Event of Default or Incipient Event of
Default exists, or, if such is not the case, specifying such Event of Default or
Incipient Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by Borrower with respect to such event. If
any internally prepared financial information, including that required under
this paragraph is unsatisfactory in any manner to Lender, Lender may request
that Borrower's independent certified public accountants review same.
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12. Additional Representations, Warranties and Covenants. Borrower
represents, warrants (each of which such representations and warranties shall be
deemed repeated upon the making of a request for a Loan and made as of the time
of each Loan made hereunder), and covenants that:
(a) Borrower is a corporation duly organized and validly existing
under the laws of the State of Delaware and duly qualified and in good standing
in every other state or jurisdiction in which the nature of Borrower's business
requires such qualification;
(b) the execution, delivery and performance of this Agreement and
the Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Borrower's certificate of incorporation, by-laws or of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers;
(c) this Agreement and the Ancillary Agreements executed and
delivered by Borrower are Borrower's legal, valid and binding obligations,
enforceable in accordance with their terms;
(d) it keeps and will continue to keep all of its books and records
concerning the Collateral at Borrower's executive offices located at the address
set forth in the introductory paragraph of this Agreement and will not move such
books and records without giving Lender at least thirty (30) days prior written
notice;
(e) (i) the operation of Borrower's business is and will continue to
be in compliance in all material respects with all applicable federal, state and
local laws, including but not limited to all applicable environmental laws and
regulations;
(ii) Borrower will establish and maintain a system to assure
and monitor continued compliance with all applicable environmental laws, which
system shall include periodic reviews of such compliance;
(iii) In the event the Borrower obtains, gives or receives
notice of any release or threat of release of a reportable quantity of any
hazardous substances on its property (any such event being hereinafter referred
to as a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions on its property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of any environmental laws affecting its property or
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person or entity, including any state agency
responsible in whole or in part for environmental matters in the state in which
such property is located or the United States
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Environmental Protection Agency (any such person or entity hereinafter the
"Authority"), then the Borrower shall, within seven (7) days, give written
notice of same to the Lender detailing facts and circumstances of which the
Borrower is aware giving rise to the Hazardous Discharge or Environmental
Complaint and periodically inform Lender of the status of the matter. Such
information is to be provided to allow the Lender to protect its security
interest in the Collateral and is not intended to create nor shall it create any
obligation upon the Lender with respect thereto;
(iv) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral to any
lien. If Borrower shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or Borrower shall fail to comply with any of the
requirements of any environmental laws, the Lender may, but without the
obligation to do so, for the sole purpose of protecting the Lender's interest in
Collateral: (A) give such notices or (B) enter onto Borrower's property (or
authorize third parties to enter onto such property) and take such actions as
the Lender (or such third parties as directed by the Lender) deems reasonably
necessary or advisable, to clean up, remove, mitigate or otherwise deal with any
such Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by the Lender (or such third parties) in the exercise of any
such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Revolving Credit
Advances shall be paid upon demand by the Borrower, and until paid shall be
added to and become a part of the Obligations secured by the liens created by
the terms of this Agreement or any other agreement between Lender and Borrower;
(v) Borrower shall defend and indemnify the Lender and hold
the Lender harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by the Lender under or on account of any environmental laws, including,
without limitation, the assertion of any lien thereunder, with respect to any
Hazardous Discharge, the presence of any hazardous substances affecting
Borrower's property, whether or not the same originates or emerges from
Borrower's property or any contiguous real estate, including any loss of value
of the Collateral as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of the Lender. The Borrower's obligations
under this paragraph 12(e) shall arise upon the discovery of the presence of any
hazardous substances on the Borrower's property, whether or not any federal,
state, or local environmental agency has taken or threatened any action in
connection with the presence of any hazardous substances. The Borrower's
obligation and the
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indemnifications hereunder shall survive the termination of this Agreement;
(vi) For purposes of paragraph 12(e) all references to
Borrower's property shall be deemed to include all of Borrower's right, title
and interest in and to all owned and/or leased premises.
