UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
or
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE TRANSITION PERIOD FROM ___________ TO ____________.
COMMISSION FILE NO. 0-20312
--------------------
VISTA INFORMATION SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-1293754
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
5060 SHOREHAM PLACE, #300, SAN DIEGO, CA 92122
(Address of principal executive office) Zip Code)
(619) 450-6100
(Issuer's telephone number, including area code)
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES _X_ NO__
The number of shares of the Issuer's Common Stock, $0.01 par value, outstanding
on May 14, 1996 was 11,042,983.
Transitional Small Business Format (check one) YES __ NO _X_
INDEX
PART I FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) 3
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1996
(UNAUDITED) AND DECEMBER 31, 1995 4,5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) 6
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION 8-11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 12
ITEM 2. CHANGES IN SECURITIES. 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 12
ITEM 5. OTHER INFORMATION. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 12
SIGNATURES 13
EXHIBIT INDEX 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
1996 1995
- - - ------------------------------------------------------------------------
REVENUES $ 2,167,509 $ 1,108,139
COST OF REVENUES 570,805 400,935
------------ ------------
GROSS MARGIN 1,596,704 707,204
OPERATING EXPENSES
Sales and general and administrative 1,575,626 811,266
Research and development 193,948 281,624
Depreciation and amortization 1,112,264 576,480
------------ ------------
OPERATING LOSS (1,285,134) (962,166)
OTHER INCOME (EXPENSE): (119,312) (26,745)
------------ ------------
NET LOSS ($ 1,404,446) ($ 988,911)
============ ============
NET LOSS PER SHARE ($ 0.13) ($ 0.11)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 11,024,450 9,232,835
============ ============
See Notes to Financial Statements
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
----------------------------
ASSETS 1996 1995
- - - ----------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,670 $ 21,027
Trade accounts receivable, less allowance
for doubtful accounts of
$238,156 and $248,500 respectively 1,854,678 1,843,782
Prepaid expenses & other assets 264,151 204,697
------------ ------------
TOTAL CURRENT ASSETS 2,127,499 2,069,506
EQUIPMENT, FURNITURE AND SOFTWARE, AT COST
Equipment and furniture 2,578,863 2,363,148
Purchased software 118,150 109,751
------------ ------------
2,697,013 2,472,899
Less accumulated depreciation and amortization (1,776,391) (1,595,965)
------------ ------------
NET EQUIPMENT AND SOFTWARE 920,622 876,934
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
less accumulated amortization of
$1,247,469 and $1,212,919 respectively 70,299 104,848
ACQUIRED TECHNOLOGY AND ENVIRONMENTAL DATABASES,
less accumulated amortization of
$4,331,898 $ 3,332,229 respectively 7,664,126 8,663,795
------------ ------------
$ 10,782,546 $ 11,715,083
============ ============
</TABLE>
See Notes to Financial Statements
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- - - ------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Note payable to bank $ 1,076,677 $ 1,111,790
Current maturities of long-term obligations 1,442,087 1,081,081
Trade accounts payable 1,352,804 1,029,574
Accrued development costs 487,500 487,500
Accrued compensation and employee benefits 241,339 380,910
Other current liabilities 283,943 398,325
------------ ------------
TOTAL CURRENT LIABILITIES 4,884,350 4,489,180
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 1,274,178 1,198,939
------------ ------------
TOTAL LIABILITIES 6,158,528 5,688,119
STOCKHOLDERS' EQUITY
Preferred stock, Series B convertible, par value $.01;
liquidation value $3,000,000,
authorized 200,000 shares; 200,000 shares
issued and outstanding 2,000 2,000
Preferred stock, Series C convertible, par value $.01;
liquidation value $10,802,185,
authorized 670,000 shares; 613.935 shares
issued and outstanding 6,439 6,439
Preferred stock, Series D convertible, par value $.01;
liquidation value $2,499,982,
authorized 240,000 shares; 187,134 shares
issued and outstanding 1,871 1,871
Common stock, par value $.01; authorized
43,890,000 shares, issued and outstanding
11,042,983 and 8,322,229 shares, respectively 110,227 109,898
Additional paid-in capital 27,098,591 27,097,419
Accumulated deficit (22,595,109) (21,190,663)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,624,019 6,026,964
------------ ------------
$ 10,782,547 $ 11,715,083
============ ============
</TABLE>
See Notes to Financial Statements
VISTA INFORMATION SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
- - - -----------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,404,446) ($ 988,911)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,214,645 663,256
Changes in current assets and liabilities, net of
effect of acquisition of VISTA
(Increase) decrease in:
Accounts receivable - trade (10,896) (93,777)
Prepaid expenses & other assets (59,453) (135,370)
Increase (decrease) in:
Trade accounts payable 323,230 (325,822)
Accrued compensation and employee benefits (139,571) 35,376
Other current liabilities (114,382) (15,379)
--------------------------
NET CASH USED IN OPERATING ACTIVITIES (190,873) (860,627)
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and software (224,115) (86,706)
Additions to capitalized software development costs 0 (50,294)
Decrease in other assets 0 29,546
--------------------------
NET CASH USED IN INVESTING ACTIVITIES (224,115) (107,454)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from long-term obligations 236,244 (45,226)
Proceeds from issuance of preferred stock 0 874,986
Increase (decrease) from note payable to bank (35,113) --
Proceeds from ISO note payable 200,000
Proceeds from issuance of common stock 1,500
--------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 402,631 829,760
--------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,357) (138,321)
Cash and cash equivalents at beginning of period 21,027 223,913
--------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,670 $ 85,592
==========================
</TABLE>
VISTA Information Solutions, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
- - - --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, the interim financial
statements include all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the results for interim periods
presented. Operating results for the three months ended March 31, 1996 are
not necessarily indicative of the operating results that will be achieved
for the year. These statements should be read in conjunction with the
Company's Annual Financial Report on Form 10-K for the year ended December
31, 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information that the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the financial statements and related notes
thereto which appear elsewhere in this Report.
The Company provides environmental risk information and address-based
hazard and classification information to bankers, engineers, insurance companies
and corporations throughout the United States. The Company, originally known as
DataMap, Inc. ("DMI"), was founded in 1975 to develop geographic-demographic
analysis tools for business ("GIS"). Supporting this business line, the Company
has developed a proprietary service known as the Geographic Underwriting System
("GUS(R)") which delivers address-based hazard and classification information to
property/casualty insurance underwriters. GUS provides insurance underwriters
and loss control groups of insurance companies with on-line or batch access to a
series of reports presenting specific classification and hazard information
about the property to be insured. The Company's geo-demographic information
databases, technological understanding and techniques of geographic information
processing provide the basis for its current products. Additional insurance
information layers can be easily added to the Company's current GUS service
offering due to the application's modular design.
On February 28, 1995, the Company acquired all the outstanding common
stock of VISTA Environmental Information, Inc. ("VISTA Environmental") in
exchange for newly issued common and preferred shares of the Company. The
acquisition of VISTA Environmental expanded the Company's existing product line
to include environmental risk information and significantly increased the
marketing capability within the Company. VISTA Environmental provides address
and name based environmental risk information about properties and companies in
the United States to bankers, engineers and corporations. On May 23, 1995, the
Company changed its name from DataMap, Inc. to "VISTA Information Solutions,
Inc."
In early 1996, the Company sold the assets relating to three product
lines to Business Information Technology, Inc. ("BITI"). These product lines
included the Company's: (i) compliance products for the banking and mortgage
industry, known as Census Traks Plus ("CTP"); (ii) desktop marketing products,
known as MarketPro ("MP"); and (iii) custom mapping services, known as the
Service Bureau business. As part of the asset sale, VISTA also granted certain
non-exclusive licenses to BITI for use of the VISTA mapping module Geocoder 2.0,
the "DataMap" name (for a limited period of time) and ZIPR Extracts. The
consideration provided to VISTA in connection with the sale includes various
royalty payments on the products sold to BITI ranging from 5% to 25% of sales
for a period of two years. Accordingly, as a result of this sale, substantially
all of the Company's GIS revenue will be generated from the GUS product as of
February 1, 1996.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1996 TO THE THREE MONTHS ENDED
MARCH 31, 1995
Revenue
Total revenues increased from $1,108,000 for the three months ended March
31, 1995, compared to $2,168,000 for the three months ended March 31, 1996. The
increase in revenues was due primarily to the acquisition of VISTA Environmental
on February 28, 1995. First quarter revenues for VISTA Environmental increased
10%, totaling $1,746,000 for the three month period ended March 31, 1995
compared to $1,921,000 for the three month period ended March 31, 1996. This was
due to increases in volume offset by lower average prices. First quarter
revenues for GIS decreased 42%, totaling $423,000 for the three month period
ended March 31, 1995 compared to $247,000 for the three month period ended March
31, 1996. This decrease was due to the loss of revenue from certain product
lines sold to BITI in February, 1996. Revenues for the GUS product increased by
91%, totaling $80,000 for the three month period ended March 31, 1995 compared
to $153,000 for the three month period ended March 31, 1996. GUS product
revenues have and are expected to increase in 1996 due to increased marketing
efforts and the incorporation of an additional database layer for the GUS
product which, as of the date of this report, was near completion. The forward
looking information regarding 1996 GUS revenues will be influenced by the
success of the Insurance Services Office's marketing and sales activities and
the extent to which the Company's products are utilized by insurance companies
currently under contract.
Gross Margin
Gross margins increased from 64 percent of revenue for the three months
ended March 31, 1995, to 74 percent of revenue for the three months ended March
31, 1996. First quarter gross margins for VISTA Environmental increased from 68
percent of revenue for the three month period ended March 31, 1995 compared to
74 percent of revenue for the three month period ended March 31, 1996. This
increase was due reduced payroll costs as a result of advances in production
technology. First quarter gross margins for GIS increased from 62 percent of
revenue for the three month period ended March 31, 1995 compared to 70 percent
of revenue for the three month period ended March 31, 1996. This increase was
due to the sale of certain product lines (which generate lower gross margins
than the GUS product) to BITI in February, 1996. Overall gross margins are
expected to continue to increase as more automated production and delivery
options are implemented and as some economies of scale are realized with higher
revenues. This forward looking information will be influenced by the relative
success of the Company's efforts in these areas as well as the degree of price
competition in the market for the Company's products, the Company's product mix
with regard to internally produced as opposed to externally purchased products
and fluctuations in prices for such products.
Operating Expenses
Operating expenses increased 73% from $1,669,000 for the three months ended
March 31, 1995, to $2,882,000 for the three months ended March 31, 1996. First
quarter operating expenses for VISTA Environmental decreased 6%, totaling
$2,545,000 for the three month period ended March 31, 1995 compared to
$2,401,000 for the three month period ended March 31, 1996. First quarter
operating expenses for GIS decreased 25%, totaling $640,000 for the three month
period ended March 31, 1995 compared to $481,000 for the three month period
ended March 31, 1996. Operating expenses have decreased due to consolidation of
various functions following the acquisition, offset in part by an increase in
amortization charges related to the acquisition of VISTA Environmental. The
Company expects to continue to realize the benefit of these overhead reductions,
although this forward looking information will be impacted in the event of
increases in revenues requiring additional overhead expenditures, increases in
research and development costs in response to fluctuations in sales or market
demands for additional or enhanced products, and any addition of management and
administration personnel as the Company determines appropriate staffing levels
following consolidation.
Interest Expense
Interest expense was significantly higher in the first quarter of 1996
compared to 1995 due to increased borrowing and a higher interest rate on the
receivables credit line. It is expected that interest costs will increase in
1996 with an increase in overall debt levels as a result of financing
transactions discussed below. Factors influencing this forward looking
information are the Company's ability to obtain additional debt financing and
the timing of the conversion of the Company's outstanding convertible debentures
into equity, if such conversion occurs at all.
