<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1996.
REGISTRATION NO. 333-03355
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-EFFECTIVE
AMENDMENT
NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PHOENIX INTERNATIONAL LTD., INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 7372 59-3171810
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
900 WINDERLEY PLACE, SUITE 140, MAITLAND, FLORIDA 32751
(407) 667-0033
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BAHRAM YUSEFZADEH
CHIEF EXECUTIVE OFFICER
PHOENIX INTERNATIONAL LTD., INC.
900 WINDERLEY PLACE, SUITE 140
MAITLAND, FLORIDA 32751
(407) 667-0033
(407) 667-0133 (FAX)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
GLENN W. STURM, ESQ. M. HILL JEFFRIES, ESQ.
TERRESA R. TARPLEY, ESQ. W. THOMAS CARTER III, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. ALSTON & BIRD
400 COLONY SQUARE ONE ATLANTIC CENTER
1201 PEACHTREE STREET 1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30361 ATLANTA, GEORGIA 30309-3424
(404) 817-6000 (404) 881-7000
(404) 817-6050 (FAX) (404) 881-7777 (FAX)
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value...... 1,239,125 $13.00 $16,108,625 $5,555
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</TABLE>
(1) Includes 161,625 shares which the Underwriters have the option to purchase
from certain Selling Shareholders to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933.
(3) Includes an additional filing fee of $142 paid herewith as a result of the
registration of 31,625 additional shares of Common Stock.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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ITEM NUMBER AND CAPTION LOCATION OF CAPTION IN PROSPECTUS
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Outside Front Cover Page; Underwriting
6. Dilution................................... Risk Factors; Dilution
7. Selling Security Holders................... Principal and Selling Shareholders
8. Plan of Distribution....................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered............................... Prospectus Summary; Capitalization;
Description of Capital Stock
10. Interests of Named Experts and Counsel..... Legal Matters
11. Information with Respect to the
Registrant............................... Prospectus Summary; Risk Factors; Use of
Proceeds; Divided Policy; Capitalization;
Dilution; Selected Consolidated Financial
Data; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal and Selling Shareholders;
Description of Capital Stock; Shares
Eligible for Future Sale; Consolidated
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 14, 1996
PROSPECTUS
1,077,500 SHARES
[PHOENIX INTERNATIONAL LOGO]
COMMON STOCK
Of the 1,077,500 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), offered hereby, 670,000 shares are being sold by Phoenix
International Ltd., Inc. ("Phoenix" or the "Company") and 407,500 shares are
being sold by certain shareholders of the Company (the "Selling Shareholders").
See "Principal and Selling Shareholders." The Company will not receive any
proceeds from the sale of shares by the Selling Shareholders other than the
receipt of $1,319,000 in payment of stock subscriptions receivable plus accrued
interest thereon of $158,000 through the estimated Closing Date (as defined
herein) from one of the Selling Shareholders.
Prior to this offering (the "Offering"), there has been no public market
for the Common Stock. It is currently anticipated that the initial public
offering price will be between $11.00 and $13.00 per share. See "Underwriting"
for the factors to be considered in determining the initial public offering
price. The Common Stock has been approved for listing on the Nasdaq Stock
Market's National Market (the "Nasdaq National Market") under the symbol "PHXX."
Immediately after the Offering, the present directors and executive
officers of the Company and their respective affiliates will beneficially own in
the aggregate approximately 57.6% of the outstanding shares of Common Stock.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
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Total............................. $ $ $ $
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</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $927,000 payable by the Company.
(3) Certain of the Selling Shareholders have granted the Underwriters a 30-day
over-allotment option to purchase up to 161,625 additional shares of Common
Stock on the same terms and conditions as set forth above. If all such
shares are purchased by the Underwriters, the total Price to Public will be
$ , the total Underwriting Discount will be $ , the total
Proceeds to the Company will be $ and the total Proceeds to
Selling Shareholders will be $ . See "Principal and Selling
Shareholders" and "Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
orders in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that certificates for the shares of Common Stock will be
available for delivery on or about , 1996.
---------------------
J.C. BRADFORD & CO. ADVEST, INC.
, 1996
<PAGE> 4
[INSERT ARTWORK AS DETERMINED BY COMPANY AND UNDERWRITERS]
Graphic of Company logo on inside front
cover.
Fold-out graphic
which displays the
client/server banking environment.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
FOLLOWING CONSUMMATION OF THE OFFERING, THE COMPANY INTENDS TO FURNISH ITS
SHAREHOLDERS WITH ANNUAL REPORTS CONTAINING AUDITED FINANCIAL STATEMENTS AND AN
OPINION THEREON EXPRESSED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AND WITH
QUARTERLY REPORTS CONTAINING UNAUDITED FINANCIAL INFORMATION FOR THE FIRST THREE
QUARTERS OF EACH FISCAL YEAR.
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. Prospective investors should carefully
consider the matters set forth under "Risk Factors" herein. Unless the context
otherwise indicates, (i) the information in this Prospectus assumes no exercise
of the Underwriters' over-allotment option and (ii) all share and per share data
has been restated to reflect (a) a 2.3231-for-one stock split in the form of a
132% stock dividend on all shares of capital stock outstanding on May 6, 1996
and (b) a recapitalization on the closing date of the Offering (the "Closing
Date") in which all outstanding shares of the Company's five classes of common
stock (designated as A through E) will be converted into Common Stock on a share
for share basis. All references to "Phoenix" or the "Company" include Phoenix
International Ltd., Inc. and its subsidiary.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
THE COMPANY
Phoenix International Ltd., Inc. ("Phoenix" or the "Company") designs,
develops, markets and supports highly adaptable, enterprise-wide client/server
application software for the financial services industry, with a primary focus
on middle market banks. Phoenix combined (i) its management's extensive
experience with banking and banking software systems, (ii) input from a
consortium of financial institutions (the "U.S. Bank Partners") concerning bank
operational and flexibility needs and (iii) the most recent advances in client/
server technology to design and develop an innovative new banking software
system. The Phoenix Retail Banking System (the "Phoenix System"), through its
client/server technology, addresses many of the deficiencies of the mainframe-
and minicomputer-based legacy systems on which most banks currently operate by
allowing financial institutions to integrate data into a comprehensive
management information network. Like legacy systems, the Phoenix System supports
all core areas of bank data processing, including system administration, account
processing, nightly processing, teller functions, holding company accounting and
budgeting. Unlike legacy systems, the Phoenix System is a fully integrated
system that provides significant advantages in three critical areas: (i)
customer relationship management; (ii) management decision support; and (iii)
bank product creation and support.
Since its formation in January 1993, the Company has entered into 25
ongoing contracts with banks or bank holding companies for installation of the
Phoenix System supporting 26 United States and 8 international financial
institutions. As of May 31, 1996, the Phoenix System has been fully implemented
and is operating in 18 of these 34 financial institutions. The Company had total
revenues of approximately $5.0 million and net income of approximately $554,000
for the fiscal year ended December 31, 1995 and total revenues of approximately
$1.8 million and net income of approximately $142,000 for the quarter ended
March 31, 1996.
The Company's Chief Executive Officer, Bahram Yusefzadeh, has over 27 years
of experience in the banking software industry. In addition, the Company has
assembled a senior management team with over 120 years of experience in the
banking and software industries. In the 1970s, Mr. Yusefzadeh co-founded Nu-Comp
Systems, Inc. and led its development of one of the first integrated legacy core
banking systems, the Liberty Banking System, which at one time was used by over
260 banks. Mr. Yusefzadeh founded Phoenix for the purpose of developing and
marketing a new generation of integrated banking software applications using
client/server technology that would replace less flexible and technologically
dated legacy systems. The Phoenix System's development was the result of a joint
effort among the Company's management, Hewlett-Packard Company
("Hewlett-Packard") and the U.S. Bank Partners. In addition, the U.S. Bank
Partners provided a substantial portion of the Company's initial capital.
The Company's primary market consists of middle market banks, which the
Company defines as commercial banks and savings institutions with asset sizes
ranging between $100 million and $1 billion. These
3
<PAGE> 6
banks are highly regulated, and they historically have provided a limited range
of products and faced limited competition. These banks typically used legacy
computer systems that generally only processed transactions and provided a
general ledger. Today, the competitive landscape has changed dramatically as
diversified financial service providers compete directly with middle market
banks. As a result, these banks need detailed information about their
institutions and customers in order to develop and market profitable new
products and services and to expand customer relationships.
The Phoenix System addresses this increasing need for detailed information
by allowing financial institutions to integrate data into a comprehensive
management information network that is (i) readily accessible throughout the
entire financial institution, (ii) flexible with shared information and (iii)
easily interfaced with other software systems. The Company believes that the
Phoenix System is easy to use and simple to learn, which enables a bank to
provide higher quality customer service with reduced operating and training
costs. As a result of these benefits, the Company believes that its customers'
competitive positions are enhanced. Phoenix believes that very few middle market
banks have fully realized the potential benefits offered by client/server
technology due to the small number of true client/server applications currently
available to banks.
The Company's primary business objective is to become a leading supplier of
enterprise-wide client/ server application software for the financial services
industry by pursuing the following strategies:
- Maintain Technology Leadership and Enhance Product
Functionality. Phoenix believes the Phoenix System is the most advanced
client/server computing solution for banks because it incorporates new
open technologies and standards, such as client/server architectures,
relational databases, graphical user interfaces and advanced application
development tools. Phoenix intends to maintain its leadership position by
integrating new technologies, adding new applications, enhancing existing
applications and increasing functionality.
- Focus on United States Middle Market Banks. The Company intends to
continue its marketing focus in the United States on the approximately
3,800 middle market banks with asset sizes ranging from $100 million to $1
billion. The Company believes that most middle market banks are
technologically sophisticated, seek banking software applications that
support strategic objectives and have the capital and human resources to
finance and effectively use advanced technological solutions.
- Expand International Market. Phoenix believes that many international
financial institutions are seeking technology as a means to offer a
broader array of financial products and services to meet the increasing
demand for retail banking services in the international market. Phoenix
has designed its software products to incorporate numerous international
features and intends to continue enhancing functionality.
- Increase Worldwide Distribution. The Company plans to continue expanding
its distribution both in the United States and internationally by
increasing its sales and implementation forces and seeking additional
strategic alliances. In March 1996, Phoenix and Unisys Corporation
("Unisys") entered into a software license agreement (the "Unisys
Agreement") whereby Unisys exclusively markets the Phoenix System to banks
in Central and South America, Mexico, the Caribbean and Bermuda. In April
1996, the Company and Computer Systems Associates (Nigeria) Limited
("CSA") entered into a remarketing agreement (the "CSA Agreement") whereby
CSA exclusively markets the Phoenix System to banks in certain countries
of Africa and non-exclusively markets the Phoenix System to banks in the
Republic of South Africa.
- Maximize Recurring Revenues. Phoenix signs customers to long-term
licensing agreements and charges annual service fees which are generally
15-20% of the base license fee. As the asset size of a bank increases or
as branches are added, customers pay additional incremental license fees
and increased service fees over the life of the license agreement.
Additionally, the Company's disaster recovery service is a separate
five-year contract which has an initial implementation fee and annual
service fees. Phoenix plans to continue to build this base of recurring
revenue and to develop additional sources of recurring revenue.
- Leverage Existing Customer Base and Broaden Primary Market. The Company
intends to expand its current bank customer relationships by providing
additional products and services and by licensing to additional bank
subsidiaries of existing clients. In addition, the Company intends to use
its implemented customer base as an important source of references, which
are vital in marketing to the
4
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financial services industry. By mid-1997, the Company also intends to
expand the market for the Phoenix System to include banks with asset sizes
greater than $1 billion by increasing product functionality and
flexibility. Furthermore, by mid-1997 the Company intends to develop a
product specifically for banks with assets of less than $100 million which
operates on the Microsoft Windows NT platform (the "NT Version").
- Pursue Complementary Acquisitions. Phoenix intends to leverage its
position as a provider of client/server technology to financial
institutions by pursuing strategic acquisitions of providers of
complementary technologies, products and services, such as companies that
offer legacy retail banking systems. The Company intends to pursue such
acquisitions in order to more rapidly expand the Company's customer base
by converting the acquired customers to the Phoenix System. Management
believes such strategic acquisitions will permit the Company to expand its
customer base, enter new markets, provide outsourcing alternatives and
acquire additional products and applications.
The Company was incorporated in Florida in January 1993. The Company's
principal offices are located at 900 Winderley Place, Suite 140, Maitland,
Florida 32751, and its telephone number is (407) 667-0033.
THE OFFERING
Common Stock offered by the Company... 670,000 shares
Common Stock offered by the Selling
Shareholders........................ 407,500 shares
Common Stock to be outstanding after
the Offering.......................... 3,706,388 shares(1)
Use of Proceeds....................... To fund product development; to
expand sales, marketing and
implementation resources; to retire
certain outstanding indebtedness;
and for general corporate purposes,
including the possible acquisition
of complementary technologies,
products and services. See "Use of
Proceeds."
