<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 240.14a-11(c) or 240.14a-12
VISTA INFORMATION SOLUTIONS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 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.,
5060 Shoreham Place
San Diego, California 92122
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 23, 1999
-------------------------
The Annual Meeting of the Stockholders of VISTA Information Solutions,
Inc., a Delaware corporation (the "Company"), will be held at the Company's
office located at 5060 Shoreham Place, San Diego, California, beginning at 1:00
p.m. on November 23, 1999, for the following purposes:
1. To elect a Board of Directors to serve until the next Annual
Meeting of Stockholders (or for staggered terms if proposal 3
is adopted) or until their respective successors shall be
elected and qualified.
2. To consider a proposal to adopt the Company's 1999 Stock
Option Plan.
3. To consider a proposal to amend the Certificate of
Incorporation to create a classified board of directors with
three classes each to serve for a term of three years.
4. To transact such other business as may properly come before
the Annual Meeting.
The record date for determination of the stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof is the
close of business on September 24, 1999. For ten days prior to the meeting, a
complete list of the stockholders entitled to vote at the meeting will be
available at the offices of the Company for examination during business hours by
any stockholder for any purpose relating to the meeting.
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
E. Stevens Hamilton
Secretary
October 21, 1999
San Diego, California
- --------------------------------------------------------------------------------
IMPORTANT: Please fill in, date, sign and promptly mail the enclosed
proxy card in the accompanying postpaid envelope to assure that your shares are
represented at the meeting. If you attend the meeting, you may choose to vote in
person even if you have previously sent in your proxy card.
- --------------------------------------------------------------------------------
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
5060 SHOREHAM PLACE
SAN DIEGO, CALIFORNIA 92122
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 23, 1999
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 Annual Meeting of Stockholders to be
held November 23, 1999, and any adjournment thereof (the "Annual Meeting"). The
Annual Meeting will be held at the Company's office located at 5060 Shoreham
Place, San Diego, California, on November 23, 1999 at 1:00 p.m., local time. The
Company expects that this proxy material will be mailed to stockholders on or
about October 22, 1999.
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.
All valid proxies received prior to the meeting will be voted. All shares
represented by a proxy will be voted, and where a stockholder specifies a choice
with respect to any matter to be acted upon, the shares will be voted in
accordance with the specification so made. If no choice is indicated on the
proxy, the shares will be voted in favor of the election of the nominees for
director, in favor of the proposal to adopt the 1999 Stock Option Plan in favor
of the proposed amendment to the Certificate of Incorporation and at the
discretion of the proxy holders on any other matter that comes before the
meeting. A stockholder giving a proxy has the power to revoke that proxy at any
time prior to the time it is voted by delivery to the Secretary of the Company
of either a written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES CONTAINED IN THIS PROXY STATEMENT AND IN FAVOR OF THE OTHER TWO
PROPOSALS ADDRESSED IN THE NOTICE OF THE MEETING.
VOTING OF SHARES
The securities which can be voted at the Annual Meeting consist of the
Company's Common Stock, par value $0.001 per share ("Common Stock"), Series A
Convertible Preferred Stock, par value $0.001 per share (the "Series A
Preferred"), and Series F Convertible Preferred Stock, par value $0.001 per
share (the "Series F Preferred") (the Series A Preferred and Series F Preferred
are collectively referred to hereinafter as the "Preferred Stock"). Each share
of Common Stock entitles its owner to one vote on each matter submitted to the
stockholders at the Annual Meeting. Each share of 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 stockholders at the Annual Meeting. The shares of Series A
Preferred Stock are currently convertible into Common Stock at the rate of 10
shares of Common Stock for each share of Series A Preferred Stock. The shares of
Series F Preferred Stock are currently convertible into Common Stock at the rate
of 156.986
1
<PAGE>
shares of Common Stock for each share of Series F Preferred Stock. Holders of
shares of Common Stock or Preferred Stock are not entitled to cumulate voting
rights.
The record date for determining the holders of Common Stock and
Preferred Stock entitled to notice of and to vote at the Annual Meeting is
September 24, 1999. On the record date, 20,557,281 shares of Common Stock were
outstanding and eligible to be voted at the Annual Meeting and 105,064 shares of
Preferred Stock (equal to 1,418,105 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 Preferred Stock 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).
PRINCIPAL STOCKHOLDERS 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 16, 1999 (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 Chief Executive Officer and the two other executive officers named in the
Summary Compensation Table (the "Designated Executive Officers"), and (d) by all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENT OF CLASS
NAME OWNED(1) OWNED(2)
- ------------------------------------------------------ ------------------------------ ---------------------------
<S> <C> <C>
Martin F. Kahn....................................... 120,893 (3) 0.6%
Cadence Information Associates
767 Fifth Avenue
43rd Floor
New York, NY 10153
Thomas R. Gay........................................ 1,139,911 (4) 5.5%
5060 Shoreham Place
Suite 300
San Diego, CA 92122
Earl Gallegos........................................ 10,000 (5) *
4785 Nomad Drive
Woodland Hills, CA 91364
Jay D. Seid.......................................... 380,279 (6) 1.8%
3 Bala Plaza East
Suite 502
Bala Cynwyd, PA 19004
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENT OF CLASS
NAME OWNED(1) OWNED(2)
- ------------------------------------------------------ ------------------------------ ---------------------------
<S> <C> <C>
Patrick A. Rivelli................................... 857,987 (7) 4.2%
Three Forest Plaza, Suite 1300
12221 Merit Dr.
Dallas, TX 75251
Richard J. Freeman................................... 2,462,195 (8) 11.4%
Century Capital Management
One Liberty Square
Boston, MA 02109
Century Capital Partners, L. P....................... 2,462,195 (9) 11.4%
Century Capital Management
One Liberty Square
Boston, MA 02109
Robert Boscamp....................................... 12,500 (10) *
E. Stevens Hamilton.................................. 100,000 (11) 0.5%
5060 Shoreham Place, #300
San Diego, CA 92122
Howard Shuster....................................... 50,000 (12) 0.2%
All current directors and executive officers as a 5,194,298 (13) 24.4%
group (14 persons)...................................
