<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
VISTA INFORMATION SOLUTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 29, 1996
------------------------
The Annual Meeting of the Shareholders of VISTA Information Solutions, Inc.,
a Minnesota corporation (the "Company"), will be held at the Company's offices
located at 5060 Shoreham Place, San Diego, California, beginning at 2:30 p.m. on
October 29, 1996, for the following purposes:
1. To elect six (6) persons to serve as directors of the Company until the
next Annual Meeting of the Shareholders or until their respective
successors shall be elected and qualified.
2. To transact such other business as may properly come before the Annual
Meeting.
The record date for determination of the shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof is the close of business
on September 20, 1996.
Whether or not you expect to attend the Annual Meeting in person, please
complete, sign, date and promptly return the enclosed proxy in the envelope
provided, which requires no postage if mailed in the United States.
By Order of the Board of Directors
/s/ E. Steven Hamilton
E. Steven Hamilton
CHIEF FINANCIAL OFFICER AND SECRETARY
September 25, 1996
San Diego, California
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
5060 SHOREHAM PLACE
SAN DIEGO, CALIFORNIA 92122
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 29, 1996
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of VISTA Information Solutions, Inc.
(the "Company") to be voted at the Company's 1996 Annual Meeting of Shareholders
(the "Annual Meeting") and at any adjournment(s) thereof. The Annual Meeting
will be held at the Company's offices located at 5060 Shoreham Place, San Diego,
California, on October 29, 1996 at 2:30 p.m., local time.
A Proxy Card is enclosed for your use. You are solicited on behalf of the
Board of Directors to SIGN AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE. No postage is required if mailed within the United States. The cost of
soliciting proxies, including the preparation, assembly and mailing of proxies
and soliciting material, as well as the cost of forwarding such material to the
beneficial owners of the Company's outstanding stock will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit proxies by
telephone, telegraph or personal conversation. The Company may reimburse
brokerage firms and others for expenses in forwarding proxy materials to the
beneficial owners of the Company's outstanding stock.
Any shareholder giving a proxy may revoke it at any time prior to its use at
the Annual Meeting either by giving written notice of such revocation to the
Secretary of the Company, by filing a duly executed proxy bearing a later date
with the Secretary of the Company, or by appearing at the Annual Meeting and
filing written notice of revocation with the Secretary of the Company prior to
use of the proxy. Proxies will be voted as specified by shareholders. Proxies
that are signed by shareholders but that lack any such specification will be
voted in favor of the proposals set forth in the Notice of Meeting and, subject
to limitations set forth under the heading "Voting of Shares" contained on pages
1 and 2 hereof, in favor of the election as directors of the nominees for
directors listed in this Proxy Statement.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSAL SET FORTH IN THE NOTICE OF MEETING.
The Company expects that this proxy material will be mailed first to
shareholders on or about September 25, 1996.
VOTING OF SHARES
The securities which can be voted at the Annual Meeting consist of the
Company's Common Stock, par value $.01 per share ("Common Stock"), Series B
Convertible Preferred Stock, par value $.01 per share (the "Series B
Preferred"), Series C Convertible Preferred Stock, par value $.01 per share (the
"Series C Preferred") and Series D Convertible Preferred Stock, par value $.01
per share (the "Series D Preferred") (the Series B Preferred, Series C Preferred
and Series D Preferred are collectively referred to
1
<PAGE>
hereinafter as the "Preferred Stock"). The Common Stock entitles its owner to
one vote on each matter submitted to the shareholders at the Annual Meeting or
any adjournment thereof. Other than with respect to the election of directors,
the Preferred Stock entitles its owner to one vote for each of the underlying
shares of Common Stock into which the Preferred Stock is convertible ("Common
Stock Equivalents") on each matter submitted to the shareholders at the Annual
Meeting or any adjournment thereof. The Preferred Stock is currently convertible
on a ten-for-one basis with the Common Stock. With respect to the election of
directors, (i) the Common Stock and the Series D Preferred, on a converted
basis, will vote for three nominees (Messrs. Gay, Hovis and Moeller), (ii) the
Series B Preferred will vote for one nominee (Mr. Seid) and (iii) the Series C
Preferred will vote for two nominees (Messrs. Kahn and Rivelli). See "Election
of Directors--Other Information About Nominees."
The record date for determining the holders of Common Stock and Common Stock
Equivalents entitled to notice of and to vote at the Annual Meeting is September
20, 1996. On the record date, 12,234,735 shares of Common Stock were outstanding
and eligible to be voted at the Annual Meeting and 980,072 shares of Preferred
Stock (equal to 9,800,720 Common Stock Equivalents) were outstanding and
eligible to be voted at the Annual Meeting. The holders of a majority of the
shares entitled to vote, either represented in person or by proxy at the Annual
Meeting, will constitute a quorum for the transaction of business. In general,
shares of Common Stock and Common Stock Equivalents represented by a properly
signed and returned proxy card will be counted as shares present and entitled to
vote at the Annual Meeting for purposes of determining a quorum, without regard
to whether the card reflects abstentions (or is left blank) or reflects a
"broker non-vote" on a matter (i.e., a card returned by a broker because voting
instructions have not been received and the broker has no discretionary
authority to vote). Holders of shares of Common Stock are not entitled to
cumulate voting rights.
Other than as set forth above, the election of a nominee for director and
the approval of each of the other proposals described in this Proxy Statement
require the approval of a majority of the shares present and entitled to vote in
person or by proxy on that matter (and at least a majority of the minimum number
of votes necessary for a quorum to transact business at the Annual Meeting).
Shares represented by a proxy card voted as abstaining on any of the proposals
will be treated as shares present and entitled to vote that were not cast in
favor of a particular matter, and thus will be counted as votes against the
matter. Shares represented by a proxy card including any broker non-vote on a
matter will be treated as shares not entitled to vote on that matter, and thus
will not be counted in determining whether that matter has been approved.