(f) based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder: (i)
Borrower has not engaged in any Prohibited Transactions as defined in paragraph
406 of ERISA and paragraph 4975 of the Internal Revenue Code, as amended; (ii)
Borrower has met all applicable minimum funding requirements under paragraph 302
of ERISA in respect of its plans; (iii) Borrower has no knowledge of any event
or occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) Borrower has no fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than Borrower's
employees; and (v) Borrower has not withdrawn, completely or partially, from any
multi-employer pension plan so as to incur liability under the Multiemployer
Pension Plan Amendments Act of 1980;
(g) it is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which it is about to
engage and the fair saleable value of its assets (calculated on a going concern
basis) is in excess of the amount of its liabilities;
(h) there is no pending or threatened litigation, actions or
proceeding which involve the possibility of materially and adversely affecting
the Borrower's business, assets, operations, prospects or condition (financial
or otherwise), or the Collateral or the ability of Borrower to perform this
Agreement;
(i) all balance sheets and income statements which have been
delivered to Lender fairly, accurately and properly state Borrower's financial
condition on a basis consistent with that of previous financial statements and
there has been no material adverse change in Borrower's financial condition as
reflected in such statements since the date thereof and such statements do not
fail to disclose any fact or facts which might materially and adversely affect
Borrower's financial condition;
(j) (x) it possesses all of the licenses, patents, copyrights,
trademarks and tradenames necessary to conduct its business, (y) there has been
no assertion or claim of violation or infringement with respect thereof and (z)
all such licenses, patents, copyrights, trademarks and tradenames are listed on
Exhibit 12(j);
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(k) it will pay or discharge when due all taxes, assessments and
governmental charges or levies imposed upon it;
(l) it will promptly inform Lender in writing of: (i) the
commencement of all proceedings and investigations by or before and/or the
receipt of any notices from, any governmental or nongovernmental body and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any of Borrower's properties, assets or business, which might
singly or in the aggregate, have a materially adverse effect on Borrower; (ii)
any amendment of Borrower's certificate of incorporation or by-laws; (iii) any
change in Borrower's business, assets, liabilities, condition (financial or
otherwise), results of operations or business prospects which has had or might
have a materially adverse effect on Borrower; (iv) any Event of Default or
Incipient Event of Default; (v) any default or any event which with the passage
of time or giving of notice or both would constitute a default under any
agreement for the payment of money to which Borrower is a party or by which
Borrower or any of Borrower's properties may be bound which would have a
material adverse effect on Borrower's business, assets, operations, prospects or
condition (financial or otherwise) or the Collateral; (vi) any change in the
location of Borrower's executive offices; (vii) any change in the location of
Borrower's Inventory or Equipment from the locations listed on Exhibit 12(l)
attached hereto, (viii) any change in Borrower's corporate name; (ix) any
material delay in Borrower's performance of any of its obligations to any
account debtor and of any assertion of any material claims, offsets or
counterclaims by any account debtor and of any allowances, credits and/or other
monies granted by it to any account debtor; (x) and furnish to Lender all
material adverse information relating to the financial condition of any account
debtor; and (xi) any material return of goods;
(m) it will not (i) create, incur, assume or suffer to exist any
indebtedness (exclusive of trade debt) whether secured or unsecured other than
Borrower's indebtedness to Lender and as set forth on Exhibit 12(m) attached
hereto and made a part hereof; (ii) declare, pay or make any dividend or
distribution on any shares of the common stock or preferred stock of Borrower or
apply any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock of Borrower; (iii) directly or
indirectly, prepay any indebtedness (other than to Lender), or repurchase,
redeem, retire or otherwise acquire any indebtedness of Borrower; (iv) make
advances, loans or extensions of credit to any Person; (v) become either
directly or contingently liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise; (vi) enter into any
merger, consolidation or other reorganization with or into any other Person or
acquire all or a portion of the assets or stock of any Person or permit any
other Person to consolidate with or merge with it; (vii) form any Subsidiary or
enter into any partnership, joint venture or similar arrangement; (viii)
materially change the nature of the business in which it is presently engaged;
(ix)
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change its fiscal year or make any changes in accounting treatment and reporting
practices without prior written notice to Lender except as required by GAAP or
in the tax reporting treatment or except as required by law; (x) enter into any
transaction with any Affiliate, except in ordinary course on arms-length terms;
(xi) bill Receivables under any name except the present name of the Borrower or
(xii) directly or indirectly redeem, repurchase, retire or otherwise acquire or
make any payment or distribution with respect to the Vista Subordinated Debt,
except that provided no Incipient Event of Default or Event of Default shall
have occurred and be continuing prior to and after giving effect to such
payment, Borrower may make payments with respect to the Vista Subordinated Debt
if (x) the aggregate amount of such payments do not exceed $500,000 and such
payments are made between the Closing Date and December 31, 1996 (the "Period");
(y) such payment is after the Period and is permitted by the terms of Vista
Subordination Agreement; and (z) such payment is made with the proceeds of a
Permitted Mortgage Financing.