</TABLE>
- ------------------------------------
*Less than 0.l%.
(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. These numbers include shares 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 into Common Stock.
(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 into Common Stock.
(3) Includes 436 shares of Common Stock held by Cadence Management, L.P.
("Cadence"), of which Mr. Kahn serves as the sole general partner, and
120,457 shares of Common Stock that Cadence has the right to acquire
upon exercise of stock options.
(4) Includes 203,102 shares of Common Stock that Mr. Gay has the right to
acquire upon the exercise of options and 71,302 shares of Common Stock
that Mr. Gay has the right to acquire upon the exercise of warrants.
(5) Includes 10,000 shares of Common Stock which Mr. Gallegos has the right
to acquire upon the exercise of stock options.
3
<PAGE>
(6) Includes 327,586 shares of Common Stock beneficially owned by the Paul
S. Bachow Co-Investment Fund, L.P. Mr. Seid is a Managing Director of
Bachow & Associates and has investment power with respect to the shares
held by the Paul S. Bachow Co-Investment Fund, L.P.; however, Mr. Seid
disclaims beneficial ownership of such shares except to the extent of
his pecuniary interest therein.
(7) Includes 11,334 shares of Common Stock held jointly by Mr. Rivelli and
his wife. Also includes 811,653 shares of Common Stock beneficially
owned by Sunwestern Managers, Inc. Mr. Rivelli and James Silcock are
the general partners of Sunwestern Investment Fund III, Sunwestern
Cayman 1988 Partners and Mapleleaf Capital, Ltd., and are equal
shareholders of Sunwestern Managers, Inc., the attorney in fact for
Sunwestern Investment Fund III, Sunwestern Cayman 1988 Partners and
Mapleleaf Capital, Ltd., having the power to vote and direct the voting
of the shares held. 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 and for Sunwestern Investment Fund
III, Sunwestern Cayman 1988 Partners and Mapleleaf Capital, Ltd.;
however, Mr. Rivelli disclaims beneficial ownership except to the
extent of his pecuniary interest therein.
(8) Includes 2,462,195 shares of Common Stock beneficially owned by Century
Capital Partners, L. P. Mr. Freeman disclaims beneficial ownership of
such shares. Mr. Freeman is a Vice President of Century Capital
Partners, L. P. and has investment power with respect to the shares
held.
(9) Includes 1,338,619 shares of Common Stock owned by Century Capital
Partners, L. P., 17,500 shares Century Capital Partners, L. P. has the
right to acquire upon the exercise of options, 80,477 shares Century
Capital Partners, L. P. has the right to acquire upon the exercise of
warrants and 1,025,600 shares Century Capital Partners, L. P. has the
right to acquire upon conversion of 102,560 shares of Series A
Preferred.
(10) Includes 12,500 shares of Common Stock Mr. Boscamp has the right to
acquire upon exercise of options.
(11) Includes 100,000 shares of Common Stock Mr. Hamilton has the right to
acquire upon exercise of options.
(12) Includes 50,000 shares of Common Stock Mr. Shuster has the right to
acquire upon exercise of options.
(13) Includes shares referred to in notes (3) through (12) above, and
692,518 shares of Common Stock issuable upon exercise of options.
4
<PAGE>
SERIES A PREFERRED
The following table sets forth information regarding the beneficial
ownership of the Company's Series A Preferred as of September 16, 1999 (a) by
each stockholder who is known by the Company to own beneficially more than 5% of
the outstanding Series A Preferred, (b) by each director, (c) by the Designated
Executive Officers, and (d) by all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENT OF CLASS
NAME(1) OWNED(2) OWNED
- ------------------------------------------------------ ------------------------------- -----------------------------
<S> <C> <C>
Century Capital Partners, L. P. ..................... 102,560 100%
Century Capital Management
One Liberty Square
Boston, MA 02109
Richard J. Freeman .................................. 102,560 (3) 100%
Century Capital Management
One Liberty Square
Boston, MA 02109
All current directors and executive officers as a
group (14 persons)................................... 102,560 (3) 100%
</TABLE>
- ------------------------------------
(1) Unless listed in this table, no director or Designated Executive
Officer has any beneficial ownership of shares of Series A Preferred.
(2) 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. These numbers include shares 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.
(3) Includes 102,560 shares of Series A Preferred beneficially owned by
Century Capital Partners, L.P. Mr. Freeman is a Vice President of
Century Capital Partners, L.P. and has investment power with respect to
the shares held; however, Mr. Freeman disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein.
5
<PAGE>
SERIES F PREFERRED
The following table sets forth information regarding the beneficial
ownership of the Company's Series F Preferred as of September 16, 1999 (a) by
each stockholder who is known by the Company to own beneficially more than 5%
of the outstanding Series F Preferred, (b) by each director, (c) by the
Designated Executive Officers, and (d) by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENT OF
NAME(1) OWNED(2) CLASS OWNED
- ---------------------------------------------------------- ------------------------------- ------------------------
<S> <C> <C>
Finova Mezzanine Capital Inc. 2,500 100.0%
500 Church Street, #200
Nashville, TN 37219
All current directors and executive officers
as a group (14 persons).................................. 0 *
- ------------------------------------
*Less than 1%.