Nasdaq National Market symbol......... PHXX
- ---------------
(1) Excludes 580,545 shares of Common Stock issuable upon exercise of stock
options outstanding as of May 31, 1996, at exercise prices ranging from
$1.08 to $6.46 per share.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully a number of factors that could
affect the Company's operations and financial results. Such factors include,
among others, the Company's limited operating history, ability to realize
growth, dependence on new products, expansion of distribution channels,
dependence on a single product line, concentration of stock ownership and
certain anti-takeover defenses. See "Risk Factors" beginning on page 7 for a
discussion of certain factors that should be considered by prospective
purchasers of the Common Stock offered hereby.
5
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
ELEVEN
FISCAL YEARS ENDED MONTHS THREE MONTHS ENDED
-------------------------- ENDED ------------------------
JANUARY 31, JANUARY 31, DECEMBER 31, MARCH 31, MARCH 31,
1994 1995 1995(1) 1995 1996
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STATEMENT OF OPERATIONS DATA:
Revenues:
License fees and other............... $ 30,000 $ 57,776 $ 3,467,547 $ -- $1,127,607
Implementation, customer and software
support and other service fees..... -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------ ---------- ----------
Total revenues................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Cost of license fees and other....... -- -- 375,783 -- 131,029
Cost of implementation, customer and
software support and other service
fees............................... 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing.................. 96,911 358,948 983,290 224,839 268,818
General and administrative........... 225,458 981,930 1,058,190 287,072 358,260
Product development.................. 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------ ---------- ----------
Total expenses................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income...................... 3,603 26,610 121,815 29,607 28,647
Interest expense..................... -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)............... 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------ ---------- ----------
Income (loss) before income taxes...... (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense..................... -- -- 255,999 -- 153,000
----------- ----------- ------------ ---------- ----------
Net income (loss)...................... $(1,013,142) $(2,830,365) $ 554,269 $ (605,973) $ 141,526
============ ============ ============ ========== ==========
Net income (loss) per share(2)......... $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
Weighted average shares
outstanding(2)....................... 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
OTHER DATA:
Total product development
expenditures(3)...................... $621,373 $1,455,781 $1,788,172 $ 364,935 $ 612,346
Total personnel(4)..................... 23 48 87 52 93
Implemented customers(5)............... 0 2 12 2 14
</TABLE>
<TABLE>
<CAPTION>
AT
--------------------------- AT MARCH 31, 1996
JANUARY 31, DECEMBER 31, -----------------------------
1995 1995 ACTUAL AS ADJUSTED(6)
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BALANCE SHEET DATA:
Working capital (deficit)........................ $(2,156,814) $(2,263,338) $(2,338,673) $ 5,530,051
Total assets..................................... 1,726,511 3,228,289 3,495,641 11,364,365
Long-term obligations............................ -- -- -- --
Accumulated deficit.............................. (3,843,507) (3,289,238) (3,147,712) (3,147,712)
Total shareholders' equity (deficit)............. (1,619,412) (568,102) (376,576) 7,492,148
</TABLE>
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(1) During 1995, the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the consolidated financial statements for the
period ended December 31, 1995 include only eleven months of operations.
However, the information presented for the quarter ended March 31, 1995
consists of three months, including January 1995.
(2) See Note 1 of Notes to Consolidated Financial Statements.
(3) The total of capitalized software development costs and product development
expenses.
(4) All personnel, including contract workers and part-time employees.
(5) Customers using the Phoenix System to support daily operations.
(6) Adjusted to reflect the sale of 670,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share, the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of stock subscriptions receivable due from Mr. Yusefzadeh and his
affiliate and the application of the estimated net proceeds therefrom as
described under "Use of Proceeds."
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<PAGE> 9
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should carefully consider the following risk factors in evaluating an
investment in the Common Stock offered hereby.
HISTORY OF RECENT LOSSES; LIMITED OPERATING HISTORY
Phoenix was incorporated in January 1993 but did not begin shipping
nondevelopment versions of its products until June 1995, and it incurred
substantial losses for the quarters ended March 31, September 30, and December
31, 1995. As of May 31, 1996, the Company had only 19 fully implemented
customers. The Company's limited operating history makes it difficult to predict
future operating results. The Company's expense levels are based, in part, on
its expectations as to future revenues. If revenue levels are below expectations
or if the Company is unable or unwilling to reduce expenses proportionately,
operating results will be adversely affected. Therefore, there can be no
assurance that Phoenix will be profitable on a quarterly or annual basis. At
December 31, 1995 the Company had net operating loss carryforwards of $2.8
million available to offset future taxable income, as well as $111,000 of
research and development credit carryforwards and $514,000 of foreign tax credit
carryforwards. A valuation allowance of $1.7 million against deferred tax assets
resulting from the net operating loss and tax credit carryforwards and other tax
benefits has been recorded due to uncertainties related to the Company's ability
to generate sufficient taxable income to realize the benefit of the deferred
income tax assets in the future. The Company's prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in their early stages of development, particularly companies in new
and rapidly evolving markets. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and the related Notes thereto.
ABILITY TO CONTINUE AND MANAGE GROWTH
Phoenix has experienced significant growth in its operations. The Company's
success will depend upon its ability to continue product development; upgrade
its technologies and commercialize products and services utilizing such
technologies; respond to competitive developments; expand its sales, marketing
and implementation forces; enter into sales agency and reseller agreements for
both United States and international markets; and attract, train, motivate and
retain management and technical personnel on a timely basis. The Company's
growth will also require the Company to continue to improve its financial and
management controls and its reporting systems and procedures. The Company's
failure to do so could have a material adverse affect upon the Company's
business, operating results and financial condition. See "Business."
DEPENDENCE ON NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE; RISK OF PRODUCT
ERRORS
The client/server application software market is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete and
unmarketable in short periods of time. The Company expects new products and
services, and enhancements to existing products and services, to be developed
and introduced by others, which will compete with the products and services
offered by the Company. The life cycles of the Company's products are difficult
to estimate. The Company's future success will depend upon its ability to
enhance its current products and to develop and introduce new products that keep
pace with technological developments and emerging industry standards and address
the increasingly sophisticated needs of its customers. There can be no assurance
that Phoenix will be successful in developing and marketing new products or
product enhancements that meet these changing demands, that Phoenix will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or that its new products and
product enhancements will adequately meet the demands of the marketplace and
achieve market acceptance. Historically, the Company's product development
efforts have been limited due to the Company's limited financial resources.
Phoenix plans to introduce and market several new products which will be subject
to significant technical risks. In the past, Phoenix has experienced delays in
the commencement of commercial shipments of new products and enhancements. If
Phoenix is unable to develop and introduce new products or product enhancements
in a
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timely manner, or if a new release of the Phoenix System or a new product does
not achieve market acceptance, the Company's business, operating results and
financial condition will be materially adversely affected.
Software products as complex as those offered by Phoenix may contain
undetected errors or failures when first introduced or when new versions are
released. Phoenix previously has discovered software errors in certain of its
new products and enhancements after their introduction and has experienced
delays and lost revenues during the periods required to correct these errors.
There can be no assurance that errors will not be found in new products or
releases after commencement of commercial shipments, resulting in loss or delay
in market acceptance, which could have a material adverse affect upon the
Company's business, operating results and financial condition. See
"Business -- Strategy" and "-- Product Development and New Products."
INTENSE COMPETITION
The financial institutions software market is intensely competitive,
rapidly evolving and subject to rapid technological change. Competitors vary in
size and in the scope and breadth of the products and services offered. Phoenix
encounters competition from a number of sources, including FiServ, Inc., Bisys,
Inc., Marshall & Isley Corp., Electronic Data Systems Corp., Jack Henry &
Associates, Inc., ALLTEL Information Services, Inc., Eastpoint Technology, Inc.
and Perot Systems Corp., which all offer core retail software systems to the
financial institutions industry. In addition, Phoenix expects additional
competition from other established and emerging companies as the client/server
application software market continues to develop and expand. Phoenix also
expects that competition will increase as a result of software industry
consolidations including particularly the acquisition of any of the above named
companies or any of the client/server based retail banking system providers by
one of the larger service providers to the financial services industry. Some of
the Company's current, and many of the Company's potential, competitors have
longer operating histories, greater name recognition, larger customer bases and
significantly greater financial, personnel, engineering, technical, marketing
and other resources than the Company. As a result, they may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development, promotion and
sale of their products than the Company. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products to
address the needs of the Company's prospective customers. Accordingly, it is
possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. The Company expects that the financial
institutions software market will continue to attract new competitors and new
technologies, possibly involving alternative technologies that are more
sophisticated and cost effective than the Company's technology. There can be no
assurance that Phoenix will be able to compete successfully against current or
future competitors or that competitive pressures faced by Phoenix will not
materially adversely affect its business, operating results and financial
condition. See "Business -- Competition."
CONSOLIDATION IN THE FINANCIAL INSTITUTIONS INDUSTRY
Merger and acquisition activity has been widespread in the financial
institutions industry in recent years and is expected to continue in future
years. As a result, the industry has experienced consolidation on a large scale,
and this consolidation has had and will continue to have the effect of reducing
the number of potential customers of the Company. Any significant increase in
the level of such consolidation could adversely affect the Company's business,
operating results and financial condition. See "Business -- Strategy" and
"-- Target Markets."
EXPANSION OF SALES FORCE, IMPLEMENTATION FORCE AND INDIRECT DISTRIBUTION
CHANNELS
Phoenix will be required to hire additional sales and implementation
personnel in 1996 and beyond if Phoenix is to achieve significant revenue growth
in the future. Competition for such personnel is intense, and there can be no
assurance that Phoenix will be able to retain its existing sales and
implementation personnel or to attract, assimilate or retain additional highly
qualified sales or implementation personnel in the future. If
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Phoenix is unable to hire such personnel on a timely basis, the Company's
business, operating results and financial condition could be materially
adversely affected.
An integral part of the Company's strategy is to develop the marketing
channel of value added resellers ("VARs") and agents and to increase the
proportion of the Company's customers licensed through these channels, which
will enable the Company to offer its services to a larger customer base than the
Company could otherwise reach through its direct marketing efforts.
Consequently, the Company's success depends in part on the ultimate success of
these sales relationships and on the ability of these VARs and agents to market
effectively the Company's products. Although all of the Company's revenues in
1995 came from direct sales channels, the Company is currently investing, and
intends to continue to invest, significant resources to develop indirect
distribution channels. There can be no assurances that Phoenix will be able to
attract or retain VARs and agents that will be able to market the Company's
products effectively and that will be qualified to provide timely and
cost-effective customer support and service. In addition, the Company's current
agreements with VARs and agents may not be exclusive and may be terminated under
certain circumstances by either party without cause, and certain of the
Company's VARs and agents may offer competing product lines. Therefore, there
can be no assurance that any VAR or agent will continue to represent the
Company's products or to represent the Company's products effectively. Gross
margins and composition of revenues and expenses may vary depending on whether a
sale was made directly by the Company or by a VAR or agent. The inability to
recruit or retain important VARs or agents or any gross margin erosion as a
result of dealing with such third parties could adversely affect the Company's
business, operating results and financial condition. See "Business -- Strategy"
and "-- Sales and Marketing."
EXPANSION OF INTERNATIONAL SALES
International sales represented approximately 70% of the Company's revenues
for the 11 months ended December 31, 1995. Phoenix believes that its continued
growth and profitability will require expansion of its international operations.
Accordingly, Phoenix intends to continue to expand its international activities,
including its strategic alliances, and to enter additional foreign markets,
which will require significant management attention and financial resources. To
date, the Company has only limited experience in marketing and distributing its
products and services internationally. In order to successfully expand
international sales in 1996 and subsequent periods, Phoenix must successfully
implement its recent strategic alliances with Unisys and CSA, hire additional
sales and implementation personnel and recruit additional international
resellers. To the extent that Phoenix is unable to do so, the Company's growth
in international sales will be limited, and the Company's business, operating
results and financial condition could be materially adversely affected. In
addition, there can be no assurance that Phoenix will be able to maintain or
increase international market demand for the Company's products.
The Company's international sales are currently denominated in United
States dollars. An increase in the value of the United States dollar relative to
foreign currencies could make the Company's products more expensive and,
therefore, potentially less competitive in those markets. Additionally, risks
inherent in the Company's international business activities generally include
unexpected changes in regulatory requirements, tariffs and other trade barriers,
costs of localizing products for foreign countries, lack of acceptance of
localized products in foreign countries, longer accounts receivable payment
cycles, difficulties in managing international operations, political
instability, potentially adverse tax consequences, restrictions on the
repatriation of earnings and the burdens of complying with a wide variety of
foreign laws and regulations. In addition, the laws of some foreign countries do
not protect the Company's proprietary rights to as great an extent as do the
laws of the United States. There can be no assurance that such factors will not
have a material adverse affect on the Company's future international sales and,
consequently, the Company's business, operating results and financial condition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business -- Strategy" and "-- Sales and Marketing."