ELECTION OF DIRECTORS
NOMINATION
Pursuant to the Company's Bylaws, the authorized number of directors of the
Company has been set at six. The Board of Directors has nominated Messrs. Gay,
Hovis and Moeller, the Series B Preferred has nominated Mr. Seid and the Series
C Preferred has nominated Messrs. Kahn and Rivelli to serve as directors of the
Company until the next regular meeting of shareholders or until their earlier
death, resignation or removal from office. Each of the six nominees are
presently a member of the Board of Directors and have consented to serve another
term as a director if re-elected. If any of the nominees should be unavailable
to serve for any reason (which is not anticipated), the Board of Directors, the
holders of the Series B Preferred or the Series C Preferred, as the case may be,
may designate a substitute nominee or nominees (in which case the persons named
on the enclosed Proxy Card will vote all valid proxies for the election of such
substitute nominee or nominees), or allow the vacancy or vacancies to remain
open until a suitable candidate or candidates are located.
2
<PAGE>
INFORMATION ABOUT NOMINEES
The names of the nominees, their ages as of September 20, 1996, and the year
in which each first became a director are set forth below. The Board of
Directors recommends that shareholders vote FOR the proposal to elect the six
nominees listed below as directors of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- --------------------------------- --- ----------------------------------------------------------------- -------
<S> <C> <C> <C>
Martin F. Kahn................... 45 Chairman of the Board of Directors 1995
Thomas R. Gay.................... 50 Chief Executive Officer 1995
James E. Hovis................... 51 Retired Chairman of the Board of Directors 1991
Robert J. Moeller................ 57 President, Moeller & Associates 1992
Jay Seid......................... 35 Vice President, Bachow & Associates 1995
Patrick A. Rivelli............... 59 General Partner of Sunwestern Investment Fund III 1995
</TABLE>
OTHER INFORMATION ABOUT NOMINEES
NOMINEES TO BE ELECTED BY HOLDERS OF COMMON STOCK AND SERIES D
PREFERRED. Pursuant to terms of the Certificate of Designation of the Voting
Powers, Preferences and Rights and Qualifications, Limitations and Restrictions
of the Series D Preferred, filed with the Secretary of State for the State of
Minnesota on February 28, 1995, the holders of the Series D Preferred are
entitled to vote the number of shares of Common Stock into which the shares of
Series D Preferred are convertible at such time together with the holders of
shares of Common Stock, voting separately as a class, in the election of any
directors of the Company other than the directors elected by the holders of the
shares of the Series B Preferred or the Series C Preferred. The Board of
Directors have nominated Messrs. Gay, Hovis and Moeller to serve as the Common
Stock and Series D Preferred nominees.
THOMAS R. GAY has served as a director and as President and Chief Executive
Officer of the Company since the merger of the Company's wholly-owned subsidiary
with VISTA Environmental Information, Inc. ("VISTA Environmental") in February
1995 (the "VISTA Merger"). Mr. Gay was a co-founder of VISTA Environmental and
served as the President and CEO of VISTA Environmental from August 1991 to
February 1995. From 1988 to August 1991, Mr. Gay served as President of National
Decisions Systems, a company involved in marketing information products,
databases and software, which he also co-founded.
JAMES E. HOVIS has served as a director of the Company since 1991, and was
Chairman of the Board of Directors of the Company from August 1991 to February
1995. From August 1991 to April 1993, Mr. Hovis also served as the Chief
Executive Officer of the Company. Prior to 1991, Mr. Hovis was involved in the
start-up and/or development of various business ventures. On July 10, 1996, Mr.
Hovis filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy
Code which was subsequently dismissed without prejudice on September 18, 1996.
ROBERT J. MOELLER has served as a director of the Company since 1992. Since
January 1994, Mr. Moeller has been the President of Moeller & Associates, a
management consulting firm. From 1991 to January 1994, Mr. Moeller served as the
Senior Vice President/Marketing of the Excel Division of Cargill, Incorporated,
a meat processing division. From 1988 through 1990, Mr. Moeller served as
President and Chief Operating Officer of Mackay Envelope Corporation, a
privately held envelope manufacturer.
DIRECTOR ELECTED BY HOLDERS OF SERIES B PREFERRED. Pursuant to the terms of
the Certificate of Designation of the Voting Powers, Preferences and Rights and
Qualifications, Limitations and Restrictions of the Series B Preferred, filed
with the Secretary of State for the State of Minnesota on September 15, 1993,
the holders of the Series B Preferred, voting separately as a class, are
entitled to appoint and elect one director. The holders of the Series B
Preferred have notified the Company that Mr. Jay Seid is the Series B Preferred
nominee.
3
<PAGE>
JAY D. SEID has served as a director of the Company since 1995. Since
December 1992, Mr. Seid has served as Vice President of Bachow & Associates,
Inc., an Investment Company. From May 1988 to December 1992, Mr. Seid served as
President and General Counsel of Judicate, Inc., a publicly traded provider of
alternative dispute resolution services. Prior to 1988, Mr. Seid was an attorney
specializing in corporate law with Wolf, Block, Schorr and Solis-Cohen in
Philadelphia.
DIRECTORS ELECTED BY HOLDERS OF SERIES C PREFERRED. Pursuant to the terms
of the Certificate of Designation of the Voting Powers, Preferences and Rights
and Qualifications, Limitations and Restrictions of the Series C Preferred,
filed with the Secretary of State for the State of Minnesota on February 28,
1995, the holders of the Series C Preferred, voting separately as a class, are
entitled to appoint and elect two directors. The nominees of the Series C
Preferred are Messrs. Kahn and Rivelli.
MARTIN F. KAHN has been Chairman of the Board of Directors of the Company
since the VISTA Merger in February 1995. From 1992 to February 1995, Mr. Kahn
served as Chairman of the Board of Directors of VISTA Environmental. From 1989
to 1992, Mr. Kahn was Chairman of the Board of Environmental Audit, Inc. Prior
to 1989, Mr. Kahn served as President of BRS Information Services, a provider of
on-line information to healthcare professionals. Mr. Kahn also serves as
Chairman of the Board of OneSource Information Services, Inc., a developer and
marketer of integrated business information and software, and as Chairman of the
Board of CDP Technologies, Inc., a medical, scientific and technical information
provider.
PATRICK A. RIVELLI has served as a director of the Company since the VISTA
Merger in February 1995. Mr. Rivelli is a founder of Sunwestern Investment Fund
III Limited Partnership and has been the General Partner of Sunwestern L.P.
since 1988. Mr. Rivelli has also served as the President and a director of
Sunwestern Managers Inc., the management company of Sunwestern Limited Fund,
since October 1992. Mr. Rivelli is also a director of Maxserv Inc., an
information services firm.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board of
Directors, which met 10 times and took 15 actions by written consent during the
fiscal year ended December 31, 1995. Committees established by the Board include
the Audit Committee and the Compensation Committee. Each of the directors of the
Company, who were serving as directors during 1995, attended 75% or more of the
aggregate meetings of the Board and all such committees on which they served
during 1995.