The Company had no taxable income and, accordingly, recorded no provision
for income taxes during the quarter or the three months ended March 31, 1996 and
1995.
The effect of inflation on the Company's results has not been significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently has negative cashflow from operations and has been
dependent on the raising of capital to fund continuing operations. As of the
April 30, 1996, the Company has raised a total of $2.5 million in new long term
debt and retired approximately $892,000 under the factoring agreement with
Silicon Valley Bank.
Net cash used in operating activities for the three months ended March 31,
1996 was approximately $191,000 compared to $861,000 during the three months
ended March 31, 1995. The decrease in net cash used was caused primarily by the
increase in accounts payable of $323,000 for the first quarter of 1996 compared
to a decrease of $326,000 in the first quarter of 1995.
Net cash used in investing activities for the three months ended March 31,
1996 was approximately $224,000 compared to $107,000 for the three months ended
March 31, 1995. The increase in cash used was due to an increase in purchases of
computers and technological equipment. The Company anticipates additional
investments in computer related equipment and software to exceed $500,000 for
the remainder of 1996 subject to the availability of debt or lease financing.
Net cash provided by financing activities was approximately $403,000 during
the three months ended March 31, 1996, compared to $830,000 during the three
months ended March 31, 1995. Equipment purchases financed through lease
transactions and proceeds from the ISO loan discussed below were the primary
sources of cash provided in the first quarter of 1996. Proceeds from the
issuance of Series D Convertible Preferred Stock in connection with the
acquisition of VISTA Environmental was the major component of the cash provided
by financing activities in 1995.
In 1995, the Company received $446,000 from the sales of 16% subordinated
convertible debentures. The debentures automatically convert to common stock at
$0.75 if they are not repaid by April 1, 1996. However, the Company defaulted on
these obligations, as the required quarterly interest payments were not made.
The Company remedied this default by offering the holders the option to either
(a) convert the debentures into Common Stock at a rate of $0.75 of principal
balance to one share of Common Stock, or (b) extend the term of the debentures
to March, 1997 with an option to convert the balance to common stock at 70
percent of the then market price of the Common Stock. One debenture holder
elected to be repaid ($20,000 principal) and all other holders elected option
(b).
The Company has outstanding $898,928 of convertible subordinated debentures
assumed in the acquisition of VISTA Environmental. The debentures are
convertible into Series C Preferred Stock ("Series C Preferred Stock") at a rate
of $16.72 per share. At December 31, 1995, the debentures, including accrued
interest, were convertible into approximately 63,000 shares of Series C
Preferred Stock and were due in January 1996. In January 1996, the Company did
not repay the debentures. As a result, under the terms of the debentures, the
repayment date was extended to January 1997 and the debenture holders received,
in aggregate, warrants for the purchase of 3,732 shares of Series C Preferred
Stock at $16.72 per share.
In February, 1996, the Company entered into an agreement with ISO for a
loan, not to exceed $500,000. Advances commenced during the first week of
February 1996 in increments of $25,000 to $50,000. The advances bear interest at
a rate of 1 percent per month on any outstanding amounts, including interest.
Repayment of the advance will be in monthly installments beginning July 1996. At
ISO's option, the advance will be repaid by installments of either (i) payment,
in cash, of 1/6 of the total amount owed plus interest due or (ii) by reducing
future monthly GUS revenue payments by the amount due. The entire loan, however,
must be repaid by December 31, 1996. As of March 31, 1996, $200,000 has been
borrowed on this loan.
On April 30, 1996, the Company entered into an agreement with the SIRROM
Capital Corporation for a $2,500,000 loan in the form of a 13.5 percent, five
year, interest only note with warrants to purchase 5 percent of the fully
diluted Common Stock at an exercise price of $0.01 per share. This note is
secured by the tangible and intangible assets of the Company. Proceeds have, and
will continue to be used to retire amounts outstanding under the Company's
factoring agreement, to pay down existing payables, purchase needed capital
equipment and to provide working capital through 1996.
As reflected in the cash flow statement, the Company's operations currently
do not generate sufficient cash flows to meet the on-going cash needs of the
Company. The Company believes that the new financing transactions discussed
above will be sufficient to fund operations in 1996. Factors impacting this
forward looking information are the levels of the Company's overall revenues and
overhead expenses and changes in the Company's accounts receivable and accounts
payable turnover. If revenues do not increase as anticipated, the Company may
need to raise additional debt or equity financing to meet its operating capital
needs. In addition, the Company may need to raise additional capital in the
future to meet various strategic growth and research and development
initiatives. There can be no assurance that the Company will be able to obtain
any required additional funding on satisfactory terms, if at all. If the
additional funding is not obtained, the Company will seek alternative sources of
debt and/or equity financing and, to the extent necessary, will reduce overhead
expenditures.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
The exhibits to this Annual Report on Form 10-K are listed in the Exhibit
Index on page 14 of this Report.
b) Reports on Form 8-K.
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
VISTA INFORMATION SOLUTIONS, INC.
(Registrant)
Date: May 13, 1996 By /s/ E. Stevens Hamilton
E. Stevens Hamilton
Chief Financial Officer
(Principal Financial Officer)
Date: May 13, 1996 By /s/ Brian Dean Conn
Brian Dean Conn
Controller
(Principal Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description Location
10.1 Loan documents for SIRROM
Capital Corporation
27 Financial Data Schedule
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 30 day of April,
1996, is made and entered into on the terms and conditions hereinafter set
forth, by and between Vista Information Solutions, Inc., a Minnesota corporation
("VIS"), Vista Environmental Information, Inc., a Delaware corporation ("VEI")
(individually, a "Borrower" and collectively, the "Borrowers"), and SIRROM
CAPITAL CORPORATION, a Tennessee corporation ("Lender").
RECITALS:
WHEREAS, Borrowers have requested that Lender make available to
Borrowers a term loan in the original principal amount of Two Million Five
Hundred Thousand and No/100ths Dollars ($2,500,000.00) (the "Loan") on the terms
and conditions hereinafter set forth, and for the purpose(s) hereinafter set
forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrowers,
Borrowers have made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements
of Borrowers, has agreed to make the Loan upon the terms and conditions
hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrowers and Lender hereby agree as follows:
ARTICLE 1
THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the terms
and conditions hereof, the Lender shall make the Loan to Borrowers by wire
transfer in immediately available funds. The Loan shall be evidenced by a
Secured Promissory Note in the original principal amount of Two Million Five
Hundred Thousand and No/100ths Dollars ($2,500,000.00), substantially in the
form of Exhibit A attached hereto and incorporated herein by this reference (the
"Note"), dated as of the date hereof, executed by Borrowers, in favor of Lender.
The Loan shall be payable in accordance with the terms of the Note. The Note,
this Agreement and any other instruments and documents executed by Borrowers,
now or hereafter evidencing, securing or in any way related to the indebtedness
evidenced by the Note are herein individually referred to as a "Loan Document"
and collectively referred to as the "Loan Documents."
1.2 Processing Fee. Borrowers shall pay Lender a processing fee of
Fifty Thousand Dollars ($50,000.00) on the date the Loan is funded.
1.3 Partial Prepayment. Borrowers may prepay the indebtedness evidenced
by the Note in whole or in part at any time and from time to time.
1.4 Purpose. The purpose of the Loan shall be to repay certain bank
debt of Borrowers owed to Silicon Valley Bank, a certain $170,000 bridge loan
owed to Gibraltar Trust, Sunwestern Management and Vanguard Group, and certain
other obligations of Borrowers as shown on Schedule 2.1(l) and to provide
additional working capital to Borrowers.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Each Borrower hereby represents and
warrants to Lender as follows:
(a) Corporate Status. Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
state in which it is incorporated and has the corporate power to own
and operate its properties, to carry on its business as now conducted
and to enter into and to perform its obligations under this Agreement
and the other Loan Documents to which it is a party. Each Borrower is
duly qualified to do business and in good standing in each state in
which a failure to be so qualified would have a material adverse effect
on Borrower's financial position or its ability to conduct its business
in the manner now conducted.
(b) Subsidiaries. Schedule 2.1(b) hereto is a complete list of
each corporation, partnership, joint venture or other business
organization (the "Subsidiary" or, with respect to all such
organizations, the "Subsidiaries") in which Borrowers or any Subsidiary
owns, directly or indirectly, any capital stock or other equity
interest, or with respect to which either Borrower or any Subsidiary,
alone or in combination with others, is in a control position, which
list shows the jurisdiction of incorporation or other organization and
the percentage of stock or other equity interest of each Subsidiary
owned by Borrowers. Each Subsidiary which is a corporation is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing in the
jurisdictions listed in Schedule 2.1(b), which are the only
jurisdictions where the properties owned or leased or the business
transacted by it makes such licensing or qualification to do business
as a foreign corporation necessary, and no other jurisdiction has
demanded, requested or otherwise indicated that (or inquired whether)
it is required so to qualify. Each Subsidiary which is not a
corporation is duly organized and validly existing under the laws of
the jurisdiction of its organization. The outstanding capital stock of
each Subsidiary which is a corporation is validly issued, fully paid
and nonassessable. Borrowers and the Subsidiaries have good and valid
title to the equity interests in the Subsidiaries shown as owned by
each of them on Schedule 2.1(b), free and clear of all liens, claims,
charges, restrictions, security interests, equities, proxies, pledges
or encumbrances of any kind, except as disclosed on Schedule 2.1(b).
Except where otherwise indicated herein or unless the context otherwise
requires, any reference to Borrowers herein shall include Borrowers and
all of its Subsidiaries.
(c) Authorization. Each Borrower has full legal right, power
and authority to conduct its business and affairs. Each Borrower has
full legal right, power and authority to enter into and perform its
obligations hereunder, without the consent or approval of any other
person, firm, governmental agency or other legal entity. The execution
and delivery of this Agreement, the borrowing hereunder, the execution
and delivery of each Loan Document to which each Borrower is a party,
and the performance by each Borrower of its obligations thereunder are
within the corporate powers of each Borrower and have been duly
authorized by all necessary corporate action properly taken, have
received all necessary governmental approvals, if any were required,
and do not and will not contravene or conflict with any provision of
law, any applicable judgment, ordinance, regulation or order of any
court or governmental agency, the charter or bylaws of each Borrower,
or any agreement binding upon each Borrower or its properties. The
officer(s) executing this Agreement, the Note and all of the other Loan
Documents to which each Borrower is a party are duly authorized to act
on behalf of each Borrower.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents are the legal, valid and binding obligations of each
Borrower, enforceable in accordance with their respective terms,
subject to limitations imposed by bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors generally or the
application of general equitable principles.
(e) Capitalization. The authorized capital stock of VIS
consists solely of 43,890,000 shares of common stock, $.01 par value
per share, of which 10,989,777 shares are issued and outstanding,
200,000 shares of Series B convertible preferred stock, $.01 par value
per share all of which is issued and outstanding, 670,000 shares of
Series C convertible preferred stock, $.01 par value per share, of
which 643,935 shares are issued and outstanding and 240,000 shares of
Series D preferred stock, $.01 par value per share, of which 187,134
shares are issued and outstanding (the "VIS Shares"). One hundred
percent of the capital stock of VEI is owned solely by VIS
(collectively with the VIS Shares, the "Shares"). All of the Shares are
duly authorized, validly issued and outstanding and fully paid and
nonassessable and free of preemptive rights. Except for the Shares,
there are no shares of capital stock or other securities of Borrowers
issued or outstanding. There are no outstanding options, warrants or
rights to purchase or acquire from Borrowers any securities of
Borrowers, and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions as to which Borrowers is a
party or by which it is bound relating to any shares of capital stock
or other securities of Borrowers (including the Shares), whether or not
outstanding.