(n) all financial projections of Borrower's performance prepared by
Borrower or at Borrower's direction and delivered to Lender will represent, at
the time of delivery to Lender, Borrower's best estimate of Borrower's future
financial performance and will be based upon assumptions which are reasonable in
light of Borrower's past performance and then current business conditions;
(o) it will not make capital expenditures in any fiscal year an
amount in excess of $50,000;
(p) none of the proceeds of the Loans hereunder will be used
directly or indirectly to "purchase" or "carry" "margin stock" or to repay
indebtedness incurred to "purchase" or "carry" "margin stock" within the
respective meanings of each of the quoted terms under Regulation G of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect; and
(q) it will bear the full risk of loss from any loss of any nature
whatsoever with respect to the Collateral. At it's own cost and expense in
amounts and with carriers acceptable to Lender, it shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to Borrower's including,
without limitation, business interruption insurance; (ii) maintain a bond in
such amounts as is customary in the case of companies engaged in businesses
similar to Borrower's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (iii) maintain public and product
liability insurance
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against claims for personal injury, death or property damage suffered by others;
(iv) maintain all such worker's compensation or similar insurance as may be
required under the laws of any state or jurisdiction in which Borrower is
engaged in business; (v) furnish Lender with (x) copies of all policies and
evidence of the maintenance of such policies at least thirty (30) days before
any expiration date, (y) endorsements to such policies naming Lender as
"co-insured" or "additional insured" and appropriate loss payable endorsements
in form and substance satisfactory to Lender, naming Lender as loss payee, and
(z) evidence that as to Lender the insurance coverage shall not be impaired or
invalidated by any act or neglect of Borrower and the insurer will provide
Lender with at least thirty (30) days notice prior to cancellation. Borrower
shall instruct the insurance carriers that in the event of any loss thereunder,
the carriers shall make payment for such loss to lender and not to Borrower and
Lender jointly. If any insurance losses are paid by check, draft or other
instrument payable to Borrower and Lender jointly, Lender may endorse Borrower's
name thereon and do such other things as Lender may deem advisable to reduce the
same to cash. Lender is hereby authorized to adjust and compromise claims. All
loss recoveries received by Lender upon any such insurance may be applied to the
Obligations, in such order as Lender in its sole discretion shall determine. Any
surplus shall be paid by Lender to Borrower or applied as may be otherwise
required by law. Any deficiency thereon shall be paid by Borrower to Lender, on
demand.
13. Power of Attorney. Borrower hereby appoints Lender or any other
Person whom Lender may designate as Borrower's attorney, with power to: (i)
endorse Borrower's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into Lender's possession;
(ii) sign Borrower's name on any invoice or bill of lading relating to any
Receivables, drafts against customers, schedules and assignments of Receivables,
notices of assignment, financing statements and other public records,
verifications of account and notices to or from customers; (iii) verify the
validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with account debtors; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through Customs; (v) do all things necessary to carry out this Agreement, any
Ancillary Agreement and all related documents; and (vi) on or after the
occurrence and continuation of an Event of Default, notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Lender, and to receive, open and dispose of all mail addressed to
Borrower. Borrower hereby ratifies and approves all acts of the attorney.
Neither Lender nor the attorney will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law. This power, being coupled with
an interest, is irrevocable so long as any Receivable which is assigned to
Lender or in which Lender has a security interest remains unpaid and until the
Obligations have been fully satisfied.