The members of the Audit Committee during the fiscal year ended December 31,
1995, were Messrs. Seid and Moeller. The function of the Audit Committee is to
review the internal and external financial reporting of the Company, the scope
of the independent audit and to consider comments by the auditors regarding
internal controls and accounting procedures and management's response to those
comments. The Audit Committee met one time during the fiscal year ended December
31, 1995.
The members of the Compensation Committee as of December 31, 1995 were
Messrs. Seid and Rivelli. Mr. Fisher, a former director of the Company, served
on the Compensation Committee until March 28, 1995. The function of the
Compensation Committee is to recommend the compensation for those officers who
are also directors and for senior management, and to review senior management's
objectives and to make recommendations to the Board of Directors regarding the
administration of and the grant of options under the Amended and Restated 1990
Stock Option Plan (the "1990 Plan"), the 1995 Stock Incentive Plan (the "1995
Plan"), and all other equity-based compensation plans adopted by the Company.
The Compensation Committee met one time during the fiscal year ended December
31, 1995.
DIRECTOR COMPENSATION
DIRECTORS' FEES. The Company pays each director who is not an employee of
the Company $200 for each Board meeting and committee meeting attended and
reimburses each director for out-of-pocket expenses.
4
<PAGE>
AUTOMATIC OPTION GRANT. Pursuant to the 1995 Plan, each non-employee
director receives an automatic grant of options to purchase 10,000 shares of
Common Stock on January 1 each year the 1990 Plan is in effect at the then
prevailing market price at the time of the grant (the "Director Options"). The
Director Options are granted on a pro-rata basis for non-employee directors who
are not directors for a full twelve months prior to the date of grant, such that
if a non-employee director serves as a director for less than six months, that
individual receives an option to purchase 5,000 shares of Common Stock (50% of a
full grant) for such short year. The Director Options expire five years from the
date of grant (subject to earlier termination in the event of death), are not
transferable (except by will or the laws of descent and distribution), and are
fully exercisable six months after the date of grant.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL OWNERSHIP
OF MANAGEMENT
COMMON STOCK AND COMMON STOCK EQUIVALENTS
The following table sets forth information regarding the beneficial
ownership of Common Stock and Common Stock Equivalents of the Company as of
September 19, 1996 (a) by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock and Common Stock
Equivalents or the combined total voting power of all classes of capital stock
of the Company on a fully diluted, as converted basis, (b) by each director, (c)
by the executive officers named in the Summary Compensation Table, and (d) by
all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT
SHARES BENEFICIALLY OF CLASS OF TOTAL
NAME OWNED(1) OWNED(2) VOTING POWER(3)
- ------------------------------------------------ ------------------- -------- ---------------
<S> <C> <C> <C>
Paul S. Bachow ................................. 3,279,696(4) 21.0% 14.7%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Paul S. Bachow Co-Investment Fund, L.P. ....... 2,216,229(5) 15.3% 10.0%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
James E. Hovis ................................. 873,412(6) 6.9% 3.9%
329 N. 3rd Street
DeKalb, IL 60115
Hudson Trust ................................... 1,064,982(7) 8.0% 4.8%
c/o Pyrenees Management Co., Inc.
Suite 445, The Office Center
666 Plainsboro Road
Plainsboro, NJ 08536
Sunwestern III Group ........................... 1,116,393(8) 8.4% 5.0%
Three Forest Plaza
Suite 1300
12221 Merit Drive
Dallas, TX 75251
James Silock ................................... 1,116,393(9) 8.4% 5.0%
Three Forest Plaza
Suite 1300
12221 Merit Drive
Dallas, TX 75251
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT PERCENT
SHARES BENEFICIALLY OF CLASS OF TOTAL
NAME OWNED(1) OWNED(2) VOTING POWER(3)
- ------------------------------------------------ ------------------- -------- ---------------
<S> <C> <C> <C>
U.S. Trust ..................................... 872,440(10) 6.7% 4.0%
c/o Pyrenees Management Co., Inc.
Suite 445, The Office Center
666 Plainsboro Road
Plainsboro, NJ 08536
Martin F. Kahn.................................. 211,785(11) 1.7% *
Thomas R. Gay .................................. 1,960,303(12) 15.1% 8.8%
5060 Shoreham Place
Suite 300
San Diego, CA 92122
Gary S. Mertz................................... 195,218(13) 1.6% *
Robert J. Moeller............................... 37,961(14) * *
Jay D. Seid .................................... 2,216,229(15) 15.3% 10.0%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Patrick A. Rivelli.............................. 1,138,353(16) 8.5% 5.1%
All current directors and executive
officers as a group (9 persons)............... 6,702,918(6)(11)(12)(14) 38.9% 28.5%
(15)(16)(17)
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire them within 60 days, whether by the
exercise of options or warrants or the conversion of Preferred Stock or
debentures into Common Stock, are deemed outstanding in determining the
number of shares beneficially owned by such person or group.
(2) The "Percent of Class Owned" is calculated by dividing the "Number of
Shares Beneficially Owned" by the sum of (i) the total outstanding shares of
Common Stock of the Company and (ii) shares of Common Stock that such person
has the right to acquire within 60 days, whether by the exercise of options
or warrants or the conversion of Preferred Stock or debentures into Common
Stock. The "Percent of Class Owned" does not reflect shares beneficially
owned by virtue of the right of any person, other than the person named and
affiliates of that person, to acquire them within 60 days, whether by
exercise of options or warrants or the conversion of Preferred Stock into
Common Stock.
(3) The "Percent of Total Voting Power" is calculated by dividing the "Number
of Shares Beneficially Owned" by the sum of (i) the total outstanding shares
of Common Stock of the Company, and (ii) shares of Common Stock that such
person has the right to acquire within 60 days by the exercise of options or
warrants, and (iii) all shares of Common Stock issuable upon conversion of
all outstanding shares of Preferred Stock.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
6
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(4) Includes 2,216,229 shares of Common Stock beneficially owned by the Paul S.