(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate
and complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses,
formulas and applications therefor owned by Borrower or used or
required by each Borrower in the operation of such Borrower's business,
title to each of which is, except as set forth in Schedule 2.1(f)
hereto, held by such Borrower free and clear of all adverse claims,
liens, security agreements, restrictions or other encumbrances, except
as disclosed on Schedule 2.1(f). There is no infringement action,
lawsuit, claim or complaint which asserts that a Borrower's operations
violate or infringe the rights or the trade names, trademarks,
trademark registration, service name, service mark or copyright of
others with respect to any apparatus or method of such Borrower or any
adversely held trademark, trade name, trademark registration, service
name, service mark or copyright, and neither Borrower is in any way
making use of any confidential information or trade secrets of any
person except with the consent of such person.
(g) No Conflicts. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrowers under
and by virtue of the Loan Documents will not result in any breach of,
or constitute a default under, any mortgage, security deed or
agreement, deed of trust, lease, bank loan or credit agreement,
corporate charter or bylaws, agreement or certificate of limited
partnership, partnership agreement, license, franchise or any other
instrument or agreement to which any Borrower is a party or by which
any Borrower or its respective properties may be bound or affected or
to which any Borrower has not obtained an effective waiver.
(h) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrowers threatened, against or
affecting Borrowers or involving the validity or enforceability of any
of the Loan Documents at law or in equity, or before any governmental
or administrative agency; and to each Borrower's knowledge, such
Borrower is not in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority.
(i) Financial Statements. The consolidated financial
statements of Borrowers dated December 31, 1995, which are attached
hereto as Schedule 2.1(i)(A), are true and correct in all material
respects have been prepared on the basis of accounting principles
consistently applied, and fairly present the financial condition of the
Borrowers as of the date(s) thereof. No material adverse change has
occurred in the financial condition of either Borrower since the
date(s) thereof, and no additional borrowings have been made by either
Borrower since the date(s) thereof other than as set forth on Schedule
2.1(i)(B).
(j) Other Agreements; No Defaults. Neither Borrower is a party
to any indenture, loan or credit agreement, lease or other agreement or
instrument, or subject to any charter or corporate restriction, that
could have a material adverse effect on the business, properties,
assets, operations or conditions, financial or otherwise, of such
Borrower, or the ability of such Borrower to carry out its obligations
under the Loan Documents to which it is a party. Neither Borrower is in
default in any respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any
agreement or instrument material to its business to which it is a
party, including but not limited to this Agreement and the other Loan
Documents, and no other default or event has occurred and is continuing
that with notice or the passage of time or both would constitute a
default or event of default under any of same.
(k) Compliance With Law. Each Borrower has obtained all
necessary licenses, permits and approvals and authorizations necessary
or required in order to conduct its business and affairs as heretofore
conducted and as hereafter intended to be conducted. To each Borrower's
knowledge, such Borrower is in compliance with all laws, regulations,
decrees and orders applicable to it (including but not limited to laws,
regulations, decrees and orders relating to environmental, occupational
and health standards and controls, antitrust, monopoly, restraint of
trade or unfair competition), to the extent that noncompliance, in the
aggregate, cannot reasonably be expected to have a material adverse
effect on its respective business, operations, property or financial
condition and will not materially adversely affect such Borrower's
ability to perform its obligations under the Loan Documents.
(l) Debt. Schedule 2.1(l) is a complete and correct list of
all credit agreements, indentures, purchase agreements, promissory
notes and other evidences of indebtedness, guaranties, capital leases
and other instruments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which the Borrowers or any of the
properties thereof is in any manner directly or contingently obligated;
and the maximum principal or face amounts of the credit in question
that are outstanding and that can be outstanding are correctly stated,
and all liens of any nature given or agreed to be given as security
therefore are correctly described or indicated in such Schedule.
(m) Taxes. Each Borrower has filed or caused to be filed all
tax returns that to its knowledge are required to be filed (except for
returns that have been appropriately extended), and has paid, or will
pay when due, all taxes shown to be due and payable on said returns and
all other taxes, impositions, assessments, fees or other charges
imposed on them by any governmental authority, agency or
instrumentality, prior to any delinquency with respect thereto (other
than taxes, impositions, assessments, fees and charges currently being
contested in good faith by appropriate proceedings, for which
appropriate amounts have been reserved). No tax liens have been filed
against either Borrower or any of the property thereof.
(n) Small Business Concern. Borrowers, together with their
"affiliates" (as that term is defined in Title 13, Code of Federal
Regulations, ss. 121.103), are a "small business concern" within the
meaning of the Small Business Investment Act of 1958, as amended, and
the regulations promulgated thereunder. The information set forth in
the Small Business Administration Forms 480, 652 and Part A of Form
1031 regarding Borrowers upon delivery, pursuant to Section 4.1 hereof,
will be accurate and complete. Borrowers do not presently engage in,
and will not hereafter engage in, any activities, and Borrowers will
not use directly or indirectly, the proceeds from the Loan, for any
purpose for which a Small Business Investment Company is prohibited
from providing funds by the Small Business Investment Act and the
regulations thereunder, including Title 13, Code of Federal Regulations
ss.107.720.
(o) Certain Transactions. Except as set forth on Schedule
2.1(o) hereto, neither Borrower is indebted, directly or indirectly, to
any of its officers or directors or to their respective spouses or
children, in any amount whatsoever; none of said officers or directors
or any members of their immediate families, are indebted to any
Borrower or have any direct or indirect ownership interest in any firm
or corporation with which such Borrower has a business relationship, or
any firm or corporation which competes with Borrower, except that
officers and/or directors of each Borrower may own no more than 4.9% of
outstanding stock of publicly traded companies which may compete with
any Borrower. No officer or director or any member of their immediate
families, is, directly or indirectly, interested in any material
contract with Borrowers. Neither Borrower is a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation.
(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrowers contained in this
Agreement or any schedule attached hereto or any statement in any
document, certificate or other instrument furnished or to be furnished
to Lender pursuant hereto, taken as a whole, contains or will (as of
the time so furnished) contain any untrue statement of a material fact,
or omits or will (as of the time so furnished) omit to state any
material fact which is necessary in order to make the statements
contained therein not misleading.
(q) Margin Regulations. Neither Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stock. No proceeds received pursuant to this Agreement will be
used to purchase or carry any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended.
(r) Significant Contracts. Schedule 2.1(r) is a complete and
correct list of all contracts, agreements and other documents pursuant
to which Borrowers receive revenues in excess of $25,000 per year. Each
such contract, agreement and other document is in full force and effect
as of the date hereof and Borrowers know of no reason why such
contracts, agreements and other documents would not remain in full
force and effect pursuant to the terms thereof.
(s) Environment. Each Borrower has duly complied with, and its
business, operations, assets, equipment, property, leaseholds or other
facilities are in compliance with, the provisions of all federal, state
and local environmental, health, and safety laws, codes and ordinances,
and all rules and regulations promulgated thereunder. Each Borrower has
been issued and will maintain all required federal, state and local
permits, licenses, certificates and approvals relating to (1) air
emissions; (2) discharges to surface water or groundwater; (3) noise
emissions; (4) solid or liquid waste disposal; (5) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or
wastes (which shall include any and all such materials listed in any
federal, state or local law, code or ordinance and all rules and
regulations promulgated thereunder as hazardous or potentially
hazardous); or (6) other environmental, health or safety matters.
Neither Borrower has received notice of, or knows of, or suspects facts
which might constitute any violations of any federal, state or local
environmental, health or safety laws, codes or ordinances, and any
rules or regulations promulgated thereunder with respect to its
businesses, operations, assets, equipment, property, leaseholds, or
other facilities. Except in accordance with a valid governmental
permit, license, certificate or approval, there has been no emission,
spill, release or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4)
the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, of any toxic or hazardous substances or wastes
at or from the premises; and accordingly the premises of Borrower are
free of all such toxic or hazardous substances or wastes. There has
been no complaint, order, directive, claim, citation or notice by any
governmental authority or any person or entity with respect to (1) air
emissions; (2) spills, releases or discharges to soils or improvements
located thereon, surface water, groundwater or the sewer, septic system
or waste treatment, storage or disposal systems servicing the premises;
(3) noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation or disposal of toxic or hazardous
substances or waste; or (6) other environmental, health or safety
matters affecting Borrower or its business, operations, assets,
equipment, property, leaseholds or other facilities. Borrower does not
have any indebtedness, obligation or liability (absolute or contingent,
matured or not matured), with respect to the storage, treatment,
cleanup or disposal of any solid wastes, hazardous wastes or other
toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup
or disposal).
ARTICLE 3
COVENANTS AND AGREEMENTS
Borrowers covenant and agree, jointly and severally, that during the
term of this Agreement:
3.1 Payment of Obligations. Borrowers shall pay the indebtedness
evidenced by the Note according to the terms thereof, and shall timely pay or
perform, as the case may be, all of the other obligations of Borrowers to
Lender, direct or contingent, however evidenced or denominated, and however and
whenever incurred, including but not limited to indebtedness incurred pursuant
to any present or future commitment of Lender to Borrowers, together with
interest thereon, and any extensions, modifications, consolidations and/or
renewals thereof and any notes given in payment thereof.
3.2 Financial Statements and Reports. VIS shall furnish to Lender (i)
as soon as practicable and in any event within ninety (90) days after the end of
VIS's fiscal year, an audited consolidated and consolidating balance sheet of
Borrowers as of the close of such fiscal year, an audited consolidated and
consolidating statement of earnings and retained earnings of Borrowers as of the
close of such fiscal year and an audited consolidated and consolidating
statement of cash flows for Borrowers for such fiscal year, prepared in
accordance with generally accepted accounting principles consistently applied
and accompanied by an unqualified audit report prepared by an independent
certified public accountant acceptable to Lender showing the financial condition
of Borrowers at the close of such year and the results of its operations during
such year and accompanied by a certificate of the President of VIS, stating that
to the best of the knowledge of such officer, such Borrower has kept, observed,
performed and fulfilled each material covenant, term and condition of this
Agreement and the other Loan Documents during the preceding fiscal year and that
no Event of Default has occurred and is continuing (or if an Event of Default
has occurred and is continuing, specifying the nature of same, the period of
existence of same and the action such Borrowers propose to take in connection
therewith), (ii) within fifteen (15) days of the end of each calendar month, a
status report indicating the financial performance of each Borrower during such
month and the financial position of each Borrower as of the end of such month,
(iii) within thirty (30) days of the end of each quarter, a consolidated and
consolidating balance sheet of Borrowers as of the close of such quarter and a
consolidated and consolidating statement of earnings and retained earnings of
Borrowers as of the close of such quarter, all in reasonable detail, and
prepared substantially in accordance with generally accepted accounting
principles consistently applied (except for the absence of footnotes and subject
to year-end adjustments), and (iv) with reasonable promptness, such other
financial data as Lender may reasonably request.
3.3 Maintenance of Books and Records; Inspection. Each Borrower shall
maintain its books, accounts and records in accordance with generally accepted
accounting principles consistently applied, and permit Lender, its officers and
employees and any professionals designated by Lender in writing, at Lender's
expense, to visit and inspect any of its properties, corporate books and
financial records, and to discuss its accounts, affairs and finances with such
Borrower or the principal officers of such Borrower during reasonable business
hours, all at such times as Lender may reasonably request; provided that no such
inspection shall materially interfere with the conduct of such Borrower's
business.