DEPENDENCE ON SINGLE PRODUCT LINE
The Company's revenues are derived from two primary sources: (i) license
fees for software products; and (ii) fees for a full range of services
complementing its products, including implementation services,
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interface services and customer and software support services. All of these fees
are derived from the licensing of the Company's principal product, the Phoenix
System. Broad acceptance of the Phoenix System by middle market banks is
critical to the Company's future success. In addition, the Company's future
financial performance will depend in part on the successful development,
introduction and customer acceptance of new and enhanced versions of the Phoenix
System and other products. A decline in demand for, or failure to achieve broad
market acceptance of, the Phoenix System or any enhanced version as a result of
competition, technological change or otherwise, will have a material adverse
affect on the business, operating results and financial condition of the
Company. See "Business -- Strategy," "-- The Phoenix System," "-- Product
Development and New Products" and "-- Competition."
DEPENDENCE UPON KEY PERSONNEL
The Company's future performance depends in significant part upon the
continued service of its executive and senior management and key technical,
implementation and sales personnel. The loss of the services of Mr. Yusefzadeh
or Mr. Reichard or one or more of the Company's other senior officers or key
technical, implementation or sales personnel could have a material adverse
affect on the Company's business, operating results and financial condition. The
Company's future success also depends on its continuing ability to attract and
retain highly qualified managerial, technical, implementation and sales
personnel. Competition for such personnel is intense, and there can be no
assurance that Phoenix will be able to retain its key managerial, technical,
implementation and sales employees or to attract, assimilate or retain other
highly qualified managerial, technical, implementation and sales personnel in
the future. The Company has entered into employment agreements with all of its
executive and senior management, and the Company maintains $1.0 million in key
man life insurance on Mr. Yusefzadeh. See "Business -- Sales and Marketing" and
"Management -- Employment Agreements."
DEPENDENCE ON THIRD-PARTY TECHNOLOGY
The Phoenix System incorporates technology developed and owned by third
parties. Consequently, Phoenix must rely upon third parties to develop and
introduce technologies that enhance the Company's current products and enable
Phoenix, in turn, to develop its own products on a timely and cost-effective
basis to meet changing customer needs and technological trends in the financial
services software industry. The Phoenix System uses a relational database
technology known as Sybase that the Company licenses from Sybase, Inc. Sybase,
Inc. is currently the sole provider of this database software, and Phoenix
currently would not be able to license the Phoenix System to its customers
without using this software. Furthermore, the license between Sybase, Inc. and
the Company is nonexclusive, and this technology has been licensed to numerous
other companies. Any impairment or termination of the Company's relationship
with any licensor of third-party technology would force Phoenix to find other
developers on a timely basis or develop its own technology and could have an
adverse effect on the Company's business, operating results and financial
condition. There can be no assurance that Phoenix will be able to obtain the
third-party technology necessary to continue to develop and introduce new and
enhanced products, that Phoenix will obtain third-party technology on
commercially reasonable terms or that Phoenix will be able to replace
third-party technology in the event such technology becomes unavailable,
obsolete or incompatible with future versions of the Company's products. See
"Business -- Technology."
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT
The Company's success is heavily dependent upon the Phoenix System's
architecture and design. Phoenix relies primarily on a combination of copyright
and trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. Phoenix seeks to protect its
software, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. Phoenix presently has no
patents or patent applications pending. Despite the Company's efforts to protect
its proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that Phoenix regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while Phoenix is unable to determine the extent to which piracy of its
software
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products occurs, such piracy can be expected to be a persistent problem,
particularly in foreign countries, where the laws do not protect the Company's
proprietary rights to as great an extent as do the laws of the United States.
There can be no assurance that the Company's means of protecting its proprietary
rights will be adequate or that the Company's competitors will not develop
similar technology independently.
Phoenix is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim infringement by Phoenix with respect to current or future
products. Phoenix expects that software product developers will increasingly be
subject to infringement claims. Any such claims, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require Phoenix to enter into royalty or licensing agreements or cause the
Company to discontinue the use of the challenged tradename, service mark or
technology at potentially significant expense to the Company associated with the
marketing of a new name or the development or purchase of replacement
technology, all of which could have a material adverse effect on the Company.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company, or at all, which could have a material adverse effect
upon the Company's business, operating results and financial condition. See
"Business -- Intellectual Property and Other Proprietary Rights."
DEPENDENCE ON GROWTH IN THE CLIENT/SERVER MARKET
Substantially all of the Company's revenues have been attributable to
licenses of the Phoenix System, which is utilized in client/server computing
environments. This product is currently expected to account for substantially
all of the Company's future revenues. Although the use of client/server
technology has grown in recent years, the client/server market is still an
emerging market. The Company's future financial performance will depend in large
part on continued growth in the number of financial institutions installing
client/server technology. If the client/server market fails to grow or grows
more slowly than Phoenix currently anticipates, the Company's business,
operating results and financial condition will be materially adversely affected.
See "Business -- Industry Background."
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future. Special factors that may cause
the Company's future operating results to vary include, without limitation, the
size and timing of significant orders; the mix of direct and indirect sales; the
mix and timing of foreign and domestic sales; the timing of new product
announcements and changes in pricing policies by the Company and its
competitors; market acceptance of new and enhanced versions of the Company's
products; increased competition; changes in operating expenses, including
expenses related to acquisitions; changes in Company strategy; personnel
changes; changes in legislation and regulation; foreign currency exchange rates
and general economic factors. Product revenues are also difficult to forecast
because the market for client/server application software products is rapidly
evolving, and the Company's sales cycle, from initial review to purchase and the
provision of support services, varies substantially from customer to customer.
As a result, Phoenix believes that quarter to quarter comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance. The Company's results of operations will be
adversely affected by an increase in its projected effective tax rate if
legislation reenacting certain research and development tax credits is not
passed by the United States Congress. In addition, the Company currently has a
net operating loss carryforward of approximately $2.8 million. Once the net
operating loss is utilized or expires, the Company's tax rate will increase. Due
to all of the foregoing factors, it is likely that in some future quarter the
Company's operating results will be below the expectations of public market
analysts and investors. In such an event, the price of the Common Stock would
likely be materially adversely affected. See "Selected Consolidated Financial
and Operating Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RISKS ASSOCIATED WITH ACQUISITIONS
As part of its business strategy, Phoenix intends to acquire complementary
technologies, products and services such as companies that offer legacy retail
banking systems. The Company intends to pursue such
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acquisitions in order to more rapidly expand the Company's customer base by
converting the acquired customers to the Phoenix System. Any such future
acquisition would be accompanied by risks commonly encountered in acquisitions
of companies. Such risks include, among other things, the difficulty of
assimilating the operations and personnel of the acquired companies; potential
disruption of Phoenix's ongoing business; inability to incorporate successfully
acquired technologies and rights into Phoenix's products; maintenance of uniform
standards, controls, procedures and policies; risks of entering markets in which
Phoenix has little or no direct prior experience; and impairments of
relationships with employees and subscribers of the acquired business as a
result of changes in management. There can be no assurance that Phoenix would be
successful in making any acquisitions or overcoming the risks or any other
problems encountered in connection with such acquisitions. In addition, any such
acquisitions could materially adversely affect the Company's operating results
due to dilutive issuances of equity securities, the incurrence of additional
debt, and the amortization of expenses related to goodwill and other intangible
assets, if any. The Company is not currently engaged in any negotiations with
respect to specific acquisitions. See "Business -- Strategy."
PRODUCT LIABILITY
The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. The agreements generally contain provisions such as
disclaimers of warranties and limitations on liability for special,
consequential and incidental damages. In addition, the Company's license
agreements generally limit the amounts recoverable for damages to the amounts
paid by the licensee to the Company for the product or service giving rise to
the damages claimed. Although Phoenix has not experienced any product liability
claims to date, the sale and support of products by Phoenix may entail the risk
of such claims. The Company currently does not have product liability insurance.
A successful product liability claim brought against the Company could have a
material adverse affect upon the Company's business, operating results and
financial condition.
CONCENTRATION OF STOCK OWNERSHIP
Upon completion of the Offering, the present directors, executive officers
and their respective affiliates will beneficially own 2,272,790 shares
(approximately 57.6%) of the outstanding Common Stock. In addition to the shares
and options included in the calculation of beneficial ownership, the present
directors, executive officers and their respective affiliates hold options to
acquire an additional 219,048 shares of Common Stock, at exercise prices ranging
from $4.30 to $6.46 per share, which are not exercisable within 60 days of the
date of this Prospectus. These additional shares, together with shares currently
beneficially owned would represent 59.8% of the Common Stock outstanding after
consummation of the Offering, after giving effect to the exercise of those
options. As a result, if these shareholders were to vote as a group, they would
be able to exercise significant influence over all matters requiring shareholder
approval, including the election of directors and approval of significant
corporate transactions. However, on the Closing Date, there will be no
agreements or understandings in effect whereby these shareholders are bound to
vote as a group. Such concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company. See "Principal and
Selling Shareholders" and "Description of Capital Stock."
TRANSACTIONS WITH RELATED PARTIES
The Company has in the past entered into agreements and arrangements with
certain officers, directors and shareholders of the Company involving loans of
funds, grants of options and discounts on certain license, implementation and
customer and software support fees. As an incentive to provide initial capital
to the Company, the Company agreed to give certain pricing discounts to the U.S.
Bank Partners if they licensed the Phoenix System for use in their banks. These
transactions were on terms more favorable to the U.S. Bank Partners than they
could obtain in a transaction with an unaffiliated third party. In addition, Mr.
Yusefzadeh and his affiliate issued interest-bearing promissory notes to the
Company to purchase 296,365 shares of non-voting Common Stock pursuant to the
Company's rights offering in 1994 and to exercise options to acquire 18,585
shares of non-voting Common Stock which he earned as a director of the Company.
All future transactions between the Company and its officers, directors,
principal shareholders and their affiliates will be
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approved by a majority of the non-interested independent directors of the
Company and, except for contracts pursuant to the discount program for the U.S.
Bank Partners, will be on terms no less favorable to the Company than could be
obtained from an affiliated third party. See "Management -- Compensation
Committee Interlocks and Insider Participation" and "Certain Transactions."
ANTI-TAKEOVER EFFECTS OF THE ARTICLES OF INCORPORATION, THE BYLAWS AND THE
FLORIDA ACT; EMPLOYMENT AGREEMENTS
On the Closing Date, the Board of Directors will file with the Florida
Secretary of State Amended and Restated Articles of Incorporation (as filed as
an exhibit to the Company's Registration Statement on Form S-1, the "Articles of
Incorporation"). Furthermore, the Board of Directors and shareholders have
approved, effective as of the Closing Date, Amended and Restated Bylaws (as
filed as an exhibit to the Company's Registration Statement, the "Bylaws"). The
Board of Directors has the authority to issue up to 10,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares, without any further vote
or action by the shareholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. The issuance of preferred
stock, while providing desirable flexibility in connection with possible
acquisition and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. The Company has no current plans to issue shares of
preferred stock. Further, certain provisions of the Articles of Incorporation,
the Bylaws and the Florida Business Corporation Act (the "Florida Act") could
delay or make more difficult a merger, tender offer or proxy contest involving
the Company. For example, the Articles of Incorporation and Bylaws contain
provisions that limit the rights of shareholders to call special shareholder
meetings and require shareholders to follow an advance notification procedure
for director nominations. Furthermore, the Company's Board of Directors is
divided into three classes with only one class being elected each year, and
directors may only be removed for cause. In addition, all of the Company's
executive and senior management have entered into or are expected to enter into
employment agreements with the Company which contain change in control
provisions. The change in control provisions may hinder, delay, deter or prevent
a tender offer, proxy contest or other attempted takeover because the covered
employees can terminate their employment (with adequate justification required
in certain circumstances), be paid a severance equal to the salary and bonus
that they would receive for the remaining term of their respective agreements
and thereafter compete with the Company. See "Management -- Employment
Agreements" and "Description of Capital Stock."
ABSENCE OF PRIOR PUBLIC MARKET; OFFERING PRICE DETERMINED BY AGREEMENT;
VOLATILITY OF MARKET PRICE
Prior to the Offering, there has been no public market for the Common
Stock. Although the Common Stock has been approved for listing on the Nasdaq
National Market, there can be no assurance that an active trading market will
develop or be sustained after the Offering or that the market price of the
Common Stock will not decline below the initial public offering price. The
initial public offering price of the Common Stock will be determined solely by
negotiations among the Company, the Selling Shareholders and the representatives
of the Underwriters and is not necessarily related to the Company's book value,
net worth or any other established criteria of value and may not be indicative
of the market price for shares of Common Stock after the Offering. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price for the Common Stock. From time to time after
the Offering, there may be significant volatility in the market price for the
Common Stock. The stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the market
prices of the stocks of high technology companies, and which may be unrelated to
the operating performance of particular companies. Factors such as actual or
anticipated operating results, growth rates, changes in estimates by analysts,
market conditions in the industry, announcements by competitors, regulatory
actions and general economic conditions will vary from period to period. As a
result of the foregoing, the Company's operating results and prospects from time
to time may be below the expectations of public market analysts and investors.