</TABLE>
(1) Unless listed in this table, no director or Designated Executive
Officer has any beneficial ownership of shares of Series F Preferred.
(2) 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. These numbers include shares 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.
ELECTION OF DIRECTORS
NOMINATION AND VOTING
Pursuant to the Company's Bylaws, seven directors serve on the
Company's Board of Directors. All directors serve until the next annual meeting
of shareholders or until their earlier death, resignation or removal from
office. One director, Richard Freeman, is elected by the holders of the Series A
Preferred. The other six directors are elected by the holders of Common Stock
and Series F Preferred, voting together as a single class. Each of the nominees
is presently a member of the Board of Directors and has 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 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.
Directors will be elected by a favorable vote of a plurality of the shares
present and entitled to vote. Accordingly, abstentions or "broker non-votes" as
to the election of directors will not affect the election of the candidates
receiving the plurality of votes. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEES NAMED BELOW.
6
<PAGE>
INFORMATION ABOUT NOMINEES
The names of the nominees and their ages as of September 30, 1999, are
set forth below.
<TABLE>
<CAPTION>
Name Age Principal Occupation
- ---- --- --------------------
<S> <C> <C>
Robert Boscamp.............51 President and CEO, Axiom Power
Solutions, Inc.
Richard J. Freeman.........46 Vice President, Century Capital
Management
Earl Gallegos..............41 Principal, Earl Gallegos Management
Thomas R. Gay .............53 Chief Executive Officer
Martin F. Kahn ............48 President, Cadence Information Associates
Patrick A. Rivelli ........62 General Partner of Sunwestern Investment
Fund
Jay D. Seid ...............38 Managing Director, Bachow & Associates
</TABLE>
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK AND SERIES F PREFERRED
ROBERT BOSCAMP has served as a director of the Company since October
1997. Since 1995, Mr. Boscamp has been the President and Chief Executive Officer
of Axiom Power Solutions, Inc., a marketer of energy related products and a
wholly-owned subsidiary of Arizona Public Service. From 1990 to 1995, Mr.
Boscamp founded and developed EcoGroup, a provider of information and market
consulting services to the utilities industry. EcoGroup was subsequently
acquired by Trans Union Corporation, an information services leader. Prior to
founding EcoGroup, Mr. Boscamp founded Enercom, a utility consulting firm, which
was subsequently acquired by Equifax, Inc., a leading provider of information
services.
EARL GALLEGOS has served as a director of the Company since January
1998. In 1995, Mr. Gallegos founded, and since that time has served as the
principal of Earl Gallegos Management, a consulting firm specializing in the
development and implementation of data processing systems and insurance
operations. Prior to 1995, Mr. Gallegos held various management positions,
including Vice President of Operations, within the Pacific Rim Assurance
Company.
THOMAS R. GAY has served as a director and as President and Chief
Executive Officer of the Company since the merger of the Company with its
wholly-owned subsidiary, 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.
MARTIN F. KAHN has been a director of the Company since the VISTA
Merger in February 1995. From February 1995 to October 1996, Mr. Kahn served as
Chairman of the Board of Directors of the Company. 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 health care professionals. Mr. Kahn also
serves as Chairman of the Board of One Source 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, a venture capital fund, 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.
JAY D. SEID has served as Chairman of the Board of Directors of the
Company since October 1996, and as a director since 1995. Since January 1996,
Mr. Seid has served as Managing Director of Bachow & Associates, Inc., an
investment company. From December 1992 to December 1996, Mr. Seid served as Vice
President of Bachow and
7
<PAGE>
Associates. 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.
NOMINEE FOR ELECTION BY HOLDERS OF SERIES A PREFERRED
RICHARD J. FREEMAN has served as a director of the Company since
October 1996. Since 1993, Mr. Freeman has been Vice President of Century Capital
Management. For the preceding 18 years, he held various investment management
positions with Kemper Financial Services, First Chicago Corp. and Metropolitan
Life Insurance Company. Mr. Freeman has also served with the State of Michigan
Insurance Bureau and Treasury Department.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board of
Directors, which met three times and took five actions by written consent during
the fiscal year ended December 31, 1998. Committees established by the Board
include the Audit Committee and the Compensation Committee. Each of the
directors of the Company attended 75% or more of the aggregate meetings of the
Board and all such committees on which he served during 1998.
The members of the Audit Committee during the fiscal year ended
December 31, 1998, were Messrs. Seid and Freeman. 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 end December 31, 1998.
The members of the Compensation Committee as of December 31, 1998 were
Messrs. Seid and Rivelli. 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 Company's stock option plans and all other
equity-based compensation plans adopted by the Company. The Compensation
Committee met one time during the fiscal year ended December 31, 1998.
DIRECTOR COMPENSATION
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 for attending Board meetings or otherwise
engaging in Company business.
Pursuant to the 1995 Stock Incentive Plan, each non-employee director
receives an automatic grant of options to purchase 5,000 shares of Common Stock
on January 1 each year the 1995 Plan is in effect. If a non-employee director is
elected or appointed to serve as a director following January 1, the
non-employee director receives an automatic grant of an option to purchase (i)
2,500 shares of Common Stock if the individual is elected or appointed after
June 30 in any year in which the 1995 Plan is in effect, or (ii) 5,000 shares of
Common Stock if such individual is elected or appointed prior to July 1 in any
year in which the 1995 Plan is in effect. The exercise price per share for
Director Options is equal to the fair market value on the date of grant.