3.4 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrowers shall maintain, in amounts customary for
entities engaged in comparable business activities, (i) to the extent required
by applicable law, worker's compensation insurance (or maintain a legally
sufficient amount of self insurance against worker's compensation liabilities,
with adequate reserves, under a plan approved by Lender, such approval not to be
unreasonably withheld or delayed), and (ii) fire and "all risk" casualty
insurance on its properties against such hazards and in at least such amounts as
are customary in Borrowers' business. Borrowers will make reasonable efforts to
obtain and maintain public liability insurance in an amount, and at a cost,
deemed reasonable to the Borrowers' Board of Directors. At the request of
Lender, Borrowers will deliver forthwith a certificate specifying the details of
such insurance in effect.
3.5 Taxes and Assessments. Each Borrower shall (i) file all tax returns
and appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon such Borrower upon
its income and profits or upon any properties belonging to it, prior to the date
on which penalties attach thereto, and (iii) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that a Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (ii) and (iii) so long as appropriate reserves are maintained
with respect thereto.
3.6 Corporate Existence. Each Borrower shall maintain its corporate
existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in each jurisdiction in
which such qualification is necessary pursuant to applicable law.
3.7 Compliance with Laws and Other Agreements. Except where the failure
to do so would not materially adversely affect a Borrower's operations or its
ability to fulfill its obligations under the Loan Documents, each Borrower shall
maintain its business operations and property owned or used in connection
therewith in compliance with (i) all applicable federal, state and local laws,
regulations and ordinances governing such business operations and the use and
ownership of such property, and (ii) all agreements, licenses, franchises,
indentures and mortgages to which each Borrower is a party or by which each
Borrower or any of its properties is bound. Without limiting the foregoing, each
Borrower shall pay all of its indebtedness promptly in accordance with the terms
thereof.
3.8 Notice of Default. Borrowers shall give written notice to Lender of
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
3.9 Notice of Litigation. Borrowers shall give notice, in writing, to
Lender of (i) any actions, suits or proceedings wherein the amount at issue is
in excess of Twenty-Five Thousand and No/100ths Dollars ($25,000.00) instituted
by any persons whomsoever against either Borrower or affecting any of the assets
of either Borrower, and (ii) any dispute, not resolved within sixty (60) days of
the commencement thereof, between a Borrower on the one hand and any
governmental regulatory body on the other hand, which dispute might materially
interfere with the normal operations of a Borrower.
3.10 Conduct of Business. Borrowers will continue to engage in a
business of the same general type and manner as conducted by it on the date of
this Agreement.
3.11 ERISA Plan. If either Borrower has in effect, or hereafter
institutes, a pension plan that is subject to the requirements of Title IV of
the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406,
September 2, 1974, 88 Stat. 829, 29 U.S.C.A. ss. 1001 et seq. (1975), as amended
from time to time ("ERISA"), then the following warranty and covenants shall be
applicable during such period as any such plan (the "Plan") shall be in effect:
(i) Borrower hereby warrants that no fact that might constitute grounds for the
involuntary termination of the Plan, or for the appointment by the appropriate
United States District Court of a trustee to administer the Plan, exists at the
time of execution of this Agreement, (ii) Borrower hereby covenants that
throughout the existence of the Plan, Borrower's contributions under the Plan
will meet the minimum funding standards required by ERISA and Borrower will not
institute a distress termination of the Plan, and (iii) Borrower covenants that
it will send to Lender a copy of any notice of a reportable event (as defined in
ERISA) required by ERISA to be filed with the Labor Department or the Pension
Benefit Guaranty Corporation, at the time that such notice is so filed.
3.12 Dividends, Stock Rights, etc. Except for dividends paid or
distributions made by VEI to VIS, neither Borrower shall declare or pay any
dividend of any kind (other than stock dividends payable to all holders of any
class of capital stock), in cash or in property, on any class of its capital
stock, or purchase, redeem, retire or otherwise acquire for value any shares of
such stock, nor make any distribution of any kind in cash or property in respect
thereof, nor make any return of capital of shareholders, nor make any payments
in cash or property in respect of any stock options, stock bonus or similar plan
(except as required or permitted hereunder), nor grant any preemptive rights
with respect to its capital stock, without the prior written consent of Lender.
3.13 Guaranties; Loans; Payment of Debt. Neither Borrower shall,
without Lender's prior express written consent, guarantee nor be liable in any
manner, whether directly or indirectly, or become contingently liable after the
date of this Agreement in connection with the obligations or indebtedness of any
person or entity whatsoever, except for the endorsement of negotiable
instruments payable to a Borrower for deposit or collection in the ordinary
course of business. Neither Borrower shall, without Lender's prior express
written consent, which shall not be unreasonably withheld, (i) make any loan,
advance or extension of credit to any person other than in the normal course of
its business, or (ii) make any payment on any subordinated debt, except as set
forth on Schedule 3.13 hereto.
3.14 Debt. Without the express prior written consent of Lender, neither
Borrower shall create, incur, assume or suffer to exist indebtedness of any
description whatsoever (excluding the indebtedness evidenced by the Note, the
endorsement of negotiable instruments payable to a Borrower for deposit or
collection in the ordinary course of business, debts incurred in the ordinary
course of business (each of which, individually, does not exceed $25,000) and
the indebtedness listed on Schedule 2.1(l) hereto).
3.15 No Liens. Neither Borrower shall create, incur, assume or suffer
to exist any lien, security interest, security title, mortgage, deed of trust or
other encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in favor
of the lessor of such equipment;
(d) liens described on Schedule 2.1(l) hereto.
3.16 Mergers, Consolidations, Acquisitions and Sales. Without the prior
written consent of Lender, neither Borrower shall (a) be a party to any merger,
consolidation or corporate reorganization, nor (b) purchase or otherwise acquire
all or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity, nor (c) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets, nor (d) create any Subsidiaries nor convey any of its assets to any
Subsidiary. Notwithstanding the foregoing, Borrowers may make acquisitions
without Lenders prior consent so long as (i) the purchase price of such
acquisitions is paid through the issuance of capital stock of the Borrowers or
from the proceeds of an equity offering and (ii) the consolidated pro forma
financial statements of the Borrowers taking into account such acquisition shows
that a positive cash flow will exist after the acqusition.
3.17 Transactions With Affiliates. Neither Borrower shall enter into
any transaction, including, without limitation, the purchase, sale or exchange
of property or the rendering of any service, with any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of a Borrower's
business and upon fair and reasonable terms no less favorable to such Borrower
than such Borrower would obtain in a comparable arm's length transaction with a
person not an affiliate. For the purposes of this Section 3.17, "affiliate"
shall mean a person, corporation, partnership or other entity controlling,
controlled by or under common control with Borrower.
3.18 Environment. Each Borrower shall be and remain in compliance with
the provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lender immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lender immediately of any hazardous discharge from or affecting
its premises; immediately contain and remove the same, in compliance with all
applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit Lender to inspect the premises, to conduct tests thereon, and
to inspect all books, correspondence, and records pertaining thereto; and at
Lender's request, and at Borrowers' expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to Lender, and
such other and further assurances reasonably satisfactory to Lender that the
condition has been corrected.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Closing of the Loan. The obligation of Lender to fund the Loan on
the date hereof (the "Closing Date") is subject to the fulfillment, on or prior
to the Closing Date, of each of the following conditions:
(a) Borrowers shall have performed and complied in all
material respects with all of the covenants, agreements, obligations
and conditions required by this Agreement.
(b) Lender shall have received an opinion of the Borrowers'
counsel, Hillyer & Irwin, dated the Closing Date, in form and substance
satisfactory to Lender's counsel, Caldwell & Caldwell, P.C.
(c) Borrowers shall have delivered to Lender a Note executed
by Borrowers, substantially in the form of Exhibit A attached hereto
and incorporated herein by this reference.
(d) VIS shall have delivered to Lender a Stock Purchase
Warrant executed by VIS, substantially in the form of Exhibit B
attached hereto and incorporated herein by this reference.
(e) Borrowers shall have delivered to Lender a Security
Agreement executed by Borrowers and a related UCC-1 Financing
Statements executed by Borrowers, each of which is substantially in the
form of Exhibit C attached hereto and incorporated herein by this
reference.
(f) Borrowers shall have delivered to Lender the Small
Business Administration Forms 480, 652 and 1031 (Part A) completed by
Borrowers.
(g) Borrowers shall have delivered to Lender the Small
Business Administration Economic Impact Assessment completed by
Borrowers, a form of which is attached hereto as Exhibit E and
incorporated herein by this reference.
(h) Lender shall have received copies of the corporate charter
and other publicly filed organizational documents of Borrowers,
certified by the Secretary of State or other appropriate public
official in the jurisdiction in which Borrowers are incorporated.
(i) Borrower shall have delivered Landlord's Consent and
Subordination of Lien, executed by Borrower's Landlord, in
substantially the form attached hereto as Exhibit F and incorporated
herein by this reference.
(j) Lender shall have received certified (as of the date of
this Agreement) copies of all corporate action taken by Borrowers,
including resolutions of their Boards of Directors, authorizing the
execution, delivery and performance of the Loan Documents.
(k) Lender shall have received a certificate as to the legal
existence and good standing of the Borrowers, issued by the Secretary
of State or other appropriate public official in the jurisdiction in
which the Borrowers are incorporated.
(l) Lender shall have received certificates of the Secretaries
of State or other appropriate public officials as to Borrowers'
qualification to do business and good standing in each jurisdiction in
which a failure to be so qualified would have a material adverse effect
on their financial position or its ability to conduct their business in
the manner now conducted and as hereafter intended to be conducted.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default in the payment of the principal of or interest on
the indebtedness evidenced by the Note in accordance with the terms of
the Note, which default is not cured within five (5) days;
(b) Any misrepresentation by Borrowers as to any material
matter hereunder or under any of the other Loan Documents, or delivery
by Borrowers of any schedule, statement, resolution, report,
certificate, notice or writing to Lender that is untrue in any material
respect on the date as of which the facts set forth therein are stated
or certified;
(c) Failure of Borrowers to perform any of their obligations,
covenants or agreements under this Agreement, the Note or any of the
other Loan Documents;
(d) Either Borrower (i) shall generally not pay or shall be
unable to pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or an
adjudication or appointment is made; or (v) shall indicate, by any act
or intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for
relief or the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for
a period of sixty (60) days or more;
(e) Either Borrower shall be liquidated, dissolved,
partitioned or terminated, or the charter thereof shall expire or be
revoked;
(f) A default or event of default shall occur under any of the
other Loan Documents and, if subject to a cure right, such default or
event of default shall not be cured within the applicable cure period;
(g) Borrowers shall default in the timely payment or
performance of any obligation now or hereafter owed to Lender in
connection with any other indebtedness of Borrowers now or hereafter
owed to Lender;
(h) Either Borrower shall have defaulted and continue to be in
default in the timely payment or performance of any other indebtedness
or obligation, which in the aggregate exceeds Twenty-Five Thousand and
No/100ths Dollars ($25,000.00) or materially adversely affects such
Borrower's financial condition; or
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may be cured by
payment of a sum of money) of notice thereof to Borrowers given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrowers and an opportunity to cure any Curable Default of
which either Borrower has had actual knowledge for the requisite number of days
set forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 5.1(d), the indebtedness evidenced by
the Note as well as any and all other indebtedness of Borrowers to Lender shall
be immediately due and payable in full; and upon the occurrence of any other
Event of Default described above, Lender at any time thereafter may at its
option accelerate the maturity of the indebtedness evidenced by the Note as well
as any and all other indebtedness of Borrowers to Lender; all without notice of
any kind. Upon the occurrence of any such Event of Default and the acceleration
of the maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and
all rights and remedies possessed by Lender pursuant to the terms of
the Note and all of the other Loan Documents; and
(b) Lender shall have any and all other rights and remedies
that Lender may now or hereafter possess at law, in equity or by
statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lender to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed expedient by Lender.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including reasonable
attorney's fees, incurred by Lender in connection with the exercise of
its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lender elects, in its sole discretion, to
cure the default that has occurred;
Third, to the payment of the obligations of Borrower under the
Loan Documents (the "Obligations"), including but not limited to the
payment of the principal of and interest on the indebtedness evidenced
by the Note, in such order of priority as Lender shall determine in its
sole discretion; and
Fourth, the remainder, if any, to Borrowers or to any other
person lawfully thereunto entitled.