Any such event would likely result in a material adverse effect on the price of
the Common Stock.
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SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Future sales of substantial amounts of the Common Stock could adversely
affect the market price of the Common Stock. Several of the Company's principal
shareholders hold a significant portion of the outstanding Common Stock, and a
decision by one or more of these shareholders to sell their shares could
adversely affect the market price of the Common Stock. The shares of Common
Stock offered hereby (plus any shares issued upon exercise of the Underwriters'
over-allotment option) will be freely tradeable without restriction.
Substantially all of the Company's officers, directors, shareholders and
optionholders have agreed to enter into contractual agreements with the
Underwriters (the "Lock-up Agreements") generally providing that for a period of
180 days after the date of this Prospectus, they will not, except in connection
with the Offering, directly or indirectly, offer, sell, loan, pledge or
otherwise dispose of, or grant any options or other rights with respect to, any
shares of Common Stock or any securities that are convertible into or
exchangeable or exercisable for Common Stock owned by them without the prior
written consent of J.C. Bradford & Co. Similarly, the Company has agreed
generally that, for a period of 180 days after the date of this Prospectus, it
will not, directly or indirectly, issue, offer, sell, grant options to purchase
or otherwise dispose of any of its equity securities or any other securities
convertible into or exchangeable or exercisable for its Common Stock or any
other equity security, except that the Company may grant stock options under the
Stock Option Plans and issue shares of Common Stock upon the exercise of options
previously granted. As a result, notwithstanding possible earlier eligibility
for sale under the provisions of Rule 144 and Rule 701 under the Securities Act,
shares subject to the Lock-up Agreements will not be eligible for sale until the
Lock-up Agreements expire or their terms are waived by J.C. Bradford & Co. J.C.
Bradford & Co. does not presently intend to waive the Lock-up Agreements. If a
shareholder should request J.C. Bradford & Co. to waive the 180 day lock-up
period, J.C. Bradford & Co., consistent with past practice with regard to other
issuing companies, would take into consideration the number of shares as to
which such request relates, the identity of the requesting shareholder, the
relative demand for additional shares of Common Stock in the market, the period
of time since the completion of the Offering, and the average trading volume and
price performance of the Common Stock during such period. Assuming J.C. Bradford
& Co. does not release any shareholders from the Lock-up Agreements, the
following shares will be eligible for sale in the public market at the following
times: beginning on the date of this Prospectus, only the shares sold in the
Offering will be immediately available for sale in the public market; and
beginning 180 days following the date of this Prospectus, approximately
2,525,000 shares will be eligible for sale pursuant to Rule 144, Rule 701 and
one or more Registration Statements on Form S-8 which the Company intends to
file approximately 30 days after the date of this Prospectus with regard to
shares issued and issuable under the Company's stock option plans. See "Shares
Eligible for Future Sale" and "Underwriting."
Upon expiration of the Lock-up Agreements, if his employment is terminated
for any reason or if he is no longer a director of the Company, Mr. Yusefzadeh,
who will beneficially hold approximately 1,075,992 shares of Common Stock after
the Offering, will be entitled to certain demand registration rights with
respect to such shares. If Mr. Yusefzadeh, by exercising his demand registration
rights, causes a large number of shares to be registered and sold in the public
market, such sales could have a material adverse affect on the market price for
the Common Stock. See "Shares Eligible for Future Sale -- Registration Rights."
DILUTION
Investors participating in the Offering will incur immediate and
substantial dilution in the net tangible book value per share of Common Stock of
$10.33 per share assuming an initial public offering price of $12.00 per share.
To the extent outstanding options to purchase the Common Stock are exercised,
there will be further dilution. See "Dilution."
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the 670,000 shares of
Common Stock offered by the Company hereby are estimated to be $6,550,000, after
deducting underwriting discounts and commissions and estimated offering expenses
and assuming an initial public offering price of $12.00 per share. Additionally,
the Company will receive approximately $1,319,000 from Mr. Yusefzadeh for
payment of a stock subscriptions receivable due from Mr. Yusefzadeh and his
affiliate plus accrued interest of $158,000 through the estimated Closing Date,
which Mr. Yusefzadeh will pay with a portion of the proceeds from the sale of
Common Stock by him in the Offering. See "Management -- Compensation Committee
Interlocks and Insider Participation." Other than the proceeds from the sale of
Common Stock by Mr. Yusefzadeh, the Company will not receive any proceeds from
the sale of Common Stock offered hereby by the Selling Shareholders.
The Company expects to use approximately $4.5 million of the estimated net
proceeds from the Offering to fund development of future products, such as the
NT Version, an Internet banking application, a home banking application and an
online business banking application, and approximately $2.2 million to expand
its sales, marketing and implementation resources, which will primarily consist
of increased personnel and related expenses. The Company plans to use
approximately $101,000 to repay all outstanding amounts owed by the Company to
Barnett Bank of Central Florida, N.A. ("Barnett Bank") pursuant to a $250,000
term loan facility (the "Term Loan"). The Company also intends to repay any sums
outstanding as of the Closing Date on the Company's $750,000 line of credit loan
facility with Barnett Bank (the "Line of Credit"). The outstanding balance of
the Term Loan bears interest at an annual rate equal to Barnett Bank's prime
rate plus 1.50% (9.75% at May 31, 1996), is due on May 15, 1998, is secured by a
lien on all of the assets of the Company and is guaranteed by Mr. Yusefzadeh.
The funds borrowed under the Term Loan were used to finance the purchase of
furniture, fixtures and equipment. No amounts are owed by the Company to Barnett
Bank under the Line of Credit as of the date of this Prospectus, and the Company
anticipates that not more than $500,000 will be outstanding under the Line of
Credit as of the Closing Date. The Line of Credit bears interest at an annual
rate equal to Barnett Bank's prime rate plus 1.75% (10.00% at May 31, 1996),
matures on November 10, 1996, is secured by a lien on all of the assets of the
Company and is guaranteed by Mr. Yusefzadeh. See "Management -- Compensation
Committee Interlocks and Insider Participation." Any funds borrowed under the
Line of Credit will be used for working capital and general corporate purposes.
The Company will also use approximately $45,073 of the estimated net proceeds to
repay a loan to Mr. Yusefzadeh, the proceeds of which were used to purchase the
Company's telephone system. The loan was made in January 1994, has a stated
interest rate of 12.00% and is payable on demand. The remainder of the net
proceeds of the Offering will be used for general corporate purposes, including
the acquisition of complementary technologies, products and services. However,
the Company does not have any present agreements or commitments in place and is
not currently engaged in any negotiations with respect to any such acquisitions.
Pending any such expenditures, the Company plans to invest the net proceeds of
the Offering in investment grade, interest-bearing securities.
DIVIDEND POLICY
Phoenix has never paid any cash dividends on its capital stock and does not
expect to pay cash dividends in the foreseeable future. Future declaration and
payment of dividends, if any, will be determined in light of the then-current
conditions, including the Company's earnings, operations, capital requirements,
financial condition, restrictions in financing agreements and other factors
deemed relevant by the Board of Directors. Unless waived in writing, the Line of
Credit prohibits the payment of dividends. The Company plans to use part of the
net proceeds of the Offering to repay all amounts outstanding as of the Closing
Date under the Term Loan and the Line of Credit, and both loans will be
terminated. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
15
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996 after giving effect to a 2.3231-for-one stock split in the form
of a stock dividend on all shares of capital stock outstanding on May 6, 1996
and on an as adjusted basis to reflect (a) a recapitalization on the Closing
Date in which all outstanding shares of Class A Common Stock, Class B Common
Stock, Class C Common Stock, Class D Common Stock and Class E Common Stock will
be converted into Common Stock on a share for share basis, (b) the receipt of
the proceeds from the sale by the Company of 670,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $12.00 per share,
(c) the receipt of approximately $1,319,000 from Mr. Yusefzadeh for payment of a
stock subscriptions receivable and (d) the application of the estimated net
proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and Notes
thereto appearing elsewhere in this Prospectus. Par values have been rounded in
the table below.
<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
Long-term debt...................................................... $ -- $ --
========== ==========
Shareholders' equity (deficit):
Preferred Stock, $1.00 par value, 10,000,000 shares authorized, no
shares outstanding............................................. $ -- $ --
Common Stock, $0.01 par value, 20,000,000 shares authorized, no
shares outstanding, 3,673,946 shares issued and outstanding as
adjusted(1).................................................... -- 36,739
Class A Common Stock, $0.0043 par value, 1,500,000 shares
authorized, 1,393,859 shares issued and outstanding, no shares
outstanding as adjusted........................................ 6,000 --
Class B Common Stock, $0.43 par value, 10,000,000 shares
authorized, 511,082 shares issued and outstanding, no shares
outstanding as adjusted........................................ 220,000 --
Class C Common Stock, $2.15 par value, 200,000 shares authorized,
185,848 shares issued and outstanding, no shares outstanding as
adjusted....................................................... 400,000 --
Class D Common Stock, $4.30 par value, 50,000 shares authorized,
23,231 shares issued and outstanding, no shares outstanding as
adjusted....................................................... 100,000 --
Class E Common Stock, $1.08 par value, 1,000,000 shares
authorized, 889,926 shares issued and outstanding, no shares
outstanding as adjusted........................................ 957,690 --
Additional paid-in capital........................................ 2,405,970 10,603,121
Stock subscriptions receivable(2)................................. (1,318,524) --
Accumulated deficit............................................... (3,147,712) (3,147,712)
----------- -----------
Total shareholders' equity (deficit)........................... (376,576) 7,492,148
----------- -----------
Total capitalization........................................... $ (376,576) $ 7,492,148
========== ==========
</TABLE>
- ---------------
(1) Excludes (i) 580,545 shares of Common Stock issuable upon exercise of stock
options outstanding as of May 31, 1996, at exercise prices ranging from
$1.08 to $6.46 per share and (ii) 282,544 shares of Common Stock reserved
for grant of future options or direct issuances as of May 31, 1996 under
the Company's stock options plans. See "Management -- Stock Option Plans"
and Note 5 of Notes to Consolidated Financial Statements.
(2) Represents stock subscriptions receivable from Mr. Yusefzadeh and his
affiliate which are due and payable upon completion of the Offering. See
"Management -- Compensation Committee Interlocks and Insider
Participation."
16
<PAGE> 19
DILUTION
The net tangible book value of the Company as of March 31, 1996 was
$(1,743,422), or approximately $(0.58) per share. Net tangible book value per
share represents the amount of the Company's shareholders' deficit, less
intangible assets, divided by a total of 3,003,946 shares of capital stock
outstanding as of March 31, 1996.
Dilution per share represents the difference between the amount per share
paid by purchasers of shares of Common Stock in the Offering and the pro forma
net tangible book value per share of Common Stock immediately after completion
of the Offering. After giving effect to (i) the sale of 670,000 shares of Common
Stock in the Offering at an assumed initial offering price of $12.00, (ii) the
receipt of approximately $1,319,000 from Mr. Yusefzadeh for payment of a stock
subscriptions receivable due from Mr. Yusefzadeh and his affiliate and (iii) the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company as of March 31, 1996 would have been $6,125,302, or
$1.67 per share. This represents an immediate increase in net tangible book
value of $2.25 per share to existing shareholders and an immediate dilution in
net tangible book value of $10.33 per share to purchasers of Common Stock in the
Offering. Investors participating in the Offering will incur immediate and
substantial dilution. This is illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $ 12.00
Net tangible book value per share before the Offering.......... $ (0.58)
Increase per share attributable to payment of stock
subscriptions receivable.................................... .44
--------
Pro forma net tangible book value attributable to existing
shareholders................................................ (.14)
Increase per share attributable to new investors............... 1.81
--------
Pro forma net tangible book value per share after the Offering... 1.67
--------
Dilution per share to new investors.............................. $ 10.33
========
</TABLE>
The following table sets forth, as of March 31, 1996 and after giving
effect to the conversion of all outstanding shares of Class A Common Stock,
Class B Common Stock, Class C Common Stock, Class D Common Stock and Class E
Common Stock into Common Stock upon completion of the Offering, the difference
between the existing shareholders and the purchasers of shares in the Offering
with respect to the number of shares purchased from the Company, the total
consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............. 3,003,946 81.76% $ 4,139,974 33.99% $ 1.38
New investors...................... 670,000 18.24 8,040,000 66.01 12.00
--------- ------- ----------- -------
Total.................... 3,673,946 100.00% $12,179,974 100.00%
======== ====== ========== ======
</TABLE>
As of March 31, 1996, there were options outstanding to purchase a total of
637,608 shares of Common Stock at a weighted average exercise price of $3.89 per
share under the Company's stock option plans. If all options outstanding as of
March 31, 1996 are exercised, the pro forma net tangible book value per share
immediately after completion of the Offering would be $2.00. This represents an
immediate increase in net tangible book value of $0.33 per share to purchasers
of Common Stock in the Offering. See "Management -- Stock Option Plans" and Note
5 of Notes to Consolidated Financial Statements.