Director Options under the 1995 Plan become exercisable six months following the
date of grant expire five years from the date of grant. In the event a
non-employee director's service as a director is terminated by reason of death
or disability (as defined in the 1995 Plan) all such outstanding options then
held by the non-employee director will become immediately exercisable in full
and will remain exercisable for a period of one year thereafter (but in no event
after the expiration of any such option). In the event that a non-employee
director's service as a director is terminated for any other reason, all such
options then held by the non-employee director will remain exercisable for a
period of three months thereafter to the extent exercisable as of the date of
termination (but in no event after the expiration of any such option).
8
<PAGE>
POTENTIAL ADDITIONAL DIRECTORS
The Company has entered into an Asset Purchase Agreement (the "Purchase
Agreement") with Moore North America, Inc. ("Moore") for the acquisition of
specified assets used by the Data Management Services Division of Moore and its
parent, Moore Corporation Limited.
Pursuant to the terms of the Purchase Agreement, so long as Moore owns
greater than 5% of the Company's outstanding Common Stock, the Company will be
required to use its best efforts to cause one designee of Moore to be elected to
the Company's Board of Directors and to consider in good faith through the
Company's nomination process the nomination of an additional designee of Moore.
Any designee that is not elected to the Board will have rights to observe all
Board meetings and to receive the notices and materials provided to the
directors.
As the acquisition of the assets from Moore has not been consummated,
the Company is not presenting the Moore designees for consideration at the
Annual Meeting; the nominees of Moore who meet the standards outlined above will
be added to the Board when the closing of the transaction occurs. Moore has
advised the Company that Mr. W. Ed Tyler and Mr. James Currie, both of whom are
senior executives with Moore or its parent, will be Moore's designees for
election to the Board. If the stockholders approve the proposal to provide for a
classified Board with staggered three year terms, any designees of Moore added
to the Board will be allocated to provide for classes of relatively equal size.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth the cash and non-cash compensation paid
to or earned by the Chief Executive Officer of the Company, and the two other
executive officers whose salary and bonus exceeded $100,000 for the fiscal year
ended December 31, 1998, with respect to the fiscal years ended December 31,
1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------------
Name And Principal Position Year Salary ($) Bonus ($) Other ($)
- --------------------------- ---- ---------- --------- ---------
<S> <C> <C> <C> <C>
Thomas R. Gay 1998 241,244 -- 12,000 (1)
Chief Executive Officer 1997 195,000 -- 11,000 (2)
1996 187,500 -- 11,000 (2)
E. Stevens Hamilton 1998 215,585 -- --
Vice President, 1997 144,000 -- --
Chief Financial Officer 1996 138,000 -- --
Howard Shuster 1998 120,417 -- --
Vice President, Sales. 1997 110,000 10,000 --
1996 28,000 -- --
</TABLE>
(1) Includes an annual car allowance of $6,000 and country club membership
dues of $6,000.
(2) Includes an annual car allowance of $6,000 and country club memberships
dues of $5,000.
9
<PAGE>
The following table sets forth information with respect to grants of
stock options during the last fiscal year to the persons named in the Summary
Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percentage of Total
Number of Securities Option Granted to
Underlying Options Employees in Fiscal Exercise or Base Expiration
Name Granted (#) Year Price ($) Date
---- ----------- ---- --------- ----
<S> <C> <C> <C> <C>
Thomas R. Gay 100,000 31.1% 7.20 12/01/99
E. Stevens Hamilton --- --- --- ---
Howard Shuster 10,000 3.1% 8.00 01/25/99
</TABLE>
The following table sets forth information with respect to option
exercises and fiscal year-end option values for the persons named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the Money Options
Acquired on Options at FY-End (#) at FY-End($)
Name Exercise (#) Value Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas R. Gay --- --- 181,436 / 148,333 $1,042,125 / 164,583
E. Stevens Hamilton --- --- 66,666 / 83,334 283,330 / 229,170
Howard Shuster --- --- 33,333 / 26,667 208,331 / 104,169
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
AGREEMENT WITH MR. GAY
The Company is a party to an employment agreement with Mr. Gay,
President and Chief Executive Officer of the Company, which currently runs
through December 31, 1999. As amended and currently in effect, the agreement
provides for (i) a grant of incentive stock options to purchase 100,000 shares
of Common Stock with an exercise price equal to $7.20 per share 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; (ii) 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; (iii) an automobile allowance of $500
per month; (iv) a country club membership allowance of up to $6,000 per year;
and (v) continuation of his base salary, health, medical and similar benefits
for nine months following termination, if Mr. Gay is terminated by the Company
"other than for cause" (as such phrase is defined in the agreement).
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 his employment
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.
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CHANGE IN CONTROL AGREEMENTS
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 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
In March and April 1997 the Company issued $700,000 of Senior
Subordinated Promissory Notes (the "1997 Senior Notes"), bearing interest at 16%
and due in March and April 1998. The 1997 Senior Notes were issued together with
warrants to purchase a number of shares of Common Stock equal to 100% of the
amount of the 1997 Senior Notes based upon the exercise price of 125% of the
fair-market value of the Common Stock 21 days prior to funding. Jay D. Seid,
Chairman of the Board of Directors, Thomas R. Gay, Chief Executive Officer and
Director of the Company, Martin F. Kahn, Richard J. Freeman, and Robert J.