ARTICLE 6
TERMINATION
6.1 Termination of this Agreement. This Agreement shall remain in full
force and effect until the later of (i) the Maturity Date (as defined in the
Note), or (ii) the payment by Borrowers of all amounts owed to Lender, at which
time Lender shall cancel the Note and deliver it to Borrowers; provided,
however, that if at any time Borrowers have satisfied all obligations to Lender,
Borrowers may terminate this Agreement by providing written notice to Lender.
ARTICLE 7
MISCELLANEOUS
7.1 Performance By Lender. If Borrowers shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Note (if none, then at the maximum rate from time
to time allowed by applicable law), shall be immediately repaid to Lender by
Borrowers and shall constitute a part of the Obligations. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrowers or by or on behalf of Lender shall bind and inure
to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
7.3 Costs and Expenses. Borrowers agree, jointly and severally, to pay
all reasonable costs and expenses incurred by Lender in connection with the
making of the Loan, including but not limited to filing fees, recording taxes
and reasonable attorneys' fees, promptly upon demand of Lender. Borrowers
further agree, jointly and severally, to pay all premiums for insurance required
to be maintained by Borrowers pursuant to the terms of the Loan Documents and
all of the out-of-pocket costs and expenses incurred by Lender in connection
with the collection of the Loan, amendment to the Loan Documents, or prepayment
of the Loan, including but not limited to reasonable attorneys' fees, promptly
upon demand of Lender.
7.4 Assignment. The Note, this Agreement and the other Loan Documents
may be endorsed, assigned and/or transferred in whole or in part by Lender, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lender under all of the same to the extent transferred
and assigned. Lender may grant participations in all or any portion of its
interest in the indebtedness evidenced by the Note, and in such event Borrowers
shall continue to make payments due under the Loan Documents to Lender and
Lender shall have the sole responsibility of allocating and forwarding such
payments in the appropriate manner and amounts. Borrowers shall not assign any
of their rights nor delegate any of their duties hereunder or under any of the
other Loan Documents without the prior express written consent of Lender.
7.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrowers hereunder and under
all of the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Note or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Loan or otherwise, shall the interest and loan charges agreed to
be paid to Lender for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrowers in respect of the indebtedness evidenced by the Note shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
indebtedness evidenced by the Note and/or refunded to Borrowers so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Note exceed the maximum amounts permitted from
time to time by applicable law.
7.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery, telecopy or telex or two (2) business days after the date of mailing
(or the next business day after delivery to such courier service), as the case
may be, shall be the date of such notice, election or demand. For the purposes
of this Agreement:
The Address of Lender is: Sirrom Capital Corporation
Suite 200
500 Church Street
Nashville, TN 37219
Attention: David Sinutko
with a copy to: Caldwell & Caldwell, P.C.
500 Church Street
Suite 200
Nashville, TN 37219
Attention: Maria-Lisa Caldwell, Esq.
The Addresses of
Borrowers are: Vista Information Solutions, Inc.
5060 Shoreham Place, Suite 300
San Diego, CA 92122
Attention: Steven Hamilton
Vista Environmental Information, Inc.
5060 Shoreham Place, Suite 300
San Diego, CA 92122
Attention: Steven Hamilton
with copies to: Hillyer & Irwin
550 West C Street, 16th Floor
San Diego, CA 92101
Attention: William A. Reavey
7.10 Entire Agreement. This Agreement and the other written agreements
between Borrowers and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrowers were not based upon any fact or material provided by Lender, nor were
the Borrowers induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement shall be construed
and enforced under the laws of the State of Tennessee applicable to contracts to
be wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
7.12 Survival of Representations and Warranties. All representations
and warranties contained herein or made by or furnished on behalf of the
Borrowers in connection herewith shall survive the execution and delivery of
this Agreement and all other Loan Documents.
7.13 Jurisdiction and Venue. Each Borrower hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or any other Loan Documents or with
respect to the transactions contemplated hereby, and expressly waives any and
all objections it may have as to venue in any of such courts.
7.14 Waiver of Trial by Jury. LENDER AND BORROWERS HEREBY WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO
THIS AGREEMENT OR THE LOAN DOCUMENTS.
7.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
7.16 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
SIRROM CAPITAL CORPORATION,
a Tennessee corporation
By: /s/George M. Miller II
Title: Chief Executive Officer
BORROWERS:
VISTA INFORMATION SOLUTIONS, INC.,
a Minnesota corporation
By: /s/ Thomas R. Gay
Title: Chief Executive Officer
VISTA ENVIRONMENTAL INFORMATION, INC.,
a Delaware corporation
By: /s/ Thomas R. Gay
Title: Chief Executive Officer
INDEX OF SCHEDULES AND ATTACHMENTS
Exhibit A - Form of Note
Exhibit B - Form of Stock Purchase Warrant
Exhibit C - Form of Security Agreement and UCC-1
Exhibit D - Economic Impact Assessment
Schedule 2.1(b) - Subsidiaries
Schedule 2.1(f) - Trademarks, Patents and Copyrights
Schedule 2.1(i)(A) and (B) - Financial Statements
Schedule 2.1(l) - Debt and Liens
Schedule 2.1(o) - Shareholder Loans
Schedule 3.13 - Subordinated Debt
SECURED PROMISSORY NOTE
$2,500,000.00 April 30, 1996
FOR VALUE RECEIVED, the undersigned, VISTA INFORMATION SOLUTIONS, INC.,
a Minnesota corporation, and VISTA ENVIRONMENTAL INFORMATION, INC., a Delaware
corporation, jointly and severally ("Makers"), promise to pay to the order of
SIRROM CAPITAL CORPORATION, a Tennessee corporation ("Payee"; Payee and any
subsequent holder[s] hereof are hereinafter referred to collectively as
"Holder"), at the office of Payee at First American Trust Company, Custody
Department, 800 First American Center, Nashville, Tennessee 37237, Attn: Jeff
Eubanks, or at such other place as Holder may designate to Makers in writing
from time to time, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND AND
NO/100THS DOLLARS ($2,500,000.00), together with interest on the outstanding
principal balance hereof from the date hereof at the rate of thirteen and
one-half percent (13.5%) per annum (computed on the basis of a 360-day year).
Interest only on the outstanding principal balance hereof shall be due
and payable monthly, in arrears, with the first installment being payable on the
first (1st) day of June, 1996, and subsequent installments being payable on the
first (1st) day of each succeeding month thereafter until April 30, 2001 (the
"Maturity Date"), at which time the entire outstanding principal balance,
together with all accrued and unpaid interest, shall be immediately due and
payable in full.
The indebtedness evidenced hereby may be prepaid in whole or in part,
at any time and from time to time, without penalty. Any such prepayments shall
be credited first to any accrued and unpaid interest and then to the outstanding
principal balance hereof.
Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any default be made in the payment of principal or interest as
stipulated above, which default is not cured within five (5) days following the
giving of any applicable notice; or in the event that any default or event of
default shall occur under that certain Loan Agreement of even date herewith,
between Makers and Payee (the "Loan Agreement"), which default or event of
default is not cured following the giving of any applicable notice and within
any applicable cure period set forth in said Loan Agreement; or should any
default by Makers be made in the performance or observance of any covenants or
conditions contained in any other instrument or document now or hereafter
evidencing, securing or otherwise relating to the indebtedness evidenced hereby
(subject to any applicable notice and cure period provisions that may be set
forth therein); then, and in such event, the entire outstanding principal
balance of the indebtedness evidenced hereby, together with any other sums
advanced hereunder, under the Loan Agreement and/or under any other instrument
or document now or hereafter evidencing, securing or in any way relating to the
indebtedness evidenced hereby, together with all unpaid interest accrued
thereon, shall, at the option of Holder and without notice to Makers, at once
become due and payable and may be collected forthwith, regardless of the
stipulated date of maturity. Upon the occurrence of any default as set forth
herein, at the option of Holder and without notice to Makers, all accrued and
unpaid interest, if any, shall be added to the outstanding principal balance
hereof, and the entire outstanding principal balance, as so adjusted, shall bear
interest thereafter until paid at an annual rate (the "Default Rate") equal to
the lesser of (i) the rate that is seven percentage points (7.0%) in excess of
the above-specified interest rate, or (ii) the maximum rate of interest allowed
to be charged under applicable law (the "Maximum Rate"), regardless of whether
or not there has been an acceleration of the payment of principal as set forth
herein. All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default.
In the event this Note is placed in the hands of an attorney for
collection, or if Holder incurs any costs incident to the collection of the
indebtedness evidenced hereby, Makers and any indorsers hereof agree to pay to
Holder an amount equal to all such costs, including without limitation all
actual reasonable attorney's fees and all court costs.
Presentment for payment, demand, protest and notice of demand, protest
and nonpayment are hereby waived by Makers and all other parties hereto. No
failure to accelerate the indebtedness evidenced hereby by reason of default
hereunder, acceptance of a past-due installment or other indulgences granted
from time to time, shall be construed as a novation of this Note or as a waiver
of such right of acceleration or of the right of Holder thereafter to insist
upon strict compliance with the terms of this Note or to prevent the exercise of
such right of acceleration or any other right granted hereunder or by applicable
laws. No extension of the time for payment of the indebtedness evidenced hereby
or any installment due hereunder, made by agreement with any person now or
hereafter liable for payment of the indebtedness evidenced hereby, shall operate
to release, discharge, modify, change or affect the original liability of Makers
hereunder or that of any other person now or hereafter liable for payment of the
indebtedness evidenced hereby, either in whole or in part, unless Holder agrees
otherwise in writing. This Note may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
The indebtedness and other obligations evidenced by this Note are
further evidenced by (i) the Loan Agreement and (ii) certain other instruments
and documents, as may be required to protect and preserve the rights of Makers
and Payee as more specifically described in the Loan Agreement. Makers hereby
agree that the indebtedness and other obligations evidenced by this Note shall
be designated as Senior Debt as that term is defined in certain Subordinated
Convertible Debentures issued by Makers.
All agreements herein made are expressly limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise, shall the amount paid or
agreed to be paid to Holder for the use of the money advanced or to be advanced
hereunder exceed the Maximum Rate. If, from any circumstances whatsoever, the
fulfillment of any provision of this Note or any other agreement or instrument
now or hereafter evidencing, securing or in any way relating to the indebtedness
evidenced hereby shall involve the payment of interest in excess of the Maximum
Rate, then, ipso facto, the obligation to pay interest hereunder shall be
reduced to the Maximum Rate; and if from any circumstance whatsoever, Holder
shall ever receive interest, the amount of which would exceed the amount
collectible at the Maximum Rate, such amount as would be excessive interest
shall be applied to the reduction of the principal balance remaining unpaid
hereunder and not to the payment of interest. This provision shall control every
other provision in any and all other agreements and instruments existing or
hereafter arising between Makers and Holder with respect to the indebtedness
evidenced hereby.