Bachow Fund, L.P. (the "Bachow Fund"). Includes 627,440 shares of Common
Stock Mr. Bachow has the right to acquire upon the conversion of 62,744
shares of Series B Preferred, 293,520 shares of Common Stock Mr. Bachow has
the right to acquire upon conversion of 29,352 shares of Series D Preferred
and 94,988 shares of Common Stock Mr. Bachow has the right to acquire upon
the exercise of stock options and warrants, and 47,519 shares of Common
Stock Mr. Bachow has the right to acquire upon the conversion of debentures.
(5) Includes 1,372,560 shares of Common Stock the Bachow Fund has the right to
acquire upon the conversion of 137,256 shares of Series B Preferred, 642,100
shares of Common Stock that the Bachow Fund has the right to acquire upon
the conversion of 64,210 shares of Series D Preferred and 201,569 shares of
Common Stock that the Bachow Fund has the right to acquire upon the exercise
of stock options.
(6) Includes 235,000 shares of Common Stock that Mr. Hovis has the right to
acquire upon the exercise of stock options and warrants, 51,650 shares of
Common Stock held by Mr. Hovis' wife, 348,486 shares of Common Stock held by
Mr. Hovis in trust for which Mr. Hovis is the beneficiary, 24,081 shares
held by Mr. Hovis' children, 103,000 shares of Common Stock that Mr. Hovis'
wife has the right to acquire upon the exercise of stock options, and
111,000 shares of Common Stock held in trust that Mr. Hovis, as beneficiary,
has the right to acquire upon the exercise of stock options.
(7) Includes 948,730 shares of Common Stock that Hudson Trust has the right to
acquire upon the conversion of 94,873 shares of Series C Preferred, 30,310
shares of Common Stock that Hudson Trust has the right to acquire upon the
conversion of 3,031 shares of Series C Preferred issuable upon exercise of
warrants and 32,615 shares of Common stock issuable upon exercise of
warrants.
(8) Includes 217,170 shares of Common Stock issuable upon conversion of 21,717
shares of Series C Preferred held of record by Sunwestern Investment Fund
III Limited Partnership ("Sunwestern LP"), 235,260 shares of Common Stock
issuable upon conversion of 23,526 shares of Series C Preferred held of
record by Sunwestern Cayman Partners 1988 ("Sunwestern 1988"), 81,104 shares
of Common Stock issuable upon conversion of debentures held by Sunwestern
LP, 87,861 shares of Common Stock issuable upon conversion of debentures
held by Sunwestern 1988, 26,490 shares of Common Stock that Sunwestern LP
has the right to acquire upon the exercise of warrants, 28,698 shares of
Common Stock that Sunwestern 1988 has the right to acquire upon the exercise
of warrants, 412,180 shares of Common Stock issuable upon conversion of
41,218 shares of Series C Preferred Stock held of record by Mapleleaf
Capital, Ltd.("Mapleleaf"), and 27,630 shares of Common Stock issuable upon
conversion of 2,763 shares of Series C Preferred which Mapleleaf has the
right to acquire upon the exercise of warrants.
(9) Includes 1,116,393 shares of Common Stock beneficially owned by Sunwestern
III Group. Mr. Silock and Mr. Rivelli, a director of the Company are the
general partners of Sunwestern LP and Mapleleaf. Mr. Rivelli and Mr. Silock
are equal shareholders of Sunwestern Incorporated, the attorney in fact for
Sunwestern 1988, having the power to vote and direct the voting of the
shares held by Sunwestern 1988. Sunwestern Incorporated also manages
Sunwestern LP and Mapleleaf. Pursuant to Rule 13d-3 of the Securities and
Exchange Act of 1934, Mr. Silock may be deemed to share beneficial ownership
with respect to the shares held by Sunwestern LP, Sunwestern 1988 and
Mapleleaf; however, Mr. Silock disclaims beneficial ownership except to the
extent of his pecuniary interest therein.
(10) Includes 845,430 shares of Common Stock that U.S. Trust has the right to
acquire upon the conversion of Series C Preferred and 27,010 shares of
Common Stock issuable upon conversion of 2,701 shares of Series C Preferred
that U.S. Trust has the right to acquire upon the exercise of warrants.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
7
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(11) Includes 210,914 shares of Common Stock that Mr. Kahn has the right to
acquire upon the exercise of options, 871 shares of Common Stock held by
Cadence Management, L.P. ("Cadence"), of which Mr. Kahn serves as the sole
general partner. Does not include 2,006,630 shares of Common Stock issuable
upon conversion of 200,663 shares of Series C Preferred held by the Hudson
Trust and the U.S. Trust, 49,310 shares of Common Stock issuable upon
conversion of 4,931 shares of Series C Preferred which the Hudson Trust and
the U.S. Trust have the right to acquire upon the exercise of warrants,
111,755 shares of Common Stock issuable upon conversion of outstanding
debentures held by the Gibraltar Trust or 36,369 shares of Common Stock that
the Gibraltar Trust has the right to acquire upon the exercise of warrants.
The Gibraltar Trust, the U.S. Trust and the Hudson Trust have the right to
co-invest in securities transactions in which Cadence or Mr. Kahn invests
and on this basis could be deemed to constitute a group for purposes of Rule
13d-13 under the Rules of the Securities and Exchange Commission. Neither
Cadence nor Mr. Kahn has voting or dispositive power over any of the shares
owned by the Gibraltar Trust, the Hudson Trust or the U.S. Trust, nor do any
of the Gibraltar Trust, the Hudson Trust and the U.S. Trust have voting or
dispositive power over the shares held by Cadence or Mr. Kahn and for such
reason the parties do not believe they constitute such a 13d-3 group. Mr.
Kahn disclaims beneficial ownership of any shares owned by the Gibraltar
Trust, the U.S. Trust and the Hudson Trust.
(12) Includes 149,537 shares of Common Stock held by Mr. Gay's children, but as
to which he disclaims any beneficial interest, 238,334 shares of Common
Stock that Mr. Gay has the right to acquire upon the exercise of options and
warrants, 478,520 shares of Common Stock Mr. Gay has the right to acquire
upon the conversion of 47,852 shares of Series C Preferred and 7,010 shares
of Common Stock issuable upon conversion of 701 shares of Series C Preferred
which Mr. Gay has the right to acquire upon the exercise of warrants.
(13) Includes 126,165 shares of Common Stock which Mr. Mertz has the right to
acquire upon the exercise of stock options and warrants, 2,250 shares of
Common Stock held jointly with Mr. Mertz's wife, and 16,803 shares of Common
Stock issuable upon conversion of debentures.