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14. Expenses. Borrower shall pay all of Lender's out-of-pocket costs
and expenses, including, without limitation, reasonable fees and disbursements
of counsel and appraisers, in connection with the preparation, execution and
delivery of this Agreement and the Ancillary Agreements, and in connection with
the prosecution or defense of any action, contest, dispute, suit or proceeding
concerning any matter in any way arising out of, related to or connected with
this Agreement or any Ancillary Agreement. Borrower shall also pay all of
Lender's fees, charges, out-of-pocket costs and expenses, including without
limitation reasonable fees and disbursements of counsel and appraisers, in
connection with (a) the preparation, execution and delivery of any waiver, any
amendment thereto or consent proposed or executed in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements, (b)
Lender's obtaining performance of the Obligations under this Agreement and any
Ancillary Agreements, including, but not limited to, the enforcement or defense
of Lender's security interests, assignments of rights and liens hereunder as
valid perfected security interests, (c) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of any Collateral, (d) any
appraisals or re-appraisals of any property (real or personal) pledged to Lender
by Borrower as Collateral for, or any other Person as security for, Borrower's
Obligations hereunder and (e) any consultations in connection with any of the
foregoing, including, without limitation, environmental consultants and
accountants. Borrower shall also pay Lender's customary bank charges for all
bank services performed or caused to be performed by Lender for Borrower at
Borrower's request or in connection with Borrower's loan account with Lender.
All such costs and expenses together with all filing, recording and search fees,
taxes and interest payable by Borrower to Lender shall be payable on demand and
shall be secured by the Collateral. If any tax by any governmental authority is
or may be imposed on or as a result of any transaction between Borrower and
Lender which Lender is or may be required to withhold or pay, Borrower agrees to
indemnify and hold Lender harmless in respect of such taxes, and Borrower will
repay to Lender the amount of any such taxes which shall be charged to
Borrower's account; and until Borrower shall furnish Lender with indemnity
therefor (or supply Lender with evidence satisfactory to it that due provision
for the payment thereof has been made), Lender may hold without interest any
balance standing to Borrower's credit and Lender shall retain its security
interests in any and all Collateral.
15. Assignment By Lender. Lender may assign any or all of the
Obligations together with any or all of the security therefor and any transferee
shall succeed to all of Lender's rights with respect thereto. In the event of
assignment by Lender other than to an Affiliate of Lender and Borrower
terminates this Agreement within three (3) months following the date of such
assignment, no early termination fee shall be payable in connection with such
termination. Upon such transfer, Lender shall be released from all
responsibility for the Collateral to the extent
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same is assigned to any transferee. Lender may from time to time sell or
otherwise grant participations in any of the Obligations and the holder of any
such participation shall, subject to the terms of any agreement between Lender
and such holder, be entitled to the same benefits as Lender with respect to any
security for the Obligations in which such holder is a participant. Borrower
agrees that each such holder may exercise any and all rights of banker's lien,
set-off and counterclaim with respect to its participation in the Obligations as
fully as though Borrower were directly indebted to such holder in the amount of
such participation.
16. Waivers. Borrower waives presentment and protest of any
instrument and notice thereof, notice of default and all other notices to which
Borrower might otherwise be entitled.