17
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth selected consolidated financial and
operating data for the periods indicated. The statements of operations and per
share data for the fiscal years ended January 31, 1994 and 1995 and for the
eleven months ended December 31, 1995 and the balance sheet data as of January
31 and December 31, 1995 were derived from the consolidated financial statements
of the Company, which have been audited by Ernst & Young LLP. The statements of
operations and per share data for the three months ended March 31, 1995 and 1996
and the balance sheet data as of March 31, 1996 were derived from unaudited
consolidated financial statements which, in the opinion of management, include
all adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of financial condition and results of operations. Operating
results for the three months ended March 31, 1996 are not necessarily indicative
of the results that may be expected for the fiscal year ended December 31, 1996.
Other data for all periods presented were derived from the Company's records.
The following data should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and the Notes thereto appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED ELEVEN MONTHS THREE MONTHS ENDED
------------------------- ENDED ----------------------
JANUARY 31, JANUARY 31, DECEMBER 31, MARCH 31, MARCH 31,
1994 1995 1995(1) 1995 1996
----------- ----------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
License fees and other...................................... $ 30,000 $ 57,776 $ 3,467,547 $ -- $1,127,607
Implementation, customer and software support and other
service fees.............................................. -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------- --------- ----------
Total revenues........................................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Cost of license fees and other.............................. -- -- 375,783 -- 131,029
Cost of implementation, customer and software support and
other service fees........................................ 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing......................................... 96,911 358,948 983,290 224,839 268,818
General and administrative.................................. 225,458 981,930 1,058,190 287,072 358,260
Product development......................................... 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------- --------- ----------
Total expenses........................................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income............................................. 3,603 26,610 121,815 29,607 28,647
Interest expense............................................ -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)...................................... 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------- --------- ----------
Income (loss) before income taxes............................. (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense............................................ -- -- 255,999 -- 153,000
----------- ----------- ------------- --------- ----------
Net income (loss)............................................. $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
========== ========== ============= ========= =========
Net income (loss) per share(2)................................ $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
Weighted average shares outstanding(2)........................ 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
OTHER DATA:
Total product development expenditures(3)..................... $ 621,373 $ 1,455,781 $ 1,788,172 $364,935 $ 612,346
Total personnel(4)............................................ 23 48 87 52 93
Implemented customers(5)...................................... 0 2 12 2 14
</TABLE>
<TABLE>
<CAPTION>
AT
-------------------------- AT MARCH 31, 1996
JANUARY 31, DECEMBER 31, ----------------------------
1995 1995 ACTUAL AS ADJUSTED(6)
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............................................. $(2,156,814) $(2,263,338) $(2,338,673) $ 5,530,051
Total assets.......................................................... 1,726,511 3,228,289 3,495,641 11,364,365
Long-term obligations -- -- -- --
Accumulated deficit................................................... (3,843,507) (3,289,238) (3,147,712) (3,147,712)
Total shareholders' equity (deficit).................................. (1,619,412) (568,102) (376,576) 7,492,148
</TABLE>
- ---------------
(1) During 1995, the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the consolidated financial statements for the
period ended December 31, 1995 include only eleven months of operations.
However, the information presented for the quarter ended March 31, 1995
consists of three months, including January 1995.
(2) See Note 1 of Notes to Consolidated Financial Statements.
(3) The total of capitalized software development costs and product development
expenses.
(4) All personnel, including contract workers and part-time employees.
(5) Customers using the Phoenix System to support daily operations.
(6) Adjusted to reflect the sale of 670,000 shares of Common Stock offered by
the Company hereby at an assumed initial public offering price of $12.00 per
share, the receipt of approximately $1,319,000 from Mr. Yusefzadeh for
payment of stock subscriptions receivable due from Mr. Yusefzadeh and his
affiliate and the application of the estimated net proceeds therefrom as
described under "Use of Proceeds."
18
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in connection with the Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus. Effective December 31, 1995, Phoenix changed its fiscal year end
from January 31 to December 31. For purposes hereof, the Company defines the
fiscal year ended January 31, 1994 as "Fiscal 1993," the fiscal year ended
January 31, 1995 as "Fiscal 1994," and the eleven months ended December 31, 1995
as "Fiscal 1995." Dollar amounts are rounded.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."
OVERVIEW
Phoenix designs, develops, markets and supports highly adaptable,
enterprise-wide client/server application software for the financial services
industry, with a primary focus on middle market banks. Phoenix combined (i) its
management's extensive experience with banking and banking software systems;
(ii) the U.S. Bank Partners' input on bank and banking software systems and
(iii) the most recent advances in client/server technology to design and develop
an innovative new banking software system. The Phoenix System, through its
client/server technology, addresses many of the deficiencies of the mainframe-
and minicomputer-based legacy systems on which most banks currently operate by
allowing financial institutions to integrate data into a comprehensive
information network. The Phoenix System, like legacy systems, supports all core
areas of bank data processing, including system administration, account
processing, nightly processing, teller functions, holding company accounting and
budgeting. Unlike legacy systems, the Phoenix System is a fully integrated
system that provides significant advantages in three critical areas: (i)
customer relationship management; (ii) management decision support; and (iii)
bank product creation and support. Phoenix was founded in January 1993 and made
its initial nondevelopment stage product shipments in June 1995. During its
development stage, the Company's business focused primarily on the development
of its software and marketing of the Phoenix System to certain development stage
customers.
The Company's revenues are derived from two primary sources: (i) license
fees for software products and other revenues and commissions from the sale and
delivery of software and hardware products of third party vendors; and (ii) fees
for a full range of services complementing its products, including
implementation, conversion and installation services, training, interface
services for tying the Phoenix System to third-party application software, and
customer and software support services. License fees for the Company's software
products are charged separately from fees for the Company's services and are
recognized upon delivery, when no significant vendor obligations remain and
collection of the resulting receivables is deemed probable. As of May 31, 1996,
there have been no returns or cancellations of the Company's sales. Revenues for
implementation, conversion, installation, training and interface services are
recognized when the services are performed. Service revenues for ongoing
customer and software support and product updates provide recurring revenues as
they are recognized ratably over each year of the license agreement, the term of
which is typically five years. Payments for license fees and services are
predominately received in advance of, or at the time of, revenue recognition.
The Company intends to maintain its marketing focus in the United States on
the approximately 3,800 middle market banks with asset sizes ranging from $100
million to $1 billion. In addition, Phoenix will continue to expand its presence
in the international market. The Company intends to pursue both markets by
increasing its direct and indirect sales forces. Since its inception, Phoenix
primarily has used a direct sales force to market the Phoenix System. However,
in March 1996, Phoenix and Unisys entered into the Unisys Agreement whereby
Unisys exclusively markets the Phoenix System in Central and South America,
Mexico, the Caribbean and Bermuda. Additionally, in April 1996, Phoenix and CSA
entered into the CSA Agreement whereby CSA exclusively markets the Phoenix
System to banks in certain countries of Africa and non-exclusively markets the
Phoenix System to banks in the Republic of South Africa. Phoenix believes that,
in the future, revenues from strategic alliances and other indirect channels may
become an increasingly significant source of the Company's total revenues. Gross
margins and composition of revenue and expenses may vary depending on whether a
sale was made directly by the Company or by a VAR or agent. However, the
19
<PAGE> 22
Company believes that the difference in the margins obtained from direct and
indirect sales should not have a material adverse effect on the Company's
business, operating results and financial condition. See "Business -- Target
Markets -- The International Market" and " -- Sales and Marketing."
The Company expects increased competition and intends to invest
significantly in product development and other aspects of its business.
Management believes that the banking software market for middle market banks is
diffuse with medium-to-high barriers of entry, including costs of entry and time
to market. As client/server technology in the financial industry is early in its
life cycle, management further believes that client/server technology will
continue to gain market share for the next five to ten years as it displaces
legacy hardware and software. Although client/server technology is characterized
by rapidly evolving developments, the open architecture design and attributes of
the Phoenix System facilitate rapid adaptation to evolving technological
changes. Phoenix intends to maintain its leadership position by integrating new
technologies, adding new applications, enhancing existing applications and
increasing functionality.
The Company intends to leverage its current bank customer relationships by
providing additional products and services, such as Internet and Intranet
services and disaster recovery services, and by licensing to additional bank
subsidiaries of existing clients. By mid-1997, the Company also intends to
expand the market for the Phoenix System to include banks with asset sizes
greater than $1 billion by increasing product functionality and flexibility and
to develop a product specifically for banks with assets of less than $100
million by delivering the NT Version for smaller banks.
Future operating results will depend on many factors, including, without
limitation, the demand for the Company's products, the level of product and
price competition, the Company's success in expanding its direct sales force and
indirect distribution channels, the mix of direct and indirect sales, the mix of
foreign and domestic sales, the ability of the Company to develop and market new
products, the ability of the Company to control operating expenses, changes in
Company strategy, personnel changes, changes in legislation and regulation,
foreign currency exchange rates and general economic factors.
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1995 to Three Months Ended March 31,
1996
General. The Company changed its fiscal year end to December 31 during
1995. However, the three months ended March 31, 1995 includes operating results
for the month of January 1995 which were included in Fiscal 1994 financial
statements. The Company defines the three months ended March 31, 1995 as the
"1995 Period" and the three months ended March 31, 1996 as the "1996 Period."
Revenues. Total revenues were $91,000 and $1.8 million in the 1995 Period
and the 1996 Period, respectively. The growth in revenues was primarily due to
increased license fees and a related increase in implementation fees in the 1996
Period.
License fees and other revenues during the 1995 Period were $0 because
Phoenix was in the process of developing its products and, as a result, did not
recognize any revenues from the licensing of its software. During the 1996
Period, Phoenix recognized $1.1 million in license fees. These revenues include
$153,000 in foreign withholding taxes which are contractually paid by foreign
customers and such amount is also recorded as an income tax expense. The
completion of a commercially viable version of the Phoenix System and acceptance
of the Phoenix System in both the United States and international markets were
major factors in the increase in license fees during the 1996 Period.
Implementation, customer and software support and other service fee
revenues were $91,000 and $654,000 during the 1995 Period and the 1996 Period,
respectively. This growth was primarily due to increased implementation fees,
which resulted from increased licensing activity.
Expenses. The Company's total expenses were $795,000 and $1.5 million in
the 1995 Period and the 1996 Period, respectively. The growth in expenses
occurred primarily due to increases in personnel related costs resulting from
higher staffing levels.
Cost of license fees and other consists of the amortization of capitalized
software development costs and software royalties paid to third parties. Cost of
license fees and other was $0 and $131,000 in the 1995 Period and the 1996
Period, respectively. These costs consisted of amortization of capitalized
software development
20
<PAGE> 23
costs after general release of the Phoenix System during the second quarter of
Fiscal 1995 and third party software royalties which relate to software which is
sold and installed with the Company's products.
Cost of implementation, customer and software support and other service
fees consists primarily of personnel related costs incurred in providing
implementation, conversion and installation services, training and customer
support. Cost of implementation, customer and software support and other service
fees was $223,000 and $457,000 in the 1995 Period and the 1996 Period,
respectively. Increases in these costs in the 1996 Period were due to increased
implementation costs related to the Company's installation of the Phoenix System
and the release of its software and increased personnel related costs.
Sales and marketing expenses were $225,000 and $269,000 in the 1995 Period
and the 1996 Period, respectively. The increase in sales and marketing expenses
was primarily due to the expansion of sales and marketing staffing and increased
marketing activities, including advertising and trade shows.
General and administrative expenses were $287,000 and $358,000 in the 1995
Period and the 1996 Period, respectively. The increase was primarily the result
of increased staffing and associated equipment expenses necessary to manage and
support the Company's growth.
Product development expenses were $60,000 and $299,000 in the 1995 Period
and the 1996 Period, respectively. The increase in product development expenses
was primarily due to the continued development of the Phoenix System. The total
of capitalized software development costs and product development expenses
("Product Development Expenditures") increased from $365,000 during the 1995
Period to $612,000 during the 1996 Period. The Company anticipates that Product
Development Expenditures will continue to be significant during the remainder of
1996 as the Company continues to expand and enhance the Company's product line.
Other Income (Expense). Interest income, consisting primarily of interest
accrued on a related party stock subscriptions receivable, was $30,000 and
$29,000 in the 1995 Period and the 1996 Period, respectively. Other income of
$75,000 in the 1995 Period consisted principally of the fair market value of
computer equipment given to Phoenix by a computer company to enable Phoenix to
develop and test the Phoenix System on such company's equipment.
Income tax expense of $153,000 in the 1996 Period represents foreign
withholding taxes which relates to the license of Company products to a foreign
customer and which are contractually payable by that customer. There was no
United States income tax expense in the 1995 Period or the 1996 Period. The
Company has a net operating loss carry forward and tax credits that should limit
the Company's United States income tax liability during the remainder of 1996.