(14) Includes 35,000 shares of Common Stock which Mr. Moeller has the right to
acquire upon the exercise of stock options, 1,857 shares of Common Stock
held by Moeller and Associates of which Mr. Moeller serves as President, and
1,104 shares of Common Stock that Moeller & Associates has the right to
acquire upon the exercise of warrants.
(15) Includes 2,216,229 shares of Common Stock beneficially owned by the Bachow
Fund; however, Mr. Seid disclaims beneficial ownership of such shares. Mr.
Seid is a Vice President of Bachow & Associates and has investment power
with respect to the shares held by the Bachow Fund.
(16) Includes 11,960 shares of Common Stock issuable upon conversion of 1,196
shares of Series C Preferred held jointly by Mr. Rivelli and his wife and
10,000 shares of Common Stock which Mr. Rivelli has the right to acquire
upon the exercise of stock options. Also includes 1,116,393 shares of Common
Stock beneficially owned by Sunwestern III Group. Mr. Rivelli and Mr. Silock
are the general partners of Sunwestern LP and Mapleleaf, and are equal
shareholders of Sunwestern Incorporated, the attorney in fact for Sunwestern
1988, having the power to vote and direct the voting of the shares held by
Sunwestern 1988. Sunwestern Incorporated also manages Sunwestern LP and
Mapleleaf. Pursuant to Rule 13d-3 of the Securities Exchange Act of 1934,
Mr. Rivelli may be deemed to share beneficial ownership with respect to the
shares held by Sunwestern LP, Sunwestern 1988 and Mapleleaf; however, Mr.
Rivelli disclaims beneficial ownership except to the extent of his pecuniary
interest therein.
(17) Also includes 46,356 shares of Common Stock that Jerome T. Marani has the
right to acquire upon the exercise of options and 5,982 shares of Common
Stock held by Mr. Marani's wife. Also includes 47,852 shares of Common Stock
held by Arnold E. Jensen and 162,185 shares of Common Stock Mr. Jensen has
the right to acquire upon the exercise of stock options.
8
<PAGE>
SERIES B PREFERRED
The following table sets forth information regarding the beneficial
ownership of the Company's Series B Preferred as of September 19, 1996 (a) by
each shareholder who is known by the Company to own beneficially more than 5% of
the outstanding Series B Preferred, (b) by each director, (c) by each person
named in the Summary Compensation Table, and (d) by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
BENEFICIALLY OF CLASS
NAME OWNED(1) OWNED(2)
- --------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Paul S. Bachow ................................................ 200,000(3) 100.0%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Bachow Fund ................................................... 137,256 68.6%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Martin F. Kahn................................................. 0 *
Thomas R. Gay.................................................. 0 *
Gary S. Mertz.................................................. 0 *
James E. Hovis................................................. 0 *
Robert J. Moeller.............................................. 0 *
Jay D. Seid.................................................... 137,256(4) 68.6%
Patrick A. Rivelli............................................. 0 *
All current directors and executive officers as a group
(9 persons).................................................. 137,256(4) 68.6%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire them within 60 days, whether by the
exercise of options or warrants, are deemed outstanding in determining the
number of shares beneficially owned by such person or group.
(2) The "Percent of Class Owned" is calculated by dividing the "Number of Shares
Beneficially Owned" by the sum of (i) the total outstanding shares of Series
B Preferred and (ii) shares of Series B Preferred that such person has the
right to acquire within 60 days by the exercise of options or warrants.
(3) Includes 137,256 shares of Series B Preferred beneficially owned by the
Bachow Fund.
(4) Includes 137,256 shares of Series B Preferred beneficially owned by the
Bachow Fund; however, Mr. Seid disclaims beneficial ownership of such
shares. Mr. Seid is a Vice President of Bachow & Associates and has
investment power with respect to the shares held by the Bachow Fund.
9
<PAGE>
SERIES C PREFERRED
The following table sets forth information regarding the beneficial
ownership of the Company's Series C Preferred as of September 19, 1996 (a) by
each shareholder who is known by the Company to own beneficially more than 5% of
the outstanding Series C Preferred of the Company, (b) by each director, (c) by
each person named in the Summary Compensation Table, and (d) by all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES BENEFICIALLY OF CLASS
NAME OWNED(1) OWNED(2)
- --------------------------------------------- ------------------- --------
<S> <C> <C>
First Century Partnership III ............... 136,575(3) 22.9%
One Palmer Square, Suite 425
Princeton, NJ 08542
Hudson Trust ................................ 97,904(4) 16.4%
c/o Pyrenees Management Co., Inc.
Suite 445, The Office Center
666 Plainsboro Road
Plainsboro, NJ 08536
Sunwestern III Group ........................ 89,224(5) 15.0%
Three Forest Plaza
Suite 1300
12221 Merit Drive
Dallas, TX 75251
James Silock ................................ 89,224(6) 15.0%
Three Forest Plaza
Suite 1300
12221 Merit Drive
Dallas, TX 75251
U.S. Trust .................................. 87,244(7) 14.7%
c/o Pyrenees Management Co., Inc.
Suite 445, The Office Center
666 Plainsboro Road
Plainsboro, NJ 08536
Technology for Information and
Publishing, L.P. ......................... 59,029(8) 10.0%
One Cranberry Hill
Lexington, MA 92173
Martin F. Kahn............................... 0(9) *
Thomas R. Gay................................ 48,553(10) 8.2%
Gary S. Mertz................................ 0 *
James E. Hovis............................... 0 *
Robert J. Moeller............................ 0 *
Jay D. Seid.................................. 0 *
Patrick A. Rivelli........................... 90,420(11) 15.2%
All current directors and executive officers
as a
group (9 persons).......................... 138,973(9)(10)(11) 23.4%
</TABLE>
- ------------------------
* Less than 1%.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
10
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire them within 60 days, whether by the
exercise of options or warrants, are deemed outstanding in determining the
number of shares beneficially owned by such person or group.
(2) The "Percent of Class Owned" is calculated by dividing the "Number of
Shares Beneficially Owned" by the sum of (i) the total outstanding shares of
Series C Preferred and (ii) shares of Series C Preferred that such person
has the right to acquire within 60 days by the exercise of options or
warrants.
(3) Includes 4,228 shares of Series C Preferred that First Century Partnership
III has the right to acquire upon the exercise of warrants.