17. Term of Agreement. This Agreement shall continue in full force
and effect until the expiration of the Term; provided, however, Lender may
terminate at any time upon ninety (90) days notice. The Term shall be
automatically extended for successive periods of two (2) years each unless
Borrower shall have provided Lender with a written notice of termination, at
least sixty (60) days prior to the expiration of the initial Term or any renewal
Term. Upon such extension of the initial Term or any renewal Term, Borrower
shall pay Lender an extension fee in an amount equal to the product of (x) the
Maximum Revolving Amount times (y) one percent (1.0%). Notwithstanding the
foregoing, Lender shall release its security interests at any time after thirty
(30) days notice upon payment to it of all Obligations if Borrower shall have
(i) provided Lender with an executed release of any and all claims which
Borrower may have or thereafter shall have under this Agreement and (ii) paid to
Lender an early payment fee as follows:
(a) during the period ending with the expiration of the initial
Term, the fee shall be equal to the product of (x) fifty percent (50%) of the
average monthly interest (including any minimum loan fees payable hereunder)
payable by Borrower to Lender from the Closing Date until the date of payment of
the fee hereunder multiplied by (y) the difference between (i) twenty-four and
(ii) the number of full months which have elapsed from the Closing Date until
the date of payment of the fee hereunder;
(b) during the period ending during any renewal Term of this
Agreement, the fee shall be equal to the product of (x) fifty percent (50%) of
the average monthly interest (including any minimum loan fees payable hereunder)
payable by Borrower to Lender from the date such renewal Term commences until
payment of the fee hereunder multiplied by (y) the difference between (i) twenty
four (24) and (ii) the number of full months which have elapsed from the date
such renewal Term is in effect until the date of payment of the fee hereunder;
such fee being intended to compensate Lender for its costs and expenses incurred
in initially approving this Agreement or
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extending same. Such early payment fee shall also be due and payable by Borrower
to Lender upon termination of this Agreement by Lender after the occurrence of
an Event of Default.
18. Events of Default. The occurrence of any of the following shall
constitute an Event of Default:
(a) failure to make payment of any of the Obligations when required
hereunder;
(b) failure to pay any taxes when due unless such taxes are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been provided on Borrower's books;
(c) failure to perform under and/or committing any breach of this
Agreement or any Ancillary Agreement or any other agreement between Borrower and
Lender;
(d) occurrence of a default under any agreement to which Borrower is
a party with third parties which has a material adverse affect upon Borrower's
business, assets, operations, prospects or condition (financial or otherwise)
including all leases for any premises where Inventory or Equipment is located;
(e) any representation, warranty or statement made by Borrower
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should at any time be false or misleading in any
material respect;
(f) if any Validity Guarantor attempts to terminate, challenges the
validity of, or its liability under any Validity Guaranty Agreement and there
shall be no Validity Guarantor remaining who has not defaulted or breached his
obligations under the Validity Guaranty Agreement and Borrower shall fail to
provide Lender with a replacement Validity Guarantor acceptable to Lender within
thirty (30) days of such occurrence or if any Validity Guarantor shall die and
there shall be no Validity Guarantor remaining who has not defaulted or breached
his obligations under the Validity Guaranty Agreement and Borrower shall fail to
provide Lender with a replacement Validity Guarantor acceptable to Lender within
thirty (30) days of such occurrence;
(g) should any Validity Guarantor default in its obligations under
any Validity Guaranty Agreement or if any proceeding shall be brought to
challenge the validity, binding effect of any Validity Guaranty Agreement or
should any Validity Guarantor breach any representation, warranty or covenant
contained in any Validity Guaranty Agreement or should any Validity Guaranty
Agreement cease to be a valid, binding and enforceable obligation and there
shall be no Validity Guarantor remaining who shall not
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have defaulted or breached his obligations under the Validity Guaranty
Agreement;
(h) an attachment or levy is made upon any of Borrower's assets
having an aggregate value in excess of $15,000, or a judgment is rendered
against Borrower or any of Borrower's property involving a liability of more
than $15,000, which shall not have been vacated, discharged, stayed or bonded
pending appeal within thirty (30) days from the entry thereof;
(i) any change in Borrower's condition or affairs (financial or
otherwise) which in Lender's opinion, impairs Lender's lien on, affects the
priority of Lender's lien on or impacts Lender's access to Collateral having an
aggregate value in excess of $25,000 or the ability of Borrower to perform its
Obligations;
(j) any lien created hereunder or under any Ancillary Agreement for
any reason ceases to be or is not a valid and perfected lien having a first
priority interest;
(k) if Borrower shall (i) apply for, consent to or suffer to exist
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