This Note is intended as a contract under and shall be construed and
enforceable in accordance with the laws of the State of Tennessee, except to the
extent that federal law may be applicable to the determination of the Maximum
Rate.
As used herein, the terms "Makers" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law.
MAKERS:
VISTA INFORMATION SOLUTIONS, INC.
a Minnesota corporation
By: /s/Thomas R. Gay
Title: Chief Executive Officer
VISTA ENVIRONMENTAL INFORMATION, INC.,
a Delaware corporation
By: /s/Thomas R. Gay
Title: Chief Executive Officer
NEITHER THE WARRANT REPRESENTED BY THIS AGREEMENT NOR THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF (1) A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT AND SUCH LAWS OR (2) AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT AND SIMILAR OR OTHER AVAILABLE EXEMPTIONS
FROM QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
This Warrant is issued this 30th day of April, 1996, by VISTA
INFORMATION SOLUTIONS, INC., a Minnesota corporation (the "Company"), to SIRROM
CAPITAL CORPORATION, a Tennessee corporation (SIRROM CAPITAL CORPORATION and any
permitted assignee or transferee hereof are hereinafter referred to collectively
as "Holder" or "Holders").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of SIRROM
CAPITAL CORPORATION making a loan to the Company in an amount of Two Million
Five Hundred Thousand and no/100ths Dollars ($2,500,000) pursuant to the terms
of a secured promissory note of even date herewith (the "Note") and related loan
agreement of even date herewith (the "Loan Agreement"), and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase
1,247,582 shares of the Company's common stock (the "Common Stock"), which the
Company represents to equal 5% of the shares of Common Stock outstanding on the
date hereof, calculated on a fully diluted basis and assuming exercise of this
Warrant for such 5% ("Base Amount"), provided that in the event that any portion
of the indebtedness evidenced by the Note is outstanding on the following dates,
the Base Amount shall be increased to the corresponding number set forth below:
DATE BASE AMOUNT
- - - ---------------------------------------- ----- --------------------------------
April 30, 1999 1,745,358 shares, which the Company
represents to equal 6.5% of the shares of
the Common Stock outstanding on the date
hereof calculated on a fully diluted basis
after exercise of this Warrant
April 30, 2000 2,348,376 shares, which the Company
represents to equal 8.0% of the shares of
the Common Stock outstanding on the date
hereof calculated on a fully diluted basis
after exercise of this Warrant
April 30, 2001 3,097,668 shares, which the Company
represents to equal 9.5% of the shares of
the Common Stock outstanding on the date
hereof calculated on a fully diluted basis
after exercise of this Warrant
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable, on
the terms and subject to the conditions provided herein, at any time and from
time to time from the date hereof until May 31, 2001.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment or
increments of One Hundred (100) Shares (or the balance of the Shares if less
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: Vista Information Solutions, Inc., 5060
Shoreham Place, Suite 300, San Diego, CA 92122 or such other address as the
Company shall designate in a written notice to the Holder hereof, together with
an investment representation letter in substantially the form attached hereto as
Exhibit A, this Warrant and payment to the Company of the aggregate Exercise
Price of the Shares so purchased. The Exercise Price shall be payable, at the
option of the Holder, (i) by certified or bank check, (ii) by the surrender of
the Note or portion thereof having an outstanding principal balance equal to the
aggregate Exercise Price or (iii) by the surrender of a portion of this Warrant
where the Shares subject to the portion of this Warrant that is surrendered have
a fair market value (after subtracting from such value the aggregate Exercise
Price for such Shares) equal to the aggregate Exercise Price. Upon exercise of
this Warrant as aforesaid, the Company shall as promptly as practicable, and in
any event within fifteen (15) days thereafter, execute and deliver to the Holder
of this Warrant a certificate or certificates for the total number of whole
Shares for which this Warrant is being exercised in such names and denominations
as are requested by such Holder (subject to compliance by the Holder with the
provisions of applicable law and this Warrant regarding transfers of any
interest herein or the Shares for which this Warrant may be exercised). If this
Warrant shall be exercised with respect to less than all of the Shares, the
Holder shall be entitled to receive a new Warrant covering the number of Shares
in respect of which this Warrant shall not have been exercised, which new
Warrant shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act") or any
state securities laws ("Blue Sky Laws"). This Warrant has been acquired
for investment purposes and not with a view to distribution or resale
and may not be sold or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and
such applicable Blue Sky Laws, or (ii) an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company and
its counsel, that registration is not required under the Securities Act
and under any applicable Blue Sky Laws (the Company hereby acknowledges
that Caldwell & Caldwell, P.C. is acceptable counsel). Transfer of the
shares issued upon the exercise of this Warrant shall be restricted in
the same manner and to the same extent as the Warrant and the
certificates representing such Shares shall bear substantially the
following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents
and instruments as counsel for the Company reasonably deems necessary
to effect the compliance of the issuance of this Warrant and any shares
of Common Stock issued upon exercise hereof with applicable federal and
state securities laws. Without limiting the foregoing, the Holder
acknowledges that it has concurrently herewith executed and delivered
to the Company an investment representation letter in substantially the
form attached hereto as Exhibit A.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The
Company shall at all times reserve and keep available for issuance upon
the exercise of this Warrant such number of authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in
full of this Warrant.
(c) The Company covenants and agrees that except for shares
issued pursuant to the exercise of stock options granted to employees
of the Company prior to the date hereof, it shall not sell any shares
of the Company's capital stock at a price per share below the fair
market value of such shares, without the prior written consent of the
Holder hereof. Fair market value shall be established by the Company's
board of directors in a commercially reasonable manner (with reference,
as applicable, to any established and active public market for the
shares of Common Stock sold by the Company). The basis for
determination (if fair market value is determined by the Company's
board of directors to be less than the prevailing price in an
established and active public market for the shares of Common Stock
sold by the Company) shall be provided in writing to the Holder hereof.
In the event that the Company sells shares of the Company's capital
stock in violation of this Section 4(c), the number of Shares then
issuable upon exercise of this Warrant shall be equal to the product
obtained by multiplying the number of Shares issuable pursuant to this
Warrant prior to such sale by the quotient obtained by dividing (i) the
number of shares of Common Stock outstanding on a fully diluted basis
prior to such sale plus the number of shares sold in such sale by (ii)
the number of shares of Common Stock outstanding on a fully diluted
basis prior to such sale plus the number of shares which the gross
proceeds of such sale could have purchased if shares had been sold in
such sale at fair market value. The provisions of this Section 4(c)
constitute the sole remedy for the Holder with respect to a violation
by the Company of the provisions of the first sentence of this Section
4(c). Without limitation, the provisions of this Section 4(c) shall not
apply to any exercise of this Warrant (or any warrant which relates to
the original Warrant) or the exercise or conversion of any derivative
securities issued and outstanding on or before the date first above
written.
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof
(and the provisions of applicable state and federal law), this Warrant may be
transferred, in whole or in part, to any person or business entity, by
presentation of the Warrant to the Company with written instructions for such
transfer. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instructions.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are subject to this Warrant shall be deemed to
be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering. The Company shall not grant any preemptive
rights with respect to any of its capital stock without the prior written
consent of the Holder.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall receive notice
of and be entitled to attend or may send a representative to attend all meetings
of the Company's Board of Directors in a non-voting observation capacity and
shall receive a copy of all correspondence and information delivered to the
Company's Board of Directors, from the date hereof until such time as the
indebtedness evidenced by the Note has been paid in full. The Holder
acknowledges the provisions of Rule 10b-5 promulgated under the Securities
Exchang eAct of 1934, as amended, and covenants that it will not engage in any
transactions involving securities of the Company while the Holder or its
affiliates are in possession of material, non-public information with respect
thereto. In the event that the Holder exercises its right to attend board
meetings and/or receive matierals supplied to members of the board, or the
Holder otherwise receives matieral, non-public information regarding the
Company, the Holder covenants that it will execute and deliver to the Company
reasonably acceptable confidentiality and standstill agreement with respect to
information regarding the Company and/or the securities of the Company.
8. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other similar event, occurring
after the date hereof, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the aggregate
number and class of shares which such Holder would have received if
this Warrant had been exercised immediately prior to such stock split,
stock dividend, recapitalization, combination of shares, or other
similar event. If any adjustment under this Section 8(a), would create
a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares subject to this Warrant shall be the next higher
number of shares, rounding all fractions upward. Whenever there shall
be an adjustment pursuant to this Section 8(a), the Company shall
forthwith notify the Holder or Holders of this Warrant of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares,
separation, reorganization or liquidation of the Company, or other
similar event, occurring after the date hereof, as a result of which
shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of securities
of the Company or another entity, or the holders of Common Stock are
entitled to receive cash or other property, then the Holder exercising
this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares, cash or other
property which such Holder would have received if this Warrant had been
exercised immediately prior to such merger, consolidation, exchange of
shares, separation, reorganization or liquidation, or other similar
event. If any adjustment under this Section 8(b) would create a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares subject to this Warrant shall be the next higher
number of shares, rounding all fractions upward. Whenever there shall
be an adjustment pursuant to this Section 8(b), the Company shall
forthwith notify the Holder of this Warrant of such adjustment, setting
forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated.
9. REGISTRATION.
(a) The Company and the Holder agree that if at any time after
the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable
for a secondary offering(but without any obligation to do so and solely
with respect to an offering only for cash, and other than a
registration relating either to the sale of securities to participants
in a Company stock option, stock purchase or similar plan or to a
Securities and Exchange Commission Rule 145 transaction, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration
statement covering the sale of Shares), it will give notice in writing
to such effect to the Holder, and, at the written request of the
Holder, made within ten (10) days after the receipt of such notice,
will include therein at the Company's cost and expense but excluding
underwriting discounts, commissions and filing fees attributable to the
Shares included therein as well as fees and expenses of counsel to such
Holder) such of the Shares as such holder(s) shall request; provided,
however, that if the offering being registered by the Company is
underwritten and if the representative of the underwriters certifies in
writing that the inclusion therein of the Shares would materially and
adversely affect the sale of the securities to be sold by the Company
thereunder, then the Company shall be required to include only that
number of selling shareholder securities, including the Shares, which
the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the selling shareholder securities so
included to be apportioned pro rata among all selling shareholders
according to the total amount of securities entitled to be included
therein owned by each selling shareholder, but in no event shall the
total amount of Shares included in the offering be less than the number
of securities included in the offering by any other single selling
shareholder unless all of the Shares requested to be included are
included in the offering).
(b) Whenever the Company undertakes to effect the registration
of any of the Shares, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering such Shares and use its best efforts to cause such
registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such
registration effective until the earlier of (A) the date when
all Shares covered by the registration statement have been
sold or (B) one hundred eighty (180) days from the effective
date of the registration statement; provided, that before
filing a registration statement or prospectus or any amendment
or supplements thereto, the Company will furnish to each
Holder of Shares covered by such registration statement and
the underwriters, if any, copies of all such documents
proposed to be filed (excluding exhibits, unless any such
person shall specifically request exhibits), which documents
will be subject to the review of such Holders and
underwriters, and the Company will not file such registration
statement or any amendment thereto or any prospectus or any
supplement thereto (including any documents incorporated by
reference therein) with the Commission if (A) the
underwriters, if any, shall reasonably object to such filing
or (B) if information in such registration statement or
prospectus concerning a particular selling Holder has changed
and such Holder or the underwriters, if any, shall reasonably
object.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to such registration
statement as may be necessary to keep such registration
statement effective during the period referred to in Section
10(b)(i) and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule
424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers
of copies of such registration statement, each amendment
thereto, the prospectus included in such registration
statement (including each preliminary prospectus), each
supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of
the Shares owned by them.