Comparison of Fiscal 1993, Fiscal 1994 and Fiscal 1995
Revenues. Total revenues were $30,000, $427,000 and $5.0 million in Fiscal
1993, Fiscal 1994 and Fiscal 1995, respectively. In Fiscal 1993, Fiscal 1994 and
Fiscal 1995, international sales accounted for approximately 0%, 33% and 70%,
respectively, of total revenues.
License fees and other revenues during Fiscal 1993 and Fiscal 1994 were $0
because Phoenix was in the process of developing its products and, as a result,
did not recognize any revenue from the licensing of its software. However,
Phoenix did recognize $30,000 and $58,000 in Fiscal 1993 and Fiscal 1994,
respectively, from commissions earned from the sale and delivery of third party
products. The Company's business strategy for third party product sales is to
generate incremental revenues from sales of products and services which are
important to the overall operations of the customer's system and that interface
and integrate directly with the Phoenix System. During Fiscal 1995, Phoenix
recognized $3.5 million in license fees. Approximately 19% and 43% of Phoenix's
total revenues for Fiscal 1995 were derived from two customers, respectively.
Management believes, however, that the Company's continued growth will reduce
reliance on individual contracts or relationships for material revenue
contribution. Revenues during Fiscal 1995 include $256,000 in foreign tax
withholdings which are contractually paid by foreign customers, and such amount
is also recorded as an income tax expense. The completion of a commercially
viable version of the Phoenix System and acceptance of the Phoenix System in
both the United States and international markets were major factors in the
increase
21
<PAGE> 24
in license fees during Fiscal 1995. Phoenix has increased the price of its
products since the conclusion of Fiscal 1995. During Fiscal 1995, approximately
70% of the Company's revenues were derived from its foreign sales activities, of
which over half of such revenue was from one customer. In the future, the
Company does not expect that any one customer will account for such a high
percentage of total annual revenues or for foreign sales to comprise such a high
percentage of total annual revenues.
Implementation, customer and software support and other service fees were
$0, $370,000 and $1.6 million during Fiscal 1993, Fiscal 1994 and Fiscal 1995,
respectively. This growth was primarily due to increased implementation fees,
which resulted from increased licensing activity.
Expenses. The Company's total expenses were $1.0 million, $3.3 million and
$4.3 million in Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The
growth in expenses has occurred primarily due to increases in personnel related
costs resulting from higher staffing levels.
Cost of license fees and other of $376,000 in Fiscal 1995, consisting
primarily of amortization of capitalized software development costs and software
royalties to third parties, was recognized after general release of the Phoenix
System.
Cost of implementation, customer and software support and other service
fees was $105,000, $637,000 and $1.2 million in Fiscal 1993, Fiscal 1994 and
Fiscal 1995, respectively. The establishment of formal implementation and
customer and software support services within the Company occurred in Fiscal
1993. The increases in these costs in Fiscal 1994 and Fiscal 1995 were due to
increased implementation costs related to the Company's initial installation of
the Phoenix System and the release of its software and increased personnel
related costs, as the Company continued to build its implementation and customer
and software support services.
Sales and marketing expenses were $97,000, $359,000 and $983,000 in Fiscal
1993, Fiscal 1994 and Fiscal 1995, respectively. The increases in sales and
marketing expenses were primarily due to the expansion of sales and marketing
staffing and increased marketing activities, including advertising and trade
shows.
General and administrative expenses were $225,000, $982,000 and $1.1
million in Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The increases
were primarily the result of increased staffing and associated expenses
necessary to manage and support the Company's growth.
Product development expenses were $621,000, $1.4 million and $655,000 in
Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. The increase in product
development expenses from Fiscal 1993 to Fiscal 1994 was primarily due to the
continued development of the Phoenix System. Technological feasibility of the
Phoenix System was established during Fiscal 1994, and, therefore, as required
by Statement of Financial Standards No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased or Otherwise Marketed," certain
expenditures were capitalized during Fiscal 1994 and Fiscal 1995. Product
development expenses decreased during Fiscal 1995 due to the capitalization of
certain software development costs. Capitalized software development costs
increased from $93,000 at the end of Fiscal 1994 to $1.1 million at the end of
Fiscal 1995. Product Development Expenditures, therefore, were $621,000, $1.5
million and $1.8 million for Fiscal 1993, Fiscal 1994 and Fiscal 1995,
respectively. The increase in Product Development Expenditures was primarily
attributable to increased staffing required to expand and enhance the Company's
product line.
Other Income (Expense). Interest income was $4,000, $27,000 and $122,000
for Fiscal 1993, Fiscal 1994 and Fiscal 1995, respectively. Interest income
increased from Fiscal 1994 to Fiscal 1995 as a result of interest accrued on a
related party stock subscriptions receivable. Interest expense decreased from
$19,000 in Fiscal 1994 to $12,000 in Fiscal 1995 as a result of repayment of a
note payable during Fiscal 1995. Other income of $76,000 in Fiscal 1994
consisted principally of the fair market value of computer equipment given to
Phoenix by a computer company to enable Phoenix to develop and test the Phoenix
System on such company's equipment.
Income tax expense for federal income tax was $0 in Fiscal 1993, Fiscal
1994 and Fiscal 1995 due to the large net operating losses incurred in Fiscal
1993 and Fiscal 1994. Income tax expense in Fiscal 1995 of $256,000 represents
foreign withholding taxes related to revenue from customers in certain foreign
countries.
22
<PAGE> 25
As a result of the Company's start-up losses, the Company has a net
operating loss carryforward. At December 31, 1995, Phoenix had available net
operating loss carryforwards of $2.8 million that expire in years 2008 through
2010 to offset future taxable income for federal income tax purposes. In
addition, Phoenix has available research and development tax credit
carryforwards of $111,000 that expire in years 2008 through 2010 and foreign tax
credit carryforwards of $514,000 that expire in years 2000 through 2001.
Utilization of these carryforwards to reduce future income taxes will depend on
the Company's ability to generate sufficient taxable income prior to expiration
of the carryforwards. Further, the Offering may cause an ownership change, as
defined by the Internal Revenue Code. In the event of an ownership change, the
annual amount of net operating loss carryforwards and tax credit available to
offset taxable income may be limited under the provisions of the Internal
Revenue Code. A valuation allowance of $1.7 million against deferred tax assets
resulting from the net operating loss and tax credit carryforwards and other tax
benefits has been recorded due to uncertainties related to the Company's ability
to generate sufficient taxable income to realize the benefit of the deferred
income tax assets in the future. See Note 7 of Notes to Consolidated Financial
Statements.
QUARTERLY OPERATING RESULTS
The following table sets forth consolidated statements of operations data
for each of the five quarters in the period beginning January 1, 1995 and ended
March 31, 1996. This information has been derived from the Company's unaudited
consolidated financial statements. The unaudited consolidated financial
statements have been prepared on substantially the same basis as the audited
consolidated financial statements and, in management's opinion, include all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation of such information when read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995(1) 1995 1995 1995 1996
--------- ---------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues:
License fees and other.................. $ -- $2,802,782(2) $ 316,002 $ 349,064 $1,127,607
Implementation, customer and software
support and other service fees........ 90,745 397,070 472,765 601,918 653,723
--------- ---------- ------------- ------------ ----------
Total revenues................... 90,745 3,199,852 788,767 950,982 1,781,330
Expenses:
Cost of license fees and other.......... -- 176,122 111,553 88,107 131,029
Cost of implementation, customer and
software support and other service
fees.................................. 222,822 276,259 365,455 457,510 457,196
Sales and marketing..................... 224,839 237,263 266,707 289,939 268,818
General and administrative.............. 287,072 305,731 262,130 324,466 358,260
Product development..................... 60,272 149,438 192,152 267,345 299,067
--------- ---------- ------------- ------------ ----------
Total expenses................... 795,005 1,144,813 1,197,997 1,427,367 1,514,370
Other income (expense):
Interest income......................... 29,607 32,958 35,091 33,504 28,647
Interest expense........................ (6,590) (5,533) (1,082) (1,125) (1,081)
Other income (expense).................. 75,270 -- (2,216) (1,316) --
--------- ---------- ------------- ------------ ----------
Income (loss) before income taxes......... (605,973) 2,082,464 (377,437) (445,322) 294,526
Income tax expense........................ -- 255,999 -- -- 153,000
--------- ---------- ------------- ------------ ----------
Net income (loss)......................... $(605,973) $1,826,465 $(377,437) $ (445,322) $ 141,526
========== ========== ============ ============ ==========
Net income (loss) per share............... $ (0.20) $ 0.57 $ (0.12) $ (0.14) $ 0.04
Weighted average shares outstanding(3).... 3,076,813 3,231,943 3,146,234 3,262,362 3,298,444
</TABLE>
- ---------------
(1) In 1995, Phoenix changed its fiscal year end from January 31 to December 31.
However, the information presented above for the quarter ended March 31,
1995 consists of three months, including the month of January 1995.
(2) License fees and other was $2.8 million for the quarter ended June 30, 1995
in large part due to license fees of $2.1 million from a single foreign
customer (which includes approximately $205,000 in foreign withholding taxes
that are payable by that customer) and from the recognition of revenue from
the backlog of customers with whom Phoenix had signed contracts while the
Phoenix System was under development.
(3) See Note 1 of Notes to Consolidated Financial Statements.
The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future. Special factors that may cause
the Company's future operating results to vary include, without limitation, the
size and timing of significant orders; the mix of direct and indirect sales; the
mix and timing of foreign and domestic sales; the timing of new product
announcements and changes in pricing policies by the Company and its
competitors; market acceptance of new and enhanced versions of the Company's
products;
23
<PAGE> 26
increased competition; changes in operating expenses, including expenses related
to acquisitions; changes in Company strategy; personnel changes; changes in
legislation and regulation; foreign currency exchange rates and general economic
factors. Product revenues are also difficult to forecast because the market for
client/server application software products is rapidly evolving, and the
Company's sales cycle, from initial review to purchase and the provision of
support services, varies substantially from customer to customer. As a result,
Phoenix believes that quarter to quarter comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
indications of future performance.
BACKLOG
Backlog, defined as the contract value of executed agreements minus revenue
recognized from these contracts, totaled $212,000, $3.1 million, $7.3 million
and $7.1 million at the end of Fiscal 1993, Fiscal 1994, Fiscal 1995 and the
1996 Period, respectively. At May 31, 1996, backlog totaled $7.5 million and
consisted of $1.8 million for software licenses, $636,000 for implementation and
$5.1 million for five-year customer support service agreements. Backlog of
software license and implementation revenue is expected to be realized within a
period of approximately one year, and customer support service backlog is
expected to be realized within a period of approximately five years.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, Phoenix has financed its operations primarily from
private sales of capital stock and from cash payments from customers prior to
implementation of the Phoenix System. The Company also has relied, to a lesser
extent, on short-term bank borrowings from time to time.
Operating activities used $672,000 in cash in Fiscal 1993 and $474,000 in
cash in Fiscal 1994 and provided $1.0 million in cash in Fiscal 1995 and
$250,000 in the 1996 Period. Contributing to cash use were net losses of $1.0
million and $2.8 million in Fiscal 1993 and Fiscal 1994, respectively. Cash
payments from customers as provided by contracts in advance of revenue
recognition equalling deferred revenues plus deferred taxes provided cash of
$149,000, $2.2 million, $386,000 and $28,000 in Fiscal 1993, Fiscal 1994, Fiscal
1995 and the 1996 Period, respectively.
In Fiscal 1993, Fiscal 1994, Fiscal 1995 and the 1996 Period, the Company's
investing activities consisted entirely of purchases of property and equipment
and development of the Phoenix System. Purchases of property and equipment,
consisting primarily of computer equipment, were $173,000, $342,000, $253,000
and $62,000 in Fiscal 1993, Fiscal 1994, Fiscal 1995 and the 1996 Period,
respectively. Capitalized software development costs used $93,000, $1.1 million
and $313,000 in cash in Fiscal 1994, Fiscal 1995 and the 1996 Period,
respectively.
Financing activities provided $975,000, $1.4 million, $187,000 and $50,000
in cash in Fiscal 1993, Fiscal 1994, Fiscal 1995, and the 1996 Period,
respectively. Short-term debt provided $194,000 and $291,000 in cash in Fiscal
1993 and Fiscal 1994, respectively, and repayment of short-term debt used
$310,000 in cash in Fiscal 1995. Net proceeds from issuance of capital stock and
cash payments for stock subscription receivables provided $781,000, $1.1
million, $497,000 and $50,000 in cash in Fiscal 1993, Fiscal 1994, Fiscal 1995,
and the 1996 Period, respectively.
At March 31, 1996, the Company had cash and cash equivalents of $351,000
and a working capital deficit of $2.3 million.
The Company believes that the net proceeds from the sale of the Common
Stock offered by the Company hereby, together with its current cash balances and
cash flow from operations, will be sufficient to meet its working capital,
capital expenditure and capitalized software development requirements for the
next 12 months. The Company intends to terminate its current financing
arrangements with Barnett Bank upon the completion of the Offering. Cash flows
from operating activities are dependent on continued advance payments from
customers, and there is no assurance that the Company will continue to receive
these payments from customers or that it will continue to receive these payments
in advance on the same terms as it has in the past. The Company anticipates that
its operating and investing activities may use cash in the future, particularly
from growth in operations and development activities. Consequently, any such
future growth may require the Company to obtain additional equity or debt
financing.