(l) Borrower shall admit in writing its inability, or be generally
unable to pay its debts as they become due or cease operations of its present
business;
(m) any Validity Guarantor shall (i) apply for, consent to or suffer
to exist the appointment of, or the taking possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
under the federal bankruptcy laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws or (viii) take any
action for the purpose of effecting any of the foregoing and there shall be no
Validity Guarantor who shall not have
-26-
<PAGE>
defaulted or breached his obligations under the Validity Guaranty Agreement;
(n) Borrower directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Borrower or any interest therein, except as
permitted herein;
(o) Borrower fails to operate in the ordinary course of business;
(p) Lender shall in good faith deem itself insecure or unsafe or
shall fear diminution in value, removal or waste of the Collateral;
(q) a default by Borrower in the payment, when due, of any principal
of or interest on any indebtedness for money borrowed;
(r) any (i) transfer of ownership of not less than fifty percent
(50%) of the common stock of Borrower or (ii) change in senior management of the
Borrower which is not acceptable to Century provided, that Borrower may retain a
management consulting firm which has Shyam Gidumal as an executive officer or
another management consulting firm acceptable to Lender without breaching the
foregoing restriction;
(s) the indictment or threatened indictment of Borrower, any officer
of Borrower or any Validity Guarantor under any criminal statute, or
commencement or threatened commencement of criminal or civil proceeding against
Borrower, any officer of Borrower pursuant to which statute or proceeding
penalties or remedies sought or available include forfeiture of any of the
property of Borrower or any Validity Guarantor;
(t) the occurrence of a breach of any provision of the Vista
Subordination Agreement or if any proceeding shall be brought to challenge the
validity or binding effect of the Vista Subordination Agreement or should the
Vista Subordination Agreement be terminated; or
(u) the occurrence of a default or event of default under the Vista
Subordinated Note, the Vista Subordinated Mortgage or the Vista Security
Agreement.
19. Remedies. Upon the occurrence of an Event of Default pursuant to
paragraph 18(k) herein, all Obligations shall be immediately due and payable and
this Agreement shall be deemed terminated; upon the occurrence and continuation
of any other of the Events of Default, Lender shall have the right to demand
repayment in full of all Obligations, whether or not otherwise due. Until all
Obligations have been fully satisfied, Lender shall retain its security interest
in all Collateral. Lender shall have,
-27-
<PAGE>
in addition to all other rights provided herein, the rights and remedies of a
secured party under the UCC, and under other applicable law, all other legal and
equitable rights to which Lender may be entitled, including without limitation,
the right to take immediate possession of the Collateral, to require Borrower to
assemble the Collateral, at Borrower's expense, and to make it available to
Lender at a place designated by Lender which is reasonably convenient to both
parties and to enter any of the premises of Borrower or wherever the Collateral
shall be located, with or without force or process of law, and to keep and store
the same on said premises until sold (and if said premises be the property of
Borrower, Borrower agrees not to charge Lender for storage thereof), and the
right to apply for the appointment of a receiver for Borrower's property.
Further, Lender may, at any time or times after default by Borrower, sell and
deliver all Collateral held by or for Lender at public or private sale for cash,
upon credit or otherwise, at such prices and upon such terms as Lender, in
Lender's sole discretion, deems advisable or Lender may otherwise recover upon
the Collateral in any commercially reasonable manner as Lender, in its sole
discretion, deems advisable. The requirement of reasonable notice shall be met
if such notice is mailed postage prepaid to Borrower at Borrower's address as
shown in Lender's records, at least ten (10) days before the time of the event
of which notice is being given. Lender may be the purchaser at any sale, if it
is public. In connection with the exercise of the foregoing remedies, Lender is
granted permission to use all of Borrower's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose of disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The proceeds of sale shall be applied first to all costs
and expenses of sale, including attorneys' fees, and second to the payment (in
whatever order Lender elects) of all Obligations. Lender will return any excess
to Borrower and Borrower shall remain liable to Lender for any deficiency. In
addition to all other sums due to Lender, Borrower shall pay Lender, for costs
and expenses incurred by Lender for internal collection efforts to obtain or
enforce payment of Receivables, an amount equal to fifteen percent (15%) of the
net face amount of any Receivables collected.
20. Waiver; Cumulative Remedies. Failure by Lender to exercise any
right, remedy or option under this Agreement or any supplement hereto or any
other agreement between Borrower and Lender or delay by Lender in exercising the
same, will not operate as a waiver; no waiver by Lender will be effective unless
it is in writing and then only to the extent specifically stated. Lender's
rights and remedies under this Agreement will be cumulative and not exclusive of
any other right or remedy which Lender may have.