(iv) Use its best efforts to register and qualify
under such other securities laws of such jurisdictions as
shall be reasonably requested by any selling Holder and do any
and all other acts and things which may be reasonably
necessary or advisable to enable such selling Holder to
consummate the disposition of the Shares owned by such Holder,
in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a
general consent to service of process in any such states or
jurisdictions.
(v) Promptly notify each selling Holder of the
happening of any event as a result of which the prospectus
included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to
make the statements therein not misleading and, at the request
of any such Holder, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Shares, such prospectus will not
contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not
misleading.
(vi) Provide a transfer agent and registrar for all
such Shares not later than the effective date of such
registration statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form for a primary
offering) and take all such other actions as the underwriters,
if any, reasonably request in order to expedite or facilitate
the disposition of such Shares (including, without limitation,
effecting a stock split or a combination of shares).
(viii) Subject to any reasonable confidentiality
agreement or procedure requested by the Company, make
available for inspection by any selling Holder or any
underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other
agent retained by any such selling Holder or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the officers, directors,
employees and independent accountants of the Company to supply
all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with
such registration statement.
(ix) Promptly notify the selling Holder(s) and the
underwriters, if any, of the following events and (if
requested by any such person) confirm such notification in
writing: (A) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment
thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments
or supplements to the registration statement or the prospectus
or for additional information, (C) the issuance or threat of
issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation
of any proceedings for that purpose and (D) the receipt by the
Company of any notification with respect to the suspension of
the qualification of the Shares for sale in any jurisdiction
or the initiation or threat of initiation of any proceeding
for such purposes.
(x) Make every reasonable effort to prevent the entry
of any order suspending the effectiveness of the registration
statement and obtain at the earliest possible moment the
withdrawal of any such order, if entered.
(xi) Cooperate with the selling Holder(s) and the
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Shares to be sold
and not bearing any restrictive legends, and enable such
Shares to be in such lots and registered in such names as the
underwriters may request at least two (2) business days prior
to any delivery of the Shares to the underwriters.
(xii) Provide a CUSIP number for all the Shares not
later than the effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration
statement and any post-effective amendment thereto and at each
closing of an underwritten offering, (A) make such
representations and warranties to the selling Holder(s) and
the underwriters, if any, with respect to the Shares and the
registration statement as are customarily made by issuers in
primary underwritten offerings; (B) use its best efforts to
obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed
to the selling Holders and the underwriters, if any, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten
offerings; (C) deliver such documents and certificates as may
be reasonably requested (1) by the Holders of a majority of
the Shares being sold, and (2) by the underwriters, if any, to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (D) obtain
opinions of counsel to the Company and updates thereof (which
counsel and which opinions shall be reasonably satisfactory to
the underwriters, if any), covering the matters customarily
covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by the
selling Holders and underwriters or their counsel. Such
counsel shall also state that no facts have come to the
attention of such counsel which cause them to believe that
such registration statement, the prospectus contained therein,
or any amendment or supplement thereto, as of their respective
effective or issue dates, contains any untrue statement of any
material fact or omits to state any material fact necessary to
make the statements therein not misleading (except that no
statement need be made with respect to any financial
statements, notes thereto or other financial data or other
expertized material contained therein). If for any reason the
Company's counsel is unable to give such opinion, the Company
shall so notify the selling Holders and shall use its best
efforts to remove expeditiously all impediments to the
rendering of such opinion.
(xiv) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the
end of any twelve-month period (or ninety (90) days, if such
period is a fiscal year) (A) commencing at the end of any
fiscal quarter in which the Shares are sold to underwriters in
a firm or best efforts underwritten offering, or (B) if not
sold to underwriters in such an offering, beginning with the
first month of the first fiscal quarter of the Company
commencing after the effective date of the registration
statement, which statements shall cover such twelve-month
periods.
(c) After the date hereof, the Company shall not grant to any
holder of securities of the Company any registration rights which have
a priority greater than or equal to those granted to the Holder
pursuant to this Warrant without the prior written consent of the
Holder.
(d) The Company's obligations under Section 9(a) above with
respect to each Holder of Shares are expressly conditioned upon (i)
such Holder's furnishing to the Company in writing such information
concerning such Holder and the terms of such Holder's proposed offering
as the Company shall reasonably request for inclusion in the
registration statement, (ii) such Holder executing any underwriting
agreement required by any underwriter in connection with the proposed
offering and (iii) such Holder executing a specific under taking in
favor of the Company to perform such Holder's obligations with respect
to an offering, and to abide by all applicable conditions and
restrictions, as set forth herein. If any registration statement
including any of the Shares is filed, then the Company shall indemnify
each Holder thereof (and each underwriter for such Holder and each
person, if any, who controls such underwriter within the meaning of the
Securities Act) from any loss, claim, damage or liability arising out
of, based upon or in any way relating to any untrue statement of a
material fact contained in such registration statement or any omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except for any
such statement or omission based on information furnished in writing by
such Holder of the Shares expressly for use in connection with such
registration statement; and such Holder shall indemnify the Company
(and each of its officers and directors who has signed such
registration statement, each director, each person, if any, who
controls the Company within the meaning of the Securities Act, each
underwriter for the Company and each person, if any, who controls such
underwriter within the meaning of the Securities Act) and each other
such Holder against any loss, claim, damage or liability arising from
any such statement or omission which was made in reliance upon
information furnished in writing to the Company by such Holder of the
Shares expressly for use in connection with such registration
statement.
(e) No Holder of Shares shall have any right to obtain or seek
an injunction restraining or otherwise delaying any registration by the
Company as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section.
(f) The right to request the Company to register Shares
pursuant to this Section shall not apply to any Holder of less than
100,000 Shares (appropriately adjusted to reflect any stock dividend,
distribution, stock split or combination, reclassification,
recapitalization or other similar event affecting the number of Shares
occurring after the date first above written).
(g) Any provision of this Section may be amended and the
observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) with the written
consent of (i) the Company and (ii) the Holder of a majority of the
Shares for which registration is possible as provided in this Section.
(h) No person shall be entitled to exercise any right relating
to registration provided for in this Section with respect to any
Shares, following any transfer of such Shares in a registered offering
or in a transaction pursuant to Rule 144 under the Securities Act. In
addition, the Company shall not be obligated to include any securities
in a registration statement if the Company shall have received an
opinion of its counsel or of other counsel to the affected Holders to
the effect that the proposed disposition of securities may be effected
without registration under the Securities Act.
(i) Notwithstanding anything in this Section 9 to the
contrary, it is agreed that none of the rights granted Holder in this
Section 9 shall be prior to or in conflict with any registration rights
previously granted any third parties and that the registration rights
of Holder and the registration rights of any such third parties shall
be pari passu to the extent permitted in the third party agreements
relating thereto.
10. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders
of its Common Stock;
(c) offer for subscription to the holders of any of its Common
Stock any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with, or sell of
all or substantially all of its assets to, another corporation;
(e) voluntarily or involuntarily dissolve, liquidate or wind
up of the affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or
securities convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least
twenty (20) days' prior written notice of the date on which the books
of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least twenty (20) days' prior written notice of the date when the same
shall take place. Any notice required by clause (i) shall also specify,
in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled
thereto, and any notice required by clause (ii) shall specify the date
on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
11. TERMINATION. Except as otherwise provided in Section 9 with respect
to the provisions thereof, all provisions of this Warrant (including, without
limitation, the covenants of the Company set forth in this Warrant) shall expire
upon the earlier of May 31, 2001 or the exercise in full of this Warrant.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
COMPANY: VISTA INFORMATION SOLUTIONS, INC.,
a Minnesota corporation
By: /s/ Thomas R. Gay
Title: Chief Executive Officer
HOLDER: SIRROM CAPITAL CORPORATION,
a Tennessee corporation
By: /s/George M. Miller II
Title: Chief Executive Officer
MANAGEMENT
SHAREHOLDERS: _________________________________________
_________________________________________
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is dated as of the 30th day of
April, 1996, by and between VISTA INFORMATION SOLUTIONS, INC., a Minnesota
corporation, VISTA ENVIRONMENTAL INFORMATION, INC., a Delaware corporation
(individually, a "Borrower" and collectively, the "Borrowers"), and SIRROM
CAPITAL CORPORATION, a Tennessee corporation ("Lender").
WITNESSETH:
WHEREAS, Lender is making a loan (the "Loan") in the amount of
$2,500,000 to Borrowers, pursuant to that certain Loan Agreement of even date
herewith by and between Borrowers and Lender (the "Loan Agreement"); and
WHEREAS, in connection with the making of the Loan, Lender desires to
obtain from Borrowers and Borrowers desire to grant to Lender a security
interest in certain collateral more particularly described below.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. Each Borrower hereby grants to Lender a
security interest in the following described property and any and all proceeds
and products thereof and accessions thereto (collectively the "Collateral"):
(a) Equipment. All equipment of Borrower of any kind and
description, whether now owned or hereafter acquired and wherever
located, together with all parts, accessories and attachments and all
replacements thereof and additions thereto;
(b) Inventory, Accounts, Contract Rights, Chattel Paper and
General Intangibles. All of Borrower's inventory and any agreements for
lease of same and rentals therefrom, and all of Borrower's accounts,
accounts receivable, contract rights, chattel paper and general
intangibles and the proceeds therefrom, whether now in existence or
owned or hereafter arising or acquired, entered into or created, and
wherever located; and whether held for lease or sale, or furnished or
to be furnished under contracts of service;
(c) Trademarks, Etc. All trademarks and service marks now held
or hereafter acquired by Borrower, both those that are registered with
the United States Patent and Trademark Office and any unregistered
marks used by Borrower in the United States, and trade dress, including
logos and designs, in connection with which any such marks are used,
together with all registrations regarding such marks and the rights to
renewals thereof, and the goodwill of the business of Borrower
symbolized by such marks;
(d) Copyrights. All copyrights now held or hereafter acquired
by Borrower and any applications for U.S. copyrights hereafter made by
Borrower; and
(e) Proprietary Information, Computer Data, Etc. All
proprietary information and trade secrets of Borrower with respect to
Borrower's business and all of Borrower's computer programs and the
information contained therein and all intellectual property rights with
respect thereto, subject, however, to the rights of Insurance Services
Office, Inc. ("ISO") under ISO's agreement with Borrowers.
2. Secured Indebtedness. The obligations secured hereby shall include
(a) loans to be made concurrently or in connection with this Agreement or the
Loan Agreement as evidenced by one or more promissory notes payable to the order
of Lender that shall be due and payable as set forth in such promissory notes,
and any renewals or extensions thereof, (b) the full and prompt payment and
performance of any and all other indebtednesses and other obligations of
Borrowers to Lender, direct or contingent (including but not limited to
obligations incurred as indorser, guarantor or surety), however evidenced or
denominated, and however and whenever incurred, including but not limited to
indebtednesses incurred pursuant to any present or future commitment of Lender
to Borrowers and (c) all future advances made by Lender for taxes, levies,
insurance and preservation of the Collateral and all attorney's fees, court
costs and expenses of whatever kind incident to the collection of any of said
indebtedness or other obligations and the enforcement and protection of the
security interest created hereby.