Moeller, directors of the Company, participated in this funding in the amounts
of $45,000, $50,000, $33,000, $100,000, and $5,000 respectively pursuant to the
1997 Senior Notes. The Senior Notes were all converted to Common Stock during
1997 pursuant to terms thereof, whereby the principal and accrued interest were
convertible into Common Stock at a price equal to 70 percent of the 21 day
trailing average of the stock price.
In October 1997 the Board of Directors of the Company approved the
extension of options to purchase 128,677 shares of Common Stock held by PSB Co.
Investment Fund and options to purchase 58,824 shares of Common Stock held by
Paul S. Bachow from December 31, 1997 to December 31, 1998.
On December 31, 1998 the Company sold 837,521 shares of Common Stock to
Century Capital Partners, L.P. a holder of more than 5% of the Company's voting
securities, for an aggregate price of $5,000,000. Richard J. Freeman, a director
of the Company is a Vice President of Century Capital Partners, L.P. and has
investment power with respect to the shares held by Century Capital Partners,
L.P.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, 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
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<PAGE>
Company for the year ended December 31, 1998, all executive officers and
greater-than-10% shareholders filed the required Section 16(a) reports in a
timely manner, except that the Form 5 filings made by Robert Boscamp, Jay
Seid, Century Capital Partners, L.P., Richard J. Freeman, Martin Kahn, James
Mauch, Robert Moeller, Paul S. Bachow Co-Investment Fund, L.P., Patrick
Rivelli and Howard Shuster were considered late since the SEC considered the
documents that were timely filed to be too light to read. Also, a Form 4 for
Mr. Rivelli was not filed timely as a result of an administrative oversight.
PROPOSAL TO ADOPT OF THE 1999 STOCK OPTION PLAN
At the Annual Meeting, the stockholders will be asked to approve the adoption of
the VISTA Information Solutions, Inc. 1999 Stock Option Plan (the "1999 Option
Plan"). The 1999 Option Plan was adopted by the Board of Directors on January
27, 1999 (the "Effective Date"). The 1999 Plan is intended to replace the
Company's previous stock option plans, as substantially all of the shares
reserved for issuance under those plans are subject to issuance pursuant to
outstanding options.
Competition for highly qualified individuals in the Company's industry is
intense. To successfully attract and retain the best possible candidates for
positions of responsibility within the Company, the Board of Directors believes
that the Company must continue to offer a competitive equity incentive program.
The Board expects that the 1999 Option Plan will be an important factor in
attracting and retaining the high caliber employees, directors and consultants
essential to the success of the Company and in motivating these individuals to
strive to enhance the Company's growth and profitability. The proposed 1999
Option Plan is intended to ensure that the Company will continue to have
available a reasonable number of shares to meet these goals. It authorizes the
issuance of up to 3,000,000 shares of the Company's Common Stock (subject to
adjustment for certain changes in the capital structure of the Company).
The 1999 Option Plan is also designed to preserve the Company's ability to
deduct in full for federal income tax purposes the compensation recognized by
its executive officers in connection with options granted under the plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
sets a limit of $1 million on the amount of compensation paid to each of the
Company's chief executive officer and four other most highly compensated
executive officers that the Company may deduct as an expense for federal income
tax purposes. In combination with other types of compensation received by these
employees, it is possible that their option-related compensation could exceed
this limit in a particular year. However, Section 162(m) exempts certain
"performance-based compensation" from this limit. To permit compensation
attributable to options granted under the 1999 Option Plan to qualify as
performance-based compensation, the 1999 Option Plan limits the number of shares
for which options may be granted in any fiscal year to any employee, including
the Company's executive officers, to a maximum of 150,000 shares (the "Grant
Limit").
SUMMARY OF THE 1999 OPTION PLAN. The following summary of the 1999 Option Plan
is qualified in its entirety by the specific language of the 1999 Option Plan, a
copy of which is available to any stockholder upon request.
GENERAL. The purpose of the 1999 Option Plan is to advance the interests of the
Company and its stockholders by providing an incentive to attract, retain and
reward the Company's employees, directors and consultants and by motivating such
persons to contribute to the Company's growth and profitability. The 1999 Option
Plan provides for the grant to employees of incentive stock options within the
meaning of Section 422 of the Code and the grant to employees, directors and
consultants of non-statutory stock options.
SHARES SUBJECT TO PLAN. A maximum of 3,000,000 of the authorized but unissued or
reacquired shares of Common Stock of the Company may be issued under the 1999
Option Plan. Appropriate adjustments will be made to the shares subject to the
1999 Option Plan, the Grant Limit, and to outstanding options upon any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company. If
any outstanding option expires, terminates or is canceled, or if shares acquired
pursuant to an option are repurchased by the Company at their original exercise
price, the expired or repurchased shares are returned to the 1999 Option Plan
and again become available for grant.
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<PAGE>
ADMINISTRATION. The 1999 Option Plan will be administered by the Board of
Directors or a duly appointed committee of the Board, which, in the case of
options intended to qualify for the performance-based compensation exemption
under Section 162(m) of the Code, must be comprised solely of two or more
"outside directors" within the meaning of Section 162(m). (For purposes of
this discussion, the "Board" shall refer to either the Board of Directors or
such committee thereof.) Subject to the provisions of the 1999 Option Plan,
the Board determines the persons to whom options are to be granted, the
number of shares to be covered by each option, whether an option is to be an
incentive stock option or a nonstatutory stock option, the timing and terms
of exercisability and vesting of each option, the purchase price and the type
of consideration to be paid to the Company upon the exercise of each option,
the time of expiration of each option, and all other terms and conditions of
the options. The Board may amend, modify, extend, cancel, renew, or grant a
new option in substitution for, any option, waive any restrictions or
conditions applicable to any option, and accelerate, continue, extend or
defer the exercisability or vesting of any option, including with respect to
the period following an optionee's termination of service with the Company.