21. Application of Payments. Borrower irrevocably waives the right
to direct the application of any and all payments
-28-
<PAGE>
at any time or times hereafter received by Lender from or on Borrower's behalf
and Borrower hereby irrevocably agrees that Lender shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter against Borrower's Obligations hereunder in such manner as
Lender may deem advisable notwithstanding any entry by Lender upon any of
Lender's books and records.
22. Depository Accounts. Any payment received by Borrower on account
of any Collateral shall be held by Borrower in trust for Lender and Borrower
shall promptly deliver same in kind to Lender or deposit all such payments into
a cash collateral account at such bank as Lender may designate for application
to payment of the Obligations. Borrower shall also execute such further
documents as Lender may deem necessary to establish such an account and all
funds deposited in such account shall immediately be deemed Lender's property.
23. Lock Box Accounts. Borrower shall, at Lender's request, instruct
all of its customers and account debtors to make such payments on account of
Receivables to an account under Lender's dominion and control at such bank as
Lender may designate. Borrower shall also execute such further documents as
Lender may deem necessary to establish such an account and all funds deposited
in such account shall immediately be deemed Lender's property.
24. Revival. Borrower further agrees that to the extent Borrower
makes a payment or payments to Lender, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
25. Notices. Any notice or request hereunder may be given to
Borrower or Lender at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
paragraph. Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail or
telecopy (confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any officer
of the party to whom it is addressed, in the case of those by mail or overnight
mail, deemed to have been given when deposited in the mail or with the overnight
mail carrier, and, in the case of a telecopy, when confirmed.
Notices shall be provided as follows:
If to the Lender: Century Business Credit Corporation
-29-
<PAGE>
119 West 40th Street
New York, New York 10018
Attention: Allen H. Vogel
Telephone: (212) 703-3500
Telecopier: (212) 703-3639
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118-0075
Attention: Miriam L. Cohen, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
If to the Borrower: Alabaster Industries, Inc.
501 Industrial Road
Alabaster, AL 35007
Attention: Daniel Norris
Telephone: (205) 663-3836
Telecopier: (205) 664-0208
With a copy to: Vista 2000, Inc.
736 Johnson Ferry Road
Building C
Marietta, GA 30067
Attention: Robert E. Altenbach, Esq.
Telephone: (770) 971-4344
Telecopier: (770) 971-4978
26. Governing Law and Waiver of Jury Trial. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. LENDER SHALL HAVE THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER
APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM COMMERCIAL CODE OF NEW
YORK. BORROWER AGREES THAT ALL ACTIONS AND PROCEEDINGS RELATING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR ANY OTHER OBLIGATIONS
SHALL BE LITIGATED IN THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK OR, AT LENDER'S OPTION, IN ANY OTHER COURTS LOCATED IN NEW YORK STATE OR
ELSEWHERE AS LENDER MAY SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND
BORROWER SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS. BORROWER WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON BORROWER
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO BORROWER AT BORROWER'S ADDRESS APPEARING ON LENDER'S RECORDS, AND SERVICE SO
MADE SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED. BOTH PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN BORROWER AND LENDER AND BORROWER WAIVES THE RIGHT TO ASSERT
IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER WITH REGARD TO THIS AGREEMENT
OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS WHICH IT MAY HAVE.
-30-
<PAGE>
27. Limitation of Liability. Borrower acknowledges and understands
that in order to assure repayment of the Obligations hereunder Lender may be
required to exercise any and all of Lender's rights and remedies hereunder and
agrees that neither Lender nor any of Lender's agents shall be liable for acts
taken or omissions made in connection herewith or therewith except for actual
bad faith.
28. Entire Understanding. This Agreement and the Ancillary
Agreements contain the entire understanding between Borrower and Lender and any
promises, representations, warranties or guarantees not herein contained shall
have no force and effect unless in writing, signed by the Borrower's and
Lender's respective officers. Neither this Agreement, the Ancillary Agreements,
nor any portion or provisions thereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged.