3. Representations, Warranties and Agreements of Borrower. Each
Borrower represents, warrants and agrees as follows:
(a) Borrower will promptly notify Lender, in writing, of any
new place or places of business if the Collateral is used in business,
or of any change in Borrower's residence if the Collateral is not used
in business, and regardless of use, of any change in the location of
the Collateral or any records pertaining thereto.
(b) Except as set forth on Schedule 3(b) hereto, Borrower is
the owner of the Collateral free and clear of any liens and security
interests. Borrower will defend the Collateral against the claims and
demands of all persons.
(c) Borrower will pay to Lender all amounts secured hereby as
and when the same shall be due and payable, whether at maturity, by
acceleration or otherwise, and will promptly perform all terms of said
indebtedness and this or any other security or loan agreement between
Borrower and Lender, and will promptly discharge all said liabilities.
(d) Borrower will at all times keep the Collateral insured
against all insurable hazards in amounts equal to the full cash value
of the Collateral. Such insurance shall be in such companies as may be
acceptable to Lender, with provisions satisfactory to Lender for
payment of all losses thereunder to Lender as its interests may appear.
If required by Lender, Borrower shall deposit the policies with Lender.
So long as no Event of Default has occurred, any money received by
Lender under said policies shall be delivered by Lender to Borrower for
the purpose of repairing or restoring the Collateral. Borrower assigns
to Lender all right to receive proceeds of insurance not exceeding the
amounts secured hereby, directs any insurer to pay all proceeds
directly to Lender, and appoints Lender Borrower's attorney in fact to
endorse any draft or check made payable to Borrower in order to collect
the benefits of such insurance. If Borrower fails to keep the
Collateral insured as required by Lender, Lender shall have the right
to obtain such insurance at Borrower's expense and add the cost thereof
to the other amounts secured hereby.
(e) Borrower will pay all costs of filing of financing,
continuation and termination statements with respect to the security
interests created hereby, and Lender is authorized to do all things
that it deems necessary to perfect and continue perfection of the
security interests created hereby and to protect the Collateral.
(f) The address set forth after Borrower's signature on this
Agreement is Borrower's principal place of business and the location of
all tangible Collateral and the place where the records concerning all
intangible Collateral are kept and/or maintained.
4. Default. Borrowers shall be in default upon failure to observe or
perform any of Borrowers' agreements herein contained, or upon the occurrence of
a default or Event of Default under the Loan Agreement or any other Loan
Document (as defined in the Loan Agreement) that has not been cured during the
applicable grace period, or if any warranty or statement by Borrowers herein or
furnished in connection herewith is false or misleading, or if Lender in good
faith believes its prospect of payment and performance is impaired.
5. Remedies Upon Default. Upon default hereunder, all sums secured
hereby shall immediately become due and payable at Lender's option without
notice to Borrowers, and Lender may proceed to enforce payment of same and to
exercise any and all rights and remedies provided by the Uniform Commercial Code
(Tennessee) or other applicable law, as well as all other rights and remedies
possessed by Lender, all of which shall be cumulative. Whenever Borrowers is in
default hereunder, and upon demand by Lender, Borrowers shall assemble the
Collateral and make it available to Lender at a place reasonably convenient to
Lender and Borrower. Any notice of sale, lease or other intended disposition of
the Collateral by Lender sent to Borrower at the address hereinafter set forth,
or at such other address of Borrower as may be shown on Lender's records, at
least five (5) days prior to such action, shall constitute reasonable notice to
Borrower.
Lender may waive any default before or after the same has been declared
without impairing its right to declare a subsequent default hereunder, this
right being a continuing one.
6. Severability. If any provision of this Agreement is held invalid,
such invalidity shall not affect the validity or enforceability of the remaining
provisions of this Agreement.
7. Binding Effect. This Agreement shall inure to the benefit of
Lender's successors and assigns and shall bind each Borrower's heirs,
representatives, successors and assigns.
8. Financial Reporting. Neither Borrower has undisclosed or contingent
liabilities that are not reflected in the financial statements on file with
Lender at the execution of this Agreement. Lender shall have the right, at any
time, by its own auditors, accountants or other agents, to examine or audit any
of the books and records of Borrowers, or the Collateral, all of which will be
made available upon request. Such accountants or other representatives of Lender
will be permitted to make any verification of the existence of the Collateral or
accuracy of the records that Lender deems necessary or proper. Any reasonable
out-of-pocket expenses incurred by Lender in making such examination,
inspection, verification or audit shall be paid by Borrowers promptly on demand
and shall be secured by the security interest granted hereby.
9. Termination Statement. Each Borrower agrees that, notwithstanding
the payment in full of all indebtedness secured hereby and whether or not there
is any outstanding obligation of Lender to make future advances, Lender shall
not be required to send such Borrower a termination statement with respect to
any financing statement filed to perfect Lender's security interest(s) in any of
the Collateral, unless and until such Borrower shall have made written demand
therefor. Upon receipt of proper written demand, Lender may at its option, in
lieu of sending a termination statement to such Borrower, cause said termination
statement to be filed with the appropriate filing officer(s).
10. Protection of Collateral. Neither Borrower will permit any liens or
security interests other than those created by this Agreement to attach to any
of the Collateral, nor permit any of the Collateral to be levied upon under any
legal process, nor permit anything to be done that may impair the security
intended to be afforded by this Agreement, nor permit any tangible Collateral to
become attached to or commingled with other goods without the prior written
consent of Lender.
11. Special Agreements With Respect to Certain Tangible Collateral.
Each Borrower additionally agrees and warrants as follows:
(a) Borrower will not permit any of the Collateral to be
removed from the location specified herein, except for temporary
periods in the normal and customary use thereof, without the prior
written consent of Lender, and will permit Lender to inspect the
Collateral at any time.
(b) If any of the Collateral is equipment or goods of a type
normally used in more than one state (whether or not actually so used),
Borrower will contemporaneously herewith furnish Lender a list of the
states wherein such equipment or goods are or will be used, and
hereafter will notify Lender in writing (i) of any other states in
which such equipment or goods are so used, and (ii) of any change in
the location of Borrower's chief place of business.
(c) Borrower will not sell, exchange, lease or otherwise
dispose of any of the Collateral or any interest therein without the
prior written consent of Lender, except in the ordinary course of
Borrower's business.
(d) Borrower will keep the Collateral in good condition and
repair and will pay and discharge all taxes, levies and other
impositions levied thereon as well as the cost of repairs to or
maintenance of same, and will not permit anything to be done that may
impair the value of any of the Collateral. If Borrower fails to pay
such sums, Lender may do so for Borrower's account and add the amount
thereof to the other amounts secured hereby.
(e) Until default in any of the terms hereof, or the terms of
any indebtedness secured hereby, Borrower shall be entitled to
possession of the Collateral and to use the same in any lawful manner,
provided that such use does not cause excessive wear and tear to the
Collateral, cause it to decline in value at an excessive rate, or
violate the terms of any policy of insurance thereon.
(f) Borrower will not allow the Collateral to be attached to
real estate in such manner as to become a fixture or a part of any real
estate.
12. Special Agreements With Respect to Intangible and Certain Tangible
Collateral. Each Borrower additionally warrants and agrees as follows:
(a) So long as neither Borrower is in default hereunder,
Borrowers shall have the right to process and sell Borrowers' inventory
in the regular course of business. Lender's security interest hereunder
shall attach to all proceeds of all sales or other dispositions of the
Collateral. If at any time any such proceeds shall be represented by
any instruments, chattel paper or documents of title, then such
instruments, chattel paper or documents of title shall be promptly
delivered to Lender and subject to the security interest granted
hereby. If at any time any of Borrowers' inventory is represented by
any document of title, such document of title will be delivered
promptly to Lender and subject to the security interest granted hereby.
(b) By the execution of this Agreement, Lender shall not be
obligated to do or perform any of the acts or things provided in any
contracts covered hereby that are to be done or performed by Borrowers,
but if there is a default by either Borrower in the payment of any
amount due in respect of any indebtedness secured hereby, then Lender
may, at its election, perform some or all of the obligations provided
in said contracts to be performed by Borrowers, and if Lender incurs
any liability or expenses by reason thereof, the same shall be payable
by Borrowers upon demand and shall also be secured by this Agreement.
(c) At any time after either Borrower is in default hereunder
or under the Loan Agreement, Lender shall have the right to notify the
account debtors obligated on any or all of Borrowers' accounts
receivable to make payment thereof directly to Lender, and to take
control of all proceeds of any such accounts receivable. Until such
time as Lender elects to exercise such right by mailing to Borrowers
written notice thereof, Borrower is authorized, as agent of the Lender,
to collect and enforce said accounts receivable.
13. Power of Attorney. Each Borrower hereby constitutes the Lender or
its designee, as such Borrower's attorney-in-fact with power, upon the
occurrence and during the continuance of a monetary Event of Default, to endorse
Borrower name upon any notes, acceptances, checks, drafts, money orders, or
other evidences of payment or Collateral that may come into either its or the
Lender's possession; to sign the name of Borrower on any invoice or bill of
lading relating to any of the accounts receivable, drafts against customers,
assignments and verifications of accounts receivable and notices to customers;
to send verifications of accounts receivable; to notify the Post Office
authorities to change the address for delivery of mail addressed to Borrower to
such address as the Lender may designate; to execute any of the documents
referred to in Section 3(e) hereof in order to perfect and/or maintain the
security interests and liens granted herein by Borrower to the Lender; to do all
other acts and things necessary to carry out this Security Agreement. All acts
of said attorney or designee are hereby ratified and approved, and said attorney
or designee shall not be liable for any acts of commission or omission (other
than acts of gross negligence or willful misconduct), nor for any error of
judgment or mistake of fact or law; this power being coupled with an interest is
irrevocable until all of the obligations secured hereby are paid in full and any
and all promissory notes executed in connection therewith are terminated and
satisfied.
IN WITNESS WHEREOF, Borrowers and Lender have executed this Agreement,
or have caused this Agreement to be executed as of the date first above written.
BORROWERS:
VISTA Information Solutions, Inc.
By: /s/Thomas R. Gay
Title: Chief Executive Officer
Address: 5040 Shoreham Drive
San Diego, CA 92122
VISTA Environmental Information, Inc.
By: /s/Thomas R. Gay
Title: Chief Executive Officer
Address: 5040 Shoreham Drive
San Diego, CA 92122
LENDER:
SIRROM CAPITAL CORPORATION
By: /s/George M. Miller II
Title: Chief Executive Officer
SCHEDULE 3(b)
(Liens)
ECONOMIC IMPACT ASSESSMENT
1. Please indicate the number of full-time equivalent jobs created or
retained as a direct result of this financing.
2. Please indicate the impact of this financing in terms of expanded
revenue and taxes and other appropriate economic benefits including,
but not limited to, technology development or commercialization,
minority business development, urban or rural business development,
expansion of exports and assistance to manufacturing firms (Standard
Industrial Classification Major Groups 20-39).
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,670
<SECURITIES> 0
<RECEIVABLES> 2,092,834
<ALLOWANCES> 238,156
<INVENTORY> 0
<CURRENT-ASSETS> 2,127,499
<PP&E> 16,010,805
<DEPRECIATION> 7,355,758
<TOTAL-ASSETS> 10,782,546
<CURRENT-LIABILITIES> 4,884,350
<BONDS> 0
0
10,310
<COMMON> 110,227
<OTHER-SE> 4,503,481
<TOTAL-LIABILITY-AND-EQUITY> 10,782,546
<SALES> 2,167,509
<TOTAL-REVENUES> 2,167,509
<CGS> 570,805
<TOTAL-COSTS> 3,452,643
<OTHER-EXPENSES> 119,312
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 141,089
<INCOME-PRETAX> (1,404,446)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,404,446)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