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<PAGE> 27
BUSINESS
Phoenix designs, develops, markets and supports highly adaptable,
enterprise-wide client/server application software for the financial services
industry, with a primary focus on middle market banks. Phoenix combined (i) its
management's extensive experience with banking and banking software systems,
(ii) the U.S. Bank Partners' input on bank operational and flexibility needs and
(iii) the most recent advances in client/server technology to design and develop
an innovative new banking software system. The Phoenix System, through its
client/server technology, addresses many of the deficiencies of the mainframe,
and mini computer-based legacy systems on which most banks currently operate by
allowing financial institutions to integrate data into a comprehensive
management information network. The Phoenix System, like legacy systems,
supports all core areas of bank data processing, including system
administration, account processing, nightly processing, teller functions,
holding company accounting and budgeting. Unlike legacy systems, the Phoenix
System is a fully integrated system that provides significant advantages in
three critical areas: (i) customer relationship management; (ii) management
decision support; and (iii) bank product creation and support. Phoenix combines
its technological expertise with specific knowledge of the financial services
industry to provide information solutions to complex banking issues, such as
total data integration, customer management, customer profitability analysis and
management information requirements.
Since its formation in January 1993, the Company has entered into 25
ongoing contracts with banks or bank holding companies for installation of the
Phoenix System supporting 26 United States and 8 international financial
institutions. As of May 31, 1996, the Phoenix System has been fully implemented
and is operating in 18 of these 34 financial institutions. The Company had total
revenues of approximately $5.0 million and net income of approximately $554,000
for the fiscal year ended December 31, 1995 and total revenues of approximately
$1.8 million and net income of approximately $142,000 for the quarter ended
March 31, 1996.
The Company's Chief Executive Officer, Bahram Yusefzadeh, has over 27 years
of experience in the banking software industry. In addition, the Company has
assembled a senior management team with over 120 years of experience in the
banking and software industries. In the 1970s, Mr. Yusefzadeh co-founded Nu-Comp
Systems, Inc. and led its development of one of the first integrated core
banking systems, the Liberty Banking System, which at one time was used by over
260 banks. Mr. Yusefzadeh founded Phoenix for the purpose of developing and
marketing a new generation of integrated banking software applications using
client/server technology that would replace less flexible and technologically
dated legacy systems. The Phoenix System's development was the result of a joint
effort among the Company's management, Hewlett-Packard and the U.S. Bank
Partners. In addition, the U.S. Bank Partners provided a substantial portion of
the Company's initial capital. After the Offering, it is anticipated that
Hewlett-Packard will continue its strategic marketing alliance with the Company
and that the U.S. Bank Partners will continue to contribute to plans for new
products and enhancements through the Phoenix User Group ("PUG").
INDUSTRY BACKGROUND
The Company's primary market consists of middle market banks, which the
Company defines as commercial banks and savings institutions with asset sizes
ranging between $100 million and $1 billion. These banks are highly regulated,
and they historically have provided a limited range of products and faced
limited competition. These banks used legacy computer systems that generally
only processed transactions and provided a general ledger. Today, the
competitive landscape has changed dramatically as diversified financial service
providers compete directly with middle market banks. As a result, these banks
need detailed information about their institutions and customers in order to
develop and market profitable new products and services and to expand customer
relationships.
In response to this changing environment, the industry developed
modifications to the legacy data structures that took data extracts from legacy
systems and transported these extracts to personal computer application systems.
However, such modified legacy systems generally are written for mainframes and
minicomputers, are difficult and expensive to maintain and support, require
substantial training costs and, because they often use proprietary operating
systems and data structures, are limited in their ability to interact
25
<PAGE> 28
with other information resources and systems used in a bank. Although modified
legacy systems may offer a graphical user interface for ease of use, and some
have introduced database technologies to provide increased data storage and more
flexible access to data, these systems are generally limited because they are
still based on decades-old architecture which does not permit full integration
of data. Without full integration of data, the information provided by these
modified legacy systems generally is neither complete nor readily accessible,
and, thus, Phoenix believes that banks using legacy systems are at a competitive
disadvantage.
In the 1990s, the emergence of client/server computing made possible the
development of powerful applications which are capable of addressing
enterprise-wide business problems in a flexible and cost-effective manner. The
client/server model consists of personal computer workstation "clients"
connected on enterprise-wide networks to "servers" that provide data storage and
update capabilities. The client/server architecture allocates the processing of
application software between the client and the server to allow the clients to
handle the user interface and local data manipulation and to allow the server to
perform computing intensive functions. Because of this partitioning, a
client/server system is scalable such that responsiveness and capacity can be
increased by upgrading the server or replacing it with a more powerful model.
Furthermore the client/server architecture design minimizes network traffic.
Client/server systems also offer the level of data integrity and security that
banks require because access to information can be controlled by server-based
relational database management systems. Phoenix believes that very few middle
market banks have fully realized the potential benefits offered by client/server
technology due to the small number of true client/server applications currently
available to banks.
THE PHOENIX SOLUTION
The Phoenix System allows institutions to integrate data into a
comprehensive management information network that is readily accessible
throughout the entire financial institution, flexible with shared information
and easily interfaced. The Phoenix System gives bank personnel immediate access
to a broad range of customer information including balances, transactions,
financial statements, contact history, related accounts and demographic data.
The Company believes that the Phoenix System is easy to use and simple to learn,
which enables a bank to provide higher quality customer service with reduced
operating and training costs. Like legacy systems, the Phoenix System supports
all core areas of bank data processing, including system administration, account
processing, nightly processing, teller functions, holding company accounting,
and budgeting. Unlike legacy systems, the Phoenix System is a fully integrated
system that provides significant advantages in three critical areas: (i)
customer relationship management; (ii) management decision support; and (iii)
bank product creation and support.
- Customer Relationship Management. The Relationship Information
Management ("RIM") module integrates a customer's account data,
transactional activity, financial data from third party financial
institutions, marketing information, relationships with other customers
and other accounts, financial statements and other types of information
required to view a customer's total relationship record. The RIM module
allows a bank to determine the profitability of each account and customer.
Banks can use information generated by the Phoenix System to determine
which products or services should be offered at a particular point in a
customer relationship in order to maximize profitability. The Company
anticipates that in early 1997 the Phoenix System will be able to
integrate and include data from third party software services, including
information on brokerage accounts, insurance accounts and credit card
accounts, in the RIM.
- Management Decision Support. Through its Executive Information System
("EIS"), the Phoenix System allows bank managers to track bank performance
and model the effects of business strategies and changes in market
conditions on such performance. EIS provides modeling tools which permit a
bank's management team to use real-time data to perform trend analysis and
to conduct extensive modeling activities, such as customer profitability
and overall bank profitability. In addition, the EIS provides a bank with
both statistical measures of product penetration and performance.
- Bank Product Creation and Support. The Phoenix System gives banks the
capability to quickly develop, deliver and process bank products and
services that can be as simple or as sophisticated as a bank's customers
and competition demand. New bank products can be developed rapidly and do
not require programming or the support of technical personnel.
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<PAGE> 29
STRATEGY
The Company's primary business objective is to become a leading supplier of
enterprise-wide client/ server application software for the financial services
industry by pursuing the following strategies:
Maintain Technology Leadership and Enhance Product Functionality. Phoenix
believes the Phoenix System is the most advanced client/server computing
solution for banks because it incorporates new open technologies and standards,
such as client/server architectures, relational databases, graphical user
interfaces and advanced application development tools. Phoenix intends to
maintain its leadership position by integrating new technologies, adding new
applications, enhancing existing applications and increasing functionality. The
Phoenix System can run on any central server that will support a SQL-standard
relational database, such as hardware from Hewlett-Packard, International
Business Machines Corp. ("IBM"), AT&T Corp., Motorola, Inc., Sun Microsystems,
Inc. and all other UNIX compliant hardware.
Focus on United States Middle Market Banks. The Company intends to
continue its marketing focus in the United States on the approximately 3,800
middle market banks with asset sizes ranging between $100 million and $1
billion. The Company believes that most middle market banks are technologically
sophisticated, seek banking software applications that support strategic
objectives and have the capital and human resources to finance and use
effectively advanced technological solutions. However, middle market banks are
subject to significant merger and acquisition activity, and the resulting
consolidation has the effect of reducing the number of potential customers for
the Company's products.
Expand International Market. Phoenix believes that many international
financial institutions are seeking technology as a means to offer a broader
array of financial products and services to meet the increasing demand for
retail banking services in the international market. The Company believes that
international institutions generally are less risk averse than United States
banks, are willing to skip technology generations and are looking for
technological solutions that will last at least 10 to 15 years. The Company
designed its software products to incorporate numerous international features,
such as support for different languages; the ability to process simultaneously
all currencies formatted in accordance with standards established by the
International Organization for Standardization; numeric, date and address
formatting to fit individual country standards; accounting for local tax
computations, including value-added taxation, and reporting to satisfy different
regulatory requirements. In order to expand international sales successfully in
1996 and subsequent periods, Phoenix must hire additional sales and
implementation personnel and recruit additional international resellers. The
risks inherent in the Company's international business activities generally
include currency risk, trade barriers, costs of localizing products for foreign
countries, difficulties in managing international operations, political
instability, potentially adverse tax consequences, restrictions on the
repatriation of earnings and the additional burdens of intellectual property
protections in foreign markets.
Increase Worldwide Distribution. The Company plans to continue expanding
its distribution both in the United States and internationally by increasing its
sales and implementation force and seeking additional strategic alliances.
- Direct Sales and Implementation. Phoenix generates a majority of its
revenues through its direct sales force of four people serving the United
States market, one person serving the international market and an
administrative staff of two people. The Company currently does not have an
office outside the United States; however, it plans to open an
international sales office in early 1997. Competition for such personnel
is intense, and there can be no assurance that Phoenix will be able to
retain its existing sales and implementation personnel or to attract,
assimilate or retain additional highly qualified sales or implementation
personnel in the future. As of May 31, 1996, the Company had 29
implementation and training personnel. Phoenix intends to increase
substantially the number of sales staff and implementation staff in 1996
and 1997.
- Strategic Alliances. Phoenix has established and intends to continue
expanding alternate channels of distribution through VARs and agents. In
particular, Phoenix recently established a strategic alliance with Unisys,
whereby Unisys exclusively markets the Phoenix System in Central and South
America, Mexico, the Caribbean and Bermuda. Additionally, in April 1996
Phoenix and CSA entered into the CSA Agreement whereby CSA exclusively
markets the Phoenix System to banks in certain countries of Africa and
non-exclusively markets the Phoenix System to banks in the Republic of
South Africa.
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<PAGE> 30
See "-- Target Markets." Although VARs and agents increase the Company's
ability to reach new markets, the Company bears the risk that the VARs and
agents will not be able to market the Company's products effectively or
will not be qualified to provide timely and cost-effective customer
support and service. In addition, gross margins and composition of revenue
and expenses may vary depending on whether a sale was made directly by the
Company or by a VAR or an agent.
Maximize Recurring Revenues. Phoenix signs customers to long-term
licensing agreements and charges annual service fees which are generally 15-20%
of the base license fee. As the asset size of a bank increases or as branches
are added, customers pay additional incremental license fees and increased
service fees over the life of the license agreement. Additionally, the Company's
disaster recovery service is a separate five-year contract which has an initial
implementation fee and annual service fees. Phoenix plans to continue to build
this base of recurring revenue and to develop additional sources of recurring
revenue by providing such services as networking support to its customers.
Leverage Existing Customer Base and Broaden Primary Market. The Company
intends to expand its current bank customer relationships by providing
additional products and services and licensing additional bank subsidiaries of
existing client bank holding companies. In addition, the Company believes its
implemented customer base represents an important source of references, which
are vital in marketing to the financial services industry. By mid-1997, the
Company also intends to expand the market for the Phoenix System to include
banks with asset sizes greater than $1 billion and less than $100 million by
increasing product functionality and flexibility for larger banks and by
delivering the NT Version for smaller banks. Although the license fees for the
NT Version will be comparable to the license fees for the Phoenix System, the
Company believes that the NT Version will be more acceptable to smaller banks
because these banks will incur lower overall acquisition costs related to
operating in a Microsoft Windows NT ("Windows NT") environment.
Pursue Complementary Acquisitions. Phoenix intends to leverage its
position as a provider of client/ server technology to financial institutions by
pursuing strategic acquisitions of providers of complementary technologies,
products and services, such as companies that offer legacy retail banking
systems. The Company intends to pursue such acquisitions in order to more
rapidly expand the Company's customer base by converting the acquired customers
to the Phoenix System. Phoenix believes such strategic acquisitions will permit
Phoenix to enter new markets, provide outsourcing alternatives and acquire
additional products and applications. However, such future acquisitions, if any,
would be accompanied by risks, including, among other things: the difficulty of
assimilating the operations and personnel of the acquired company; potential
disruption of Phoenix's ongoing business; inability to successfully incorporate
acquired technologies and rights into Phoenix's products; entering markets in
which Phoenix has little or no direct prior experience; and impairments of
relationships with employees and subscribers of the acquired business as a
result of changes in management.