The 1999 Option Plan provides, subject to certain limitations, for
indemnification by the Company of any director, officer or employee against
all reasonable expenses, including attorneys' fees, incurred in connection
with any legal action arising from such person's action or failure to act in
administering the plan The Board will interpret the 1999 Option Plan and
options granted thereunder, and all determinations of the Board will be final
and binding on all persons having an interest in the 1999 Option Plan or any
option.
ELIGIBILITY. Options may be granted under the 1999 Option Plan to employees ,
directors and consultants of the Company or of any present or future parent
or subsidiary corporations of the Company. In addition, options may be
granted to prospective service providers in connection with written
employment offers, provided that no shares may be purchased prior to such
person's commencement of service. As of September 15, 1999, the Company and
its subsidiaries had approximately 300 employees (including 6 executive
officers), seven directors and approximately 25 consultants who would be
eligible under the 1999 Option Plan. While any eligible person may be granted
a nonstatutory stock option, only employees may be granted incentive stock
options.
TERMS AND CONDITIONS OF OPTIONS. Each option granted under the 1999 Option
Plan is evidenced by a written agreement between the Company and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the plan. The
exercise price of each incentive stock option may not be less than the fair
market value of a share of the Common Stock on the date of grant, while the
exercise price of a non-statutory stock option may not be less than 85% of
such fair market value. However, any incentive stock option granted to a
person who at the time of grant owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company (a "Ten Percent Stockholder")
must have an exercise price equal to at least 110% of the fair market value
of a share of Common Stock on the date of grant. As of October 18, 1999 the
closing price of the Company's Common Stock, as reported on the Nasdaq
National Market, was $3.25 per share.
The 1999 Option Plan provides that the option exercise price may be paid in
cash, by check, or in cash equivalent, by the assignment of the proceeds of a
sale or loan with respect to some or all of the shares being acquired upon
the exercise of the option, to the extent legally permitted, by tender of
shares of Common Stock owned by the optionee having a fair market value not
less than the exercise price or by means of a promissory note if the optionee
is an employee, by such other lawful consideration as approved by the Board,
or by any combination of these. Nevertheless, the Board may restrict the
forms of payment permitted in connection with any option grant. No option may
be exercised unless the optionee has made adequate provision for federal,
state, local and foreign taxes, if any, relating to the exercise of the
option.
Options will become vested and exercisable at such times or upon such events
and subject to such terms, conditions, performance criteria or restrictions
as specified by the Board. The maximum term of an incentive stock option
granted under the 1999 Option Plan is ten years, except that an incentive
stock option granted to a Ten Percent Stockholder must have a term not
exceeding five years. An option generally will remain exercisable for one
month following the optionee's termination of service, provided that if
termination results from the optionee's death or disability, the option
generally will remain exercisable for six months. In any event the option
must be exercised no later than its expiration date. The Board, in its
discretion, may provide for longer post-service exercise periods in
particular instances.
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<PAGE>
Stock options granted under the 1999 Option Plan are nontransferable by the
optionee other than by will or by the laws of descent and distribution, and
are exercisable during the optionee's lifetime only by the optionee.
CHANGE IN CONTROL. The 1999 Option Plan defines a "Change in Control" of the
Company as any of the following events upon which the stockholders of the
Company immediately before the event do not retain immediately after the
event, in substantially the same proportions as their ownership of shares of
the Company's voting stock immediately before the event, direct or indirect
beneficial ownership of more than 50% of the total combined voting power of
the stock of the Company or its successor: (i) a sale or exchange by the
stockholders in a single or series of related transactions of more than 50%
of the Company's voting stock; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company. If a Change in Control occurs, the surviving,
continuing, successor or purchasing corporation or parent corporation thereof
may either assume the Company's rights and obligations under the outstanding
options or substitute substantially equivalent options for such corporation's
stock. To the extent that the outstanding options are not assumed, replace or
exercised prior to the Change in Control, they will terminate.
TERMINATION OR AMENDMENT. The 1999 Option Plan will continue in effect until
the earlier of its termination by the Board or the date on which all shares
available for issuance under the plan have been issued and all restrictions
on such shares under the terms of the plan and the agreements evidencing
options granted under the plan have lapsed, provided that all incentive stock
options must be granted within ten years of the date on which the Board
adopted the 1999 Option Plan. The Board may terminate or amend the 1999
Option Plan at any time. However, without stockholder approval, the Board may
not amend the 1999 Option Plan to increase the total number of shares of
Common Stock issuable thereunder, change the class of persons eligible to
receive incentive stock options, or effect any other change that would
require stockholder approval under any applicable law, regulation or rule. No
termination or amendment may adversely affect an outstanding option without
the consent of the optionee, unless the amendment is required to preserve an
option's status as an incentive stock option or is necessary to comply with
any applicable law, regulation or rule.
SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES. The following summary is
intended only as a general guide as to the U.S. federal income tax
consequences under current law of participation in the 1999 Option Plan and
does not attempt to describe all possible federal or other tax consequences
of such participation or tax consequences based on particular circumstances.