(4) Includes 3,031 shares of Series C Preferred that the Hudson Trust has the
right to acquire upon the exercise of warrants.
(5) Includes 21,717 shares of Series C Preferred held of record by Sunwestern
LP, 23,526 shares of Series C Preferred held of record by Sunwestern 1988,
41,218 shares of Series C Preferred held of record by Mapleleaf and 2,763
shares of Series C Preferred which Mapleleaf has the right to acquire upon
the exercise of warrants.
(6) Includes 89,224 shares of Series C Preferred beneficially owned by
Sunwestern III Group. Mr. Silock and Mr. Rivelli, a director of the Company
are the general partners of Sunwestern LP and Mapleleaf and are equal
shareholders of Sunwestern Incorporated, the attorney in fact for Sunwestern
1988. Sunwestern Incorporated also manages Sunwestern LP and Mapleleaf.
Pursuant to Rule 13d-3 of the Securities and Exchange Act of 1934, Mr.
Silock may be deemed to share beneficial ownership with respect to the
shares held by Sunwestern LP, Sunwestern 1988 and Mapleleaf; however, Mr.
Silock disclaims beneficial ownership except to the extent of his pecuniary
interest therein.
(7) Includes 2,701 shares of Series C Preferred that U.S. Trust has the right
to acquire upon the exercise of warrants.
(8) Includes 1,826 shares of Series C Preferred that Technology for Information
and Publishing, L.P. has the right to acquire upon the exercise of warrants.
(9) Does not include 200,663 shares of Series C Preferred held by the Hudson
Trust and the U.S. Trust or 6,410 shares of Series C Preferred which the
Hudson Trust and the U.S. Trust have the right to acquire upon the exercise
of warrants. The Hudson Trust and the U.S. Trust have the right to co-invest
in securities transactions in which Cadence or Mr. Kahn invests, and on this
basis could be deemed to constitute a group for purposes of Rule 13d-13
under the Rules of the Securities and Exchange Commission. Neither Cadence
nor Mr. Kahn has voting or dispositive power over any of the shares owned by
the Hudson Trust and the U.S. Trust, nor do any of the Hudson Trust and the
U.S. Trust have voting or dispositive power over the shares held by Cadence
or Mr. Kahn and for such reason the parties do not believe they constitute
such a 13d-3 group. Mr. Kahn disclaims beneficial ownership of any shares
owned by the Trust or the Gibraltar Beneficiaries.
(10) Includes 701 shares of Series C Preferred that Mr. Gay has the right to
acquire upon the exercise of warrants.
(11) Includes 1,196 shares of Series C Preferred held jointly with Mr. Rivelli's
wife. Also includes 21,717 shares of Series C Preferred beneficially owned
by Sunwestern III Group. Mr. Rivelli and Mr. Silock are the general partners
of Sunwestern LP and Mapleleaf and are equal shareholders of Sunwestern
Incorporated, the attorney in fact for Sunwestern 1988, having the power to
vote and direct the voting of the shares held by Sunwestern 1988. Sunwestern
Incorporated also manages Sunwestern LP and Mapleleaf. Pursuant to Rule
13d-3 of the Securities Exchange Act of 1934, Mr. Rivelli may be deemed to
share beneficial ownership with respect to the shares held by Sunwestern LP,
Sunwestern 1988 and Mapleleaf; however, Mr. Rivelli disclaims beneficial
ownership except to the extent of his pecuniary interest therein.
11
<PAGE>
SERIES D PREFERRED
The following table sets forth information regarding the beneficial
ownership of the Company's Series D Preferred as of September 19, 1996 (a) by
each shareholder who is known by the Company to own beneficially more than 5% of
the outstanding Series D Preferred, (b) by each director, (c) by each person
named in the Summary Compensation Table, and (d) by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT
BENEFICIALLY OF CLASS
NAME OWNED(1) OWNED(2)
- --------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Paul S. Bachow ................................................ 93,562(3) 50.0%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Bachow Fund ................................................... 64,210 34.3%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
Century Capital Partners, L.P. ............................... 74,850 40.0%
One Liberty Square
Boston, MA 02109
Cox Enterprises, Inc. Pension Plan ............................ 18,712 10.0%
1400 Lake Hearn Drive
Atlanta, GA 30319
Martin F. Kahn................................................. 0 *
Thomas R. Gay.................................................. 0 *
Gary S. Mertz.................................................. 0 *
James E. Hovis................................................. 0 *
Robert J. Moeller.............................................. 0 *
Jay D. Seid.................................................... 64,210(4) 34.3%
Patrick A. Rivelli............................................. 0 *
All current directors and executive officers as a group
(9 persons).................................................. 64,210(4) 34.3%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of
the right of a person to acquire them within 60 days, whether by the
exercise of options or warrants, are deemed outstanding in determining the
number of shares beneficially owned by such person or group.
(2) The "Percent of Class Owned" is calculated by dividing the "Number of Shares
Beneficially Owned" by the sum of (i) the total outstanding shares of Series
D Preferred and (ii) shares of Series D Preferred that such person has the
right to acquire within 60 days, whether by the exercise of options or
warrants.
(3) Includes 64,210 shares of Series D Preferred beneficially owned by the
Bachow Fund.
(4) Includes 64,210 shares of Series D Preferred beneficially owned by the
Bachow Fund. Mr. Seid is a Vice President of Bachow & Associates and has
investment power with respect to the shares held by the Bachow Fund.
12
<PAGE>
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation paid or
earned (i) during the fiscal year ended December 31, 1995 by the Chief Executive
Officer of the Company; and (ii) during the fiscal years ended December 31, 1995
and December 31, 1994, the six-month transition period ended December 31, 1993
and the fiscal year ended June 30, 1993 by the former Chief Executive Officer of
the Company. No other executive officer of the Company had salary and bonus
which exceeded $100,000 for the fiscal year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
- --------------------------------------------- ---- ---------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Thomas R. Gay(1)............................. 1995 $ 150,000 -- $8,688(2) 150,000
CHIEF EXECUTIVE OFFICER
Gary S. Mertz(3)............................. 1995 100,750 -- -- --
FORMER CHIEF EXECUTIVE OFFICER AND 1994 96,000 -- -- 16,000
FORMER EXECUTIVE VICE PRESIDENT 1993(4) 46,000 4,080 -- 40,000
OF STRATEGIC MARKET DEVELOPMENT 1993(5) 84,000 8,000 -- 40,000
</TABLE>
- ------------------------
(1) Mr. Gay became Chief Executive Officer of the Company on February 28, 1995,
concurrent with the VISTA Merger.