29. Severability. Wherever possible each provision of this Agreement
or the Ancillary Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or the Ancillary Agreements shall be prohibited by or invalid under applicable
law such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions thereof.
30. Captions. All captions are and shall be without substantive
meaning or content of any kind whatsoever.
31. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.
-31-
<PAGE>
32. Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
33. Publicity. Borrower hereby authorizes Lender to make appropriate
announcements of the financial arrangement entered into by and between Borrower
and Lender, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties as Lender
shall in its sole and absolute discretion deem appropriate.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
ATTEST: ALABASTER INDUSTRIES, INC.
By: /s/ [ILLEGIBLE] By: /s/ Daniel A. Norris
--------------------------- -------------------------
Secretary
Name: DANIEL A. NORRIS
Title: PRESIDENT
CENTURY BUSINESS CREDIT
CORPORATION
By: /s/ Allen H. Vogel
-------------------------
Name: ALLEN H. VOGEL
Title: S.V. Pres.
-32-
<PAGE>
EXHIBITS (a)-(d)
Exhibit 1(A) - Permitted Liens
Liens granted by Borrower to Vista pursuant to the Vista Security
Agreement and the Vista Mortgage
Exhibit 12(j) - Licenses, Patents, Trademarks and Copyrights
APPLICATION OR ISSUE OR
PATENTS PATENT NO. COUNTRY FILING DATE TITLE
- ------- -------------- ------- ----------- -----
29/051,350 U.S.A. 3/6/96 "Carrier for
supporting a large
drink cup in an
automobile cup
holder"
REG. NO. OR REG. OR
TRADEMARKS APPLICATION NO. MARK COUNTRY FILING DATE
- ---------- --------------- ---- ------- -----------
1,568,430 ALABASTER U.S.A. 11/28/89
1,567,206 ALABASTER U.S.A. 11/21/89
Exhibit 12(l) - Inventory Locations
501 Industrial Road
Alabaster, Alabama 35007
Exhibit 12(m) - Permitted Indebtedness
Indebtedness of Borrower to Vista as evidenced by a promissory note dated
July 31, 1995 in the principal amount of $4,800,000
Indebtedness of Borrower pursuant to a Permitted Mortgage Financing
<PAGE>
<TABLE>
<CAPTION>
Common Stock
----------------------------------------------
Weighted
Preferred Total less Average
Stock Total Treasury Treasury Shares
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares outstanding at beginning of quarter 4,220 18,074,970 (121,100) 17,953,870 17,953,870
Treasury shares purchased 0
Exercise of warrants 0
Exercise of stock options 0
Preferred stock sold 0
Preferred converted to common 0
Common stock sold 0
-----------------------------------------------------------
Shares outstanding at end of quarter 4,220 18,074,970 (121,100) 17,953,870 17,953,870
===========================================================
Net Loss (10,611,000)
Weighted average shares 17,953,870
Loss per share ($0.59)
==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE SEPTEMBER 28, 1996 UNAUDITED FINANCIAL STATEMENTS OF
VISTA 2000, INC., AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS IN FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 28, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> JUN-30-1996
<PERIOD-END> SEP-28-1996
<CASH> 1,003,000
<SECURITIES> 0
<RECEIVABLES> 17,224,000
<ALLOWANCES> 1,485,000
<INVENTORY> 28,296,000
<CURRENT-ASSETS> 47,018,000
<PP&E> 15,004,000
<DEPRECIATION> 1,958,000
<TOTAL-ASSETS> 63,213,000
<CURRENT-LIABILITIES> 13,524,000
<BONDS> 0
0
3,984,000
<COMMON> 181,000
<OTHER-SE> 22,953,000
<TOTAL-LIABILITY-AND-EQUITY> 63,213,000
<SALES> 27,219,000
<TOTAL-REVENUES> 27,219,000
<CGS> 19,545,000
<TOTAL-COSTS> 8,265,000
<OTHER-EXPENSES> 9,463,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 494,000
<INCOME-PRETAX> (10,611,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,054,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,611,000)
<EPS-PRIMARY> (0.59)
<EPS-DILUTED> 0<F1>
<FN>
<F1> Not displayed since calculation would be anti-dilutive.
</FN>
</TABLE>