INCENTIVE STOCK OPTIONS. An optionee recognizes no taxable income for regular
income tax purposes as a result of the grant or exercise of an incentive
stock option qualifying under Section 422 of the Code. Optionees who do not
dispose of their shares for two years following the date the option was
granted nor within one year following the exercise of the option will
normally recognize a capital gain or loss equal to the difference, if any,
between the sale price and the purchase price of the shares. If an optionee
satisfies such holding periods upon a sale of the shares, the Company will
not be entitled to any deduction for federal income tax purposes. If an
optionee disposes of shares within two years after the date of grant or
within one year from the date of exercise (a "disqualifying disposition"),
the difference between the fair market value of the shares on the
determination date (see discussion under "Nonstatutory Stock Options" below)
and the option exercise price (not to exceed the gain realized on the sale if
the disposition is a transaction with respect to which a loss, if sustained,
would be recognized) will be taxed as ordinary income at the time of
disposition. Any gain in excess of that amount will be a capital gain. If a
loss is recognized, there will be no ordinary income, and such loss will be a
capital loss. The tax rate applicable to any capital gain will depend upon a
number of factors, including the date on which the optionee acquired the
shares, the optionee's holding period, and the optionee's ordinary income
marginal tax rate. Any ordinary income recognized by the optionee upon the
disqualifying disposition of the shares generally should be deductible by the
Company for federal income tax purposes, except to the extent such deduction
is limited by applicable provisions of the Code or the regulations thereunder.
The difference between the option exercise price and the fair market value of
the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is treated as an
adjustment in computing the optionee's alternative minimum taxable income and
may be subject to an alternative minimum tax which is paid if such tax
exceeds the regular tax for the year. Special rules may apply with respect to
certain
14
<PAGE>
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing the alternative minimum taxable income
on a subsequent sale of the shares and certain tax credits which may arise
with respect to optionees subject to the alternative minimum tax.
NONSTATUTORY STOCK OPTIONS. Options not designated or qualifying as incentive
stock options will be nonstatutory stock options having no special tax
status. An optionee generally recognizes no taxable income as the result of
the grant of such an option. Upon exercise of a nonstatutory stock option,
the optionee normally recognizes ordinary income in the amount of the
difference between the option exercise price and the fair market value of the
shares on the determination date (as defined below). If the optionee is an
employee, such ordinary income generally is subject to withholding of income
and employment taxes. The "determination date" is the date on which the
option is exercised unless the shares are subject to a substantial risk of
forfeiture (as in the case where an optionee is permitted to exercise an
unvested option and receive unvested shares which, until they vest, are
subject to the Company's right to repurchase them at the original exercise
price upon the optionee's termination) and are not transferable, in which
case the determination date is the earlier of (i) the date on which the
shares become transferable or (ii) the date on which the shares are no longer
subject to a substantial risk of forfeiture. If the determination date is
after the exercise date, the optionee may elect, pursuant to Section 83(b) of
the Code, to have the exercise date be the determination date by filing an
election with the Internal Revenue Service no later than 30 days after the
date the option is exercised. Upon the sale of stock acquired by the exercise
of a nonstatutory stock option, any gain or loss, based on the difference
between the sale price and the fair market value on the determination date,
will be taxed as capital gain or loss. The tax rate applicable to any capital
gain will depend upon a number of factors, including the date on which the
optionee acquired the shares, the optionee's holding period, and the
optionee's ordinary income marginal tax rate. No tax deduction is available
to the Company with respect to the grant of a nonstatutory stock option or
the sale of the stock acquired pursuant to such grant. The Company generally
should be entitled to a deduction equal to the amount of ordinary income
recognized by the optionee as a result of the exercise of a nonstatutory
stock option, except to the extent such deduction is limited by applicable
provisions of the Code or the regulations thereunder.
NEW PLAN BENEFITS. Option grants under the 1999 Option Plan will be made at
the discretion of the Board, and, accordingly, are not determinable. In
addition, benefits under the 1999 Option Plan will depend on a number of
factors, including the fair market value of the Company's Common Stock on
future dates and the exercise decisions made by the optionees. Consequently
it is not possible to determine the benefits that might be received by
optionees receiving discretionary grants under the 1999 Option Plan.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION. The
affirmative vote of a majority of the votes cast at the Annual Meeting at
which a quorum is present and voting, either in person or by proxy, is
required for approval of this proposal. Abstentions will have the same effect
as a negative vote. Broker non-votes will have no effect on the outcome of
the vote.
The Board of Directors believes that the adoption of the 1999 Stock
Option Plan is in the best interests of the Company and the stockholders for
the reasons stated above. THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" APPROVAL OF THE ADOPTION OF THE 1999 STOCK OPTION
PLAN.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO ESTABLISH A CLASSIFIED BOARD OF DIRECTORS
The Company is proposing to amend its Certificate of Incorporation
to establish of a classified board of directors, with the precise number of
directors to be determined by the Board of Directors.
The proposed classified board provides for the directors (other than
those elected by a series of Preferred Stock) to be divided into three
"classes," each of which would be elected for staggered terms of three years
after an initial transition period. The classification system of electing
directors may tend to maintain the incumbency of the Board, since only
approximately one-third of the Directors would be elected each year. As such,
a classified board generally makes it more difficult for stockholders to
change a majority of the directors. However, a classified board contributes
to the continuity and stability of the Board of Directors and provides for
consistent leadership and policy
15
<PAGE>
formulation by the Board. Classification of the Board of Directors will also
enable the Board to more effectively consider any proposed takeover attempt
and, in the event of any such proposal, would generally assist the Board in
negotiating terms that maximize the benefit to the Company and its
stockholders.