(2) Includes an annual car allowance of $5,000 and country club membership dues
of $3,688.
(3) Mr. Mertz served as the Chief Executive Officer of the Company until the
closing of the Company's merger with VISTA Environmental on February 28,
1995, when he was replaced by Mr. Gay. Mr. Mertz continued his service with
the Company from February 28, 1995 to December 31, 1995, as Executive Vice
President of Strategic Market Development.
(4) Represents the six-month transition period ended December 31, 1993.
(5) Represents the fiscal year ended June 30, 1993.
13
<PAGE>
OPTION GRANTS
The following table provides information for the year ended December 31,
1995 as to individual grants of options to purchase shares of Common Stock by
each of the persons named in the Summary Compensation Table. No person named in
the Summary Compensation Table exercised options to purchase Common Stock during
the year ended December 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE
- --------------------------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Thomas R. Gay.............. 150,000(2) 34.90% $ 1.41 2/28/00
</TABLE>
- ------------------------
(1) Reflects the grant of options under the Company's 1995 Stock Incentive Plan
(the "1995 Plan"). To the extent not already exercisable, options granted
under the 1995 Plan become immediately exercisable in full upon any change
in control of the Company, provided that, upon such a change in control, the
committee administering the 1995 Plan, if approved either in an agreement
evidencing a grant of options under the 1995 Plan at the time of grant or at
any time after the grant, may determine that some or all holders of
outstanding options granted under the 1995 Plan will receive, with respect
to some or all of the shares of Common Stock subject to such options, as of
the effective date of any such change in control, cash in an amount equal to
the excess of the fair market value of such shares immediately prior to the
effective date of such change in control over the exercise price per share
of such options. Generally, upon termination of employment of an optionee
under the 1995 Plan, options under the 1995 Plan which are exercisable upon
the date of termination will remain exercisable for a period of time set
forth in the 1995 Plan or the expiration of the term of the options,
whichever is earlier; provided, however, that if the termination is for
cause, options granted under the 1988 Plan may be cancelled.
(2) The options were granted to Mr. Gay on February 28, 1995 and vest in equal
installments on the first and second anniversaries of the date of grant.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
GAY AGREEMENT. Concurrent with the closing of the VISTA Merger, the Company
entered into an employment agreement with Mr. Gay, as President and Chief
Executive Officer of the Company. The agreement between the Company and Mr. Gay
provides for (i) an initial base salary of $180,000 for the first year of
employment and a base salary of $195,000 for the second year of employment; (ii)
a grant of incentive stock options to purchase 150,000 shares of Common Stock
with an exercise price equal to $1.41 per share (the fair market value of one
share of the Common Stock on the date of grant) which options vest in two equal
installments on the first and second anniversary of the date of grant and remain
exercisable for a period of ten years; (iii) a bonus in the range from $60,000
to $100,000 based upon the achievement of certain performance criteria to be
established by the Board; (iv) an automobile allowance of $500 per month; and
(v) a country club membership allowance of up to $5,000 per year. The initial
term of this agreement expires on February 28, 1997.
The terms of the agreement between the Company and Mr. Gay also provide that
if Mr. Gay is terminated by the Company "other than for cause" (as such phrase
is defined in the agreement), then Mr. Gay is entitled to his base salary and
benefits for the remainder of the term of the agreement; provided, however, that
such amount may not be less than an amount equal to one half of the base salary
14
<PAGE>
paid to Mr. Gay in the prior calendar year. In the event of a "change in
control" of the Company (as defined in the agreement), (i) all unvested options
granted to Mr. Gay under the agreement immediately vest and become fully
exercisable; and (ii) the agreement automatically terminates and Mr. Gay is
entitled to receive all accrued salary due and owing plus salary for a period of
either one year or until the existing term of the agreement expires, whichever
is longer. The agreement also prohibits disclosure of confidential information
to anyone outside of the Company both during and after employment and prohibits
competition with the Company and the solicitation of customers and employees of
the Company for two years after termination of employment.
MERTZ AGREEMENT. Also concurrent with the closing of the VISTA Merger, the
Company entered into an employment agreement with Mr. Mertz, Chief Executive
Officer of the Company prior to the merger, to continue his employment with the
Company following the merger as Executive Vice President of Strategic Market
Development.
The agreement between the Company and Mr. Mertz provides for (i) an initial
base salary of $106,000 for the first year of employment and a base salary of
$112,000 for the second year of employment; (ii) a grant of incentive stock
options to purchase 100,000 shares of Common Stock with an exercise price equal
to $1.41 per share (the fair market value of one share of Common Stock on the
date of grant), which options vest in two equal installments on the first and
second anniversary of the date of grant and remain exercisable for a period of
five years; and (iii) a bonus in the range from 30% to 50% of Mr. Mertz's annual
salary based upon the achievement of certain performance criteria to be
established by the Board.
Under the terms of the agreement, the initial term of Mr. Mertz's employment
by the Company was through February 28, 1997, subject to earlier termination as
provided in the agreement. Mr. Mertz voluntarily terminated his employment with
the Company effective December 31, 1995. Upon his termination, and pursuant to
the agreement, Mr. Mertz became entitled to receive (i) earned salary through
the date of termination, (ii) earned bonus payments through the date of
termination; and (iii) severance pay equal to the greater of 50% of nine months'
salary less one month of salary for the month Mr. Mertz was employed by the
Company after November 30, 1995 or the amount by which such severance pay
exceeds amounts earned by Mr. Mertz from another employer during such period
following termination. The Company is making severance payments to Mr. Mertz as
provided in the agreement in connection with the Company's regular payroll
schedule.
The agreement between Mr. Mertz and the Company also prohibits disclosure of
confidential information to anyone outside of the Company following termination,
prohibits competition with the Company for two years after employment and
provides that any inventions or other works of authorship relating to or
resulting from Mr. Mertz's work for the Company either during his employment or
for a period of six months following such employment will be the exclusive
property of the Company.
CHANGE IN CONTROL ARRANGEMENTS. In addition to the terms of Mr. Gay's
employment agreement relating to changes in control of the Company, the
Company's 1995 Stock Incentive Plan (the "1995 Plan") provides that, unless
otherwise provided in an agreement evidencing an option granted under the 1995
Plan, in the event of a "change in control" of the Company (as defined below),
all outstanding options will become immediately exercisable in full and will
remain exercisable for the remainder of their terms. In addition, in the event
of such a change in control, the committee administering the 1995 Plan, in its
sole discretion, may provide that some or all participants holding outstanding
options will receive for each share of Common Stock subject to such options cash
in an amount equal to the excess of the fair market value of such shares
immediately prior to the effective date of a change in control over the exercise
price per share of such options.
For purposes of the 1995 Plan, a "change in control" of the Company will be
deemed to have occurred, among other things, upon (i) the sale or other
disposition of substantially all of the assets of the Company to a person not
controlled by the Company, (ii) the approval by the Company's shareholders of a
plan or proposal for the liquidation or dissolution of the Company, (iii) a
merger or consolidation to which
15
<PAGE>
the Company is a party if the Company's shareholders immediately prior to the
merger or consolidation beneficially own, immediately after the merger or
consolidation, securities of the surviving corporation representing 50% or less
of the combined voting power of the surviving corporation's then outstanding
securities ordinarily having the right to vote at elections of directors, (iv)
the Incumbent Directors (defined as the directors in office as of the effective
date of the 1995 Plan or any persons who subsequently become directors and whose
election or nomination was approved by at least a majority of Incumbent
Directors) cease for any reason to constitute at least a majority of the Board;
or (v) a change in control of the Company of a nature that would be required to
be reported pursuant to Section 13 or 15(d) of the Exchange Act.
RELATED TRANSACTIONS
SERIES D PREFERRED. In connection with the VISTA Merger, and in a second
transaction in April 1995, the Company completed a private placement of 187,124
shares of Series D Preferred. Paul S. Bachow and the Bachow Fund, each being a
holder of more than five percent of the Company's outstanding voting securities
at the time of the private placement, purchased 29,352 and 64,210 shares of
Series D Preferred for approximately $392,143 and $857,846, respectively. Jay D.
Seid, a director of the Company, is a Vice President of Bachow & Associates, and
has investment power with regard to the shares of Series D Preferred purchased
by the Bachow Fund.
SUBORDINATED CONVERTIBLE DEBENTURES. During October and November of 1995,
the Company also completed a private placement of $446,000 of its Subordinated
Convertible Debentures (the "Debentures"). In connection with the issuance of
the Debentures, the Company issued immediately exercisable warrants to purchase
shares of Common Stock at an exercise price of $.906 per share. Two funds
associated with the Sunwestern III Group, a holder of more than five percent of
the Company's voting securities, purchased an aggregate of $100,000 of the
Debentures and received warrants to purchase a total of 55,188 shares of Common
Stock. Patrick A. Rivelli, a director of the Company, is one of two general
partners of Sunwestern L.P. and Mapleleaf, and a 50% shareholder of Sunwestern
Incorporated, the attorney in fact for Sunwestern 1988, having the power to vote
and direct the voting of the shares held by Sunwestern 1988.
SENIOR SUBORDINATED PROMISSORY NOTES. In April 1996, the Company issued
$170,000 of Senior Subordinated Promissory Notes (the "Senior Notes"), bearing
interest at 16% and due in September 1996. The Senior Notes were issued together
with warrants to purchase a number of shares of Common Stock equal to 50% of the
amount of the Senior Notes based upon an exercise price of 70% of the
fair-market value of the Common Stock twenty-one days prior to funding, and with
such warrant coverage increasing 3% per week so long as the Senior Notes remain
outstanding, to a maximum of 125%. Martin F. Kahn, Chairman of the Board of
Directors and Patrick A. Rivelli, a director of the Company, loaned $65,000 and
$64,000, respectively pursuant to the Senior Notes.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who beneficially own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater-than-10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company for the year ended December 31, 1995, each
of Messrs. Kahn, Moeller, Seid and Rivelli failed to file a form reporting the
receipt in January 1995 of an automatic grant of options to purchase 10,000
shares of Common Stock. In addition, each of Messrs. Gay, Mertz, Moeller and
Rivelli failed to file a form reporting the issuance of warrants to purchase
Common Stock to each of the foregoing in connection with their purchase of the
Company's Subordinated
16
<PAGE>
Convertible Debentures. Finally, Messrs. Gay and Hovis filed forms reporting
grants of options to such individuals during the year ended December 31, 1995,
although such reports were not filed on the correct form required by Section
16(a) of the Exchange Act.
INDEPENDENT PUBLIC ACCOUNTANTS
McGladrey & Pullen, LLP has been the independent public accountants for the
Company since 1992. Representatives of McGladrey & Pullen, LLP will be present
at the Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
the shareholders. The Board of Directors has not yet selected independent public
accountants for calendar 1996.
SHAREHOLDERS' PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders of a
company, after timely notice to the company, to present proposals for
shareholder action in the company's proxy statement where such proposals are
consistent with applicable law, pertain to matter appropriate for stockholder
action and are not properly omitted by company action in accordance with the
proxy rules. Shareholder proposals prepared in accordance with the proxy rules
must be received by the Company on or before May 28, 1997.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than those
referred to in the accompanying Notice of Annual Meeting of Stockholders which
properly may come before the Annual Meeting. However, if any other matter should
be properly presented for consideration and voting at the Annual Meeting or any
adjournments thereof, it is the intention of the persons named as proxies on the
enclosed form of Proxy Card to vote the Proxy Cards in accordance with their
judgment of what is in the best interest of the Company.
BY THE ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas R. Gay
Thomas R. Gay
PRESIDENT AND CHIEF EXECUTIVE OFFICER
San Diego, CA
September 25, 1996
17
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Gay and E. Steven Hamilton, and
each of them, as Proxies, each with full power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
shares of Common Stock or Preferred Stock of VISTA Information Solutions, Inc.
held of record by the undersigned on September 20, 1996, at the Annual Meeting
of Shareholders to be held on October 29, 1996, or any adjournment, thereof.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / AGAINST all nominees
(except as marked to the
contrary below)
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME)
James E. Hovis Robert J. Moeller Thomas R. Gay
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 2 AND FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ________________________ , 1996
______________________________________
Signature
______________________________________
Signature if held jointly
______________________________________
Print Name
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