Under this proposed amendment, the Board of Directors would be
divided into three classes, designated Class I, Class II and Class III, and
the directors elected at the Annual Meeting by the holders of Common Stock
and Series F Preferred would be placed in one of the three classes. The
directors in Class I will hold office until the annual meeting of
stockholders held in 2000; the directors in Class II will hold office until
the annual meeting of stockholders held in 2001; and the directors in Class
III will hold office until the annual meeting of stockholders held in 2002.
The Board anticipates that directors will be allocated among these classes to
achieve classes of approximately equal sizes. At each election after the
Annual Meeting, the directors elected at that meeting by the holders of
Common Stock and Series F Preferred would serve for succeeding terms of three
years. In all cases, the terms of directors will run until their successors
are duly elected and qualified or until their earlier resignation, removal
from office or death. The proposed amendment would also provide that the
precise number of directors would be established by the Board. If the number
of directors is changed, any increase or decrease will be apportioned among
the classes so as to maintain the number of directors in each class as nearly
equal as possible.
Under Delaware law, unless the Certificate of Incorporation provides
otherwise, a director on a classified board of directors can be removed from
office during his or her term by the stockholders only for cause. The
proposed amendment to the Certificate of Incorporation would not permit a
director to be removed during his or her term for reasons other than for
cause.
If this proposed amendment is adopted, unless directors are removed
for cause, it will require at least two annual meetings for stockholders to
make a change in a majority of the Board of Directors. As such, it would be
more difficult for stockholders to effect a change in control of the Board of
Directors, even if the stockholders are seeking that change as a result of
dissatisfaction with the performance of the Company's directors.
In the event this proposal is not approved, all directors of the
Company will be elected at each annual meeting. In the event this proposal is
approved, Article EIGHTH of the Certificate of Incorporation will be amended
in its entirety to read as follows:
"Subject to the rights of any holders of Preferred Stock, the number of
directors shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption). The directors
(other than those elected only by the holders of one or more series of
Preferred Stock) shall be divided into three classes with the term of
office of the first class to expire at the first annual meeting of the
stockholders following adoption of this provision, and the term of
office of the second class to expire at the second annual meeting of
stockholders held following the adoption of this provision, and the
term of office of the third class to expire at the third annual meeting
of stockholders following the adoption of this provision. After the
directors are divided into the three classes as set forth in the
preceding sentence, all subsequent elections (other than elections only
by the holders of one or more series of Preferred Stock) shall be for
term to expire at each third succeeding annual meeting of stockholders
after such election. All directors shall hold office until the
expiration of the term for which elected, and until their respective
successors are elected, except in the case of death, resignation, or
removal of any director. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any
incumbent director. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, the newly created directorships
resulting from any increase in the authorized number of directors or
any vacancies on the Board of Directors resulting from death,
resignation or other reason (other than removal from office for cause
by a vote of the stockholders) may be filled by a majority vote of the
Directors then in office, though less than a quorum. Subject to the
rights of the holders of any series of Preferred Stock then
outstanding, any vacancies created as a result of removal by the
stockholders of one or more directors for cause shall be filled by a
vote of the stockholders."
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VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION. The affirmative
vote of a majority of the shares of Common Stock, a majority of the shares of
Series A Preferred Stock and a majority of the shares of Series F Preferred
Stock is required for approval of this proposal. Abstentions and broker
non-votes will have the same effect as a vote against this proposal.
The Board believes that the proposed amendment of the Certificate of
Incorporation in the best interest of the stockholders and the Company for
the reasons stated above.
THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
APPROVAL OF THIS PROPOSAL.
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.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP has been the independent public accountants
for the Company since 1998. Representatives of Deloitte & Touche , 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 stockholders.
STOCKHOLDERS' PROPOSALS
The rules of the Securities and Exchange Commission permit
stockholders of a company, after timely notice to the company, to present
proposals for stockholder 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. Stockholder proposals, prepared in
accordance with the proxy rules, for consideration at the 2000 Annual Meeting
must be received by the Company on or before June 22, 2000.
17
<PAGE>
VISTA INFORMATION SOLUTIONS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Gay, Neil A. Johnson and
E. Stevens 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 of VISTA Information
Solutions, Inc. held of record by the undersigned as of September 24, 1999,
at the Annual Meeting of Stockholders to be held on November 23, 1999, or any
adjournment, thereof.
1. Election of Directors by holders of Common Stock and Series F
Preferred Stock:
-TM- FOR all nominees listed below (except as marked to
the contrary below)
-TM- AGAINST all nominees
(INSTRUCTIONS: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME)
Robert Boscamp, Earl Gallegos, Thomas R. Gay, Martin
F. Kahn, Patrick A. Rivelli and Jay D. Seid.
2. With respect to the proposed adoption of the Company's 1999
Stock Option Plan.
-TM- FOR
-TM- AGAINST
-TM- ABSTAIN
3. With respect to the proposed amendment to the Certificate of
Incorporation regarding classification of the Board of Directors.
-TM- FOR
-TM- AGAINST
-TM- ABSTAIN
4. 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 STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES, FOR ADOPTION OF THE
1999 STOCK OPTION PLAN AND FOR THE PROPOSED AMENDMENTS TO THE CERTIFICATE OF
INCORPORATION. 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: , 1999
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Signature
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Signature if held jointly
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Print Name
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