THE PHOENIX SYSTEM
The Phoenix System is a fully integrated, enterprise-wide client/server
application software system for the financial services industry. The Phoenix
System gives bank personnel at all levels the tools and information needed to
enhance and speed their decision-making. In addition, the Phoenix System is
designed to fit the evolving needs of a growing bank. The following are some of
the important capabilities included in the Phoenix System:
Customer Relationship Management. The Phoenix System places a structural
emphasis on managing customer relationships, which allows a bank to pursue a
more personalized and profitable approach to its products and services. The RIM
module integrates a customer's account data, transactional activity, financial
data from third party financial institutions, marketing information,
relationships with other customers and other accounts, financial statements and
other types of information required to view a customer's total relationship
record. The primary customer relationship management features include:
- Marketing and Other Personal Information. For purposes of marketing and
creditworthiness assessments, the RIM module tracks a range of personal
information, such as employment history, home ownership status, other
credit providers and other bank accounts.
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<PAGE> 31
- On-line Financial Statements and Portfolios. To facilitate improved
management of customer relationships, enhanced analysis of a customer's
financial condition and improved tracking of customer profitability, the
RIM module maintains information regarding a customer's assets,
liabilities, income and expense in a unified file.
- Extensive Customer Relationship Tracking. To facilitate marketing and
management decision-making, based not only on a bank's overall
relationship with individual customers but also on its overall
relationship with related groups of customers, the RIM module can track
relationships between customers, groups of customers and between customers
(or groups of customers) and accounts.
- Customer-Based Statements. Combined customer statements can contain an
unlimited number of accounts, including related accounts owned by other
customers, and each account included on a statement can be configured to
show only summary information or both summary information and transaction
detail. Copies of account statements and other correspondence can be
automatically sent to an unlimited number of additional addresses,
including temporary and seasonal addresses.
- Integrated Signature, Photograph and Document Imaging. The RIM module
maintains an on-line signature card with a photograph for each customer
and can store and display photographs of loan collateral and other
customer assets, Social Security cards and drivers' licenses.
- Flexible Inquiry Capability. The Phoenix System enables users to
progress through increasingly detailed levels of display data on all
inquiry screens. This capability allows customer service representatives
and platform officers to research questions thoroughly and quickly,
without having to enter arcane codes or wade through stacks of printed
reports.
Management Decision Support. Using EIS, senior bank executives can track
performance and model the effect of business strategies and changes in market
conditions. The Phoenix System draws upon real-time data to present financial
institutions with graphical displays that highlight important business trends
and facilitate rapid interpretation and analysis. Unlike the reporting
facilities of legacy systems, information presented to a bank's manager by the
Phoenix EIS is not static. The EIS takes into account both the relationship of a
particular indicator to other related categories of information, as well as the
trends for that indicator over time. At its core, the Phoenix System is focused
on providing bank decision-makers with the following real-time capabilities: (i)
a fully integrated general ledger; (ii) a broad suite of standard reports
augmented by a flexible ad hoc reporting capability; (iii) an integrated set of
budgeting templates; and (iv) customer and account profitability analysis. In
addition, the EIS provides a bank with both statistical measures of product
penetration and performance.
Bank Product Creation and Support. The Phoenix System provides the
capability to quickly develop, deliver and process bank products and services
that can be as simple or as sophisticated as a bank's customers and competition
demand. Because all bank product development is parameter-driven, banks can
design products and services by simply selecting product features from a variety
of options. New bank products can be developed rapidly and do not require
programming or the support of technical personnel. Some of the Phoenix System's
tools for bank product creation and support include:
- Parameterized Customization Controls. The Phoenix System was designed
around parameterization and reflects an appreciation for the continuously
changing demand for banking products and services. This design gives banks
the ability to respond by enabling bankers to create new bank products and
services quickly and easily.
- "What If" Analysis. The Phoenix System provides a unique "what if"
analysis feature that enables banks to perform complex calculations by
simply entering a few fields of information. This facility can be used to
model the effects on a bank's profitability of new products and services.
- Cost Tracking. To facilitate cost and profitability tracking at all
operation levels, the Phoenix System ties transactional activity and other
account information to the integrated general ledger at the product-class
level. Thus, for each loan and deposit product a bank offers, it can
direct financial data on balance
29
<PAGE> 32
components, interest, loan loss, escrow, dealer reserves, participations,
insurance and charges and fees to a specific set of general ledger
accounts.
- Integrated Profitability Analysis. The Phoenix System allows banks to
analyze the profitability of individual loans and customer relationships,
as well as of broad categories of customers.
- Flexible Rate Controls. Within the Phoenix System, rate calculations for
all products and accounts are managed through a centralized table of rate
indices. The Phoenix System allows banks to create an unlimited number of
rate indices and maintains a life-to-date on-line history of all rate
changes for all rate indices. It also permits banks to schedule rate
changes in advance or backdate them.
Complete Integration of Core Applications. The Phoenix System provides the
same core bank data processing capabilities as are found in older legacy systems
but does so within an integrated "open systems" environment that uses a
graphical user interface, modern relational database technology and
nonproprietary hardware and software components. The Phoenix System divides core
processing functions among seven discrete, but fully integrated, software
modules: (i) system administration; (ii) account processing; (iii) nightly
processing; (iv) teller system; (v) holding company financial statements; (vi)
EIS; and (vii) budgeting. The following are some of the core applications of the
Phoenix System:
- Deposit and Loan Processing. In addition to supporting the processing
requirements of traditional deposit and loan products, the Company built
the deposit and loan processing modules around a framework of extremely
flexible controls that allow a bank to customize and implement an
analysis-based approach tailored to the bank's products and services.
- General Ledger. Phoenix provides a self-balancing general ledger system
that supports both batch and on-line, real-time transaction processing
functions. Real-time posting of on-line transactions ensures that banks
can correct errors anytime during the day, without having to wait for the
next overnight posting to run.
- On-line Transaction Processing. The Phoenix System's core account
processing module, through which customers and accounts are added to the
Phoenix System and maintained over time, provides a full on-line
transaction processing capability. Through this module's transaction
processing facility, users can post on-line transactions to any account in
the Phoenix System.
- System Security. Phoenix provides a comprehensive set of controls for
restricting employees' access to different levels of bank, customer and
account information, as well as for limiting the transactional amounts
that employees are permitted to post to accounts. In case an internal
problem occurs, the Phoenix System maintains detailed on-line audit trails
for all records that track actions resulting in a record being viewed,
created or modified.
- Integrated On-line Help System. All areas of the Phoenix System provide
integrated connections to an interactive on-line help system.
TECHNOLOGY
Phoenix has partnered with leading hardware manufacturers, tools
manufacturers and relational database vendors in the client/server community,
such as Hewlett-Packard, Gupta Corporation ("Gupta") and Sybase, Inc., to
produce software based on leading-edge technological developments. Using these
tools, the Company has created a product that enables the Company's customers to
utilize what the Company believes is the most current technology in the
financial institutions industry.
Centralized Relational Database Management System ("RDBMS"). The Phoenix
System uses a relational database technology known as Sybase, currently provided
by Sybase, Inc. Phoenix chose Sybase System 10 as its structured query language
("SQL") database. The Phoenix System can run on hardware platforms from
Hewlett-Packard, IBM and Unisys, and all others which are UNIX compliant.
Phoenix is currently involved in the integration of Sybase, Inc.'s new
relational database System 11 into the Phoenix System. System 11 is expected to
provide substantial performance gains for existing and future customers and to
improve processing times.
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An advantage of the Phoenix System as compared to legacy or modified legacy
systems is that the Phoenix System stores data in a relational database rather
than in a proprietary file format. Consequently, the data can be integrated by
using hundreds of different third-party query and report writing tools. In
addition, with a relational database, it is very easy to expand and change the
structures of parameter tables and data. This "open" approach to data storage
also provides the ability to move the Phoenix System to other relational
database management systems. The Company plans to adapt the Phoenix System for
Microsoft Corporation's SQL Server 6.5 on Windows NT to create the NT Version
for use by smaller banks. The release of the NT Version is scheduled for
mid-1997.
Replication and Distributed Data Processing. Phoenix has leveraged the
open interfaces of the Phoenix System to implement an advanced distributed
database for support of its off-line teller system. The off-line teller system
uses a local database at each branch computer to perform replicated transactions
in the event of hardware or network failure at the central server. Off-line
branches are supported using Gupta's SQLBase for either Novell NetWare or
Windows NT.
Open Protocols for Data Communication. Phoenix uses the industry standard
TCP/IP protocol for communicating with the relational database server and
IPX/SPX for customers implementing a network using NetWare instead of Windows
NT. This allows the Company's customers to implement a broad array of local area
network and wide area network topologies and configurations. In addition,
customers that have an existing network infrastructure in place that supports
TCP/IP do not have to reinvest in new technology simply to run the Company's
product.
32-bit Application Support. The Company is currently engaged in an effort
that will enable the Company's customers to use the latest client operating
systems from Microsoft (Windows 95 and Windows NT Workstation) with native
32-bit applications. These applications offer the Company's customers
substantial benefits in the areas of fault tolerance, ability to support more
complex transaction processing, enhanced performance and advanced security.
TARGET MARKETS
Since the release of its product in June 1995, the Company has entered into
25 ongoing contracts with banks and bank holding companies for installation of
the Phoenix System supporting 26 United States and 8 international financial
institutions. As of May 31, 1996, the Phoenix System has been fully implemented
and is operating in 18 of these 34 financial institutions. Phoenix believes that
customers in both the United States market and the international market are
increasingly accepting of client/server technology.
The United States Market. Phoenix currently divides commercial banks and
savings institutions in the United States market into three groups based on
asset size(1):
[GRAPH]
- ---------------
Chart which divides the number of
commercial banks and savings institutions
in the United States market based on asset size
(1) Numbers in the graphic are derived from The FDIC Quarterly Banking Profile,
Fourth Quarter, 1995.
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<PAGE> 34
The Company primarily focuses its marketing and sales efforts on middle
market banks with total assets ranging between $100 million and $1 billion. In
the bank data processing services industry, service contracts for banks
typically have an initial term of five years, and, therefore, the Company
estimates that each year approximately 20% of banks evaluate data processing
alternatives because their current contracts expire. Management believes that
recently an increasing number of banks have renewed their service contracts for
shorter periods in order to maintain the flexibility to change software
companies due to rapid developments in banking software technology which may
result in increased demand. Moreover, a number of banks are evaluating data
processing alternatives due to the acquisition of their software providers and
servicers by other software companies and the age of their current software and
hardware solutions.
Phoenix is also marketing the Phoenix System to financial institutions with
assets greater than $1 billion and has licensed and implemented the Phoenix
System in eight banks with assets under $100 million. The Company intends to
continue to license to financial institutions and other businesses outside of
its primary market on an opportunistic basis; for example, one of the Company's
customers is a church. As a means to increase its target market, the Company
intends to release its NT Version targeted at smaller banks in mid-1997. The
Company also believes that larger banks will become target banks for the Phoenix
System in mid-1997 as new product features and enhancements increase the Phoenix
System's functionality for larger banks.
The International Market. At this time, Phoenix and its strategic sales
partners are actively marketing the Company's products and services in Central
and South America, Mexico, the Caribbean, Australia and Africa, and Phoenix is
pursuing inquiries from a variety of other areas in Western Europe, Eastern
Europe and the Middle East. In the international market, the Company has
primarily focused on technology-minded financial institutions operating in
countries where the primary language is either Spanish or English. The Company
believes the international market offers significant opportunity because
economic expansion and other market factors have increased the demand for
sophisticated retail banking services. Sophisticated international banks offer a
broad array of financial products and services and demand technology, like the
Phoenix System, that can integrate numerous applications, such as trade finance.
Furthermore, management believes that a significant number of international
banks have accepted, to a greater degree than United States banks, that
technology should be used as a competitive tool and not just as a service
delivery vehicle. International banks are searching for hardware and software
platforms that are open, powerful and economical. The Company also believes that
these institutions are looking for technology solutions that will last at least
10 to 15 years. The Company currently does not have an office outside the United
States; however, it plans to open an international sales office in early 1997.
PRODUCT PRICING
The Company prices its product in two components: (i) license fees for
software products and other revenues and commissions from the sale and delivery
of software and hardware products of third party vendors; and (ii) fees for a
full range of services complementing its products, including implementation,
conversion training and installation services, interface services for tying the
Phoenix System to third-party software applications and customer and software
support services. License fees are paid at the beginning of the license
agreement and are recognized as revenue upon delivery, when no significant
vendor obligations remain and collection of the resulting receivables is deemed
probable. When a customer enters into a license agreement with the Company, the
license agreement includes a service agreement for the same term.
Implementation, conversion training and installation fees and interface fees are
paid at the beginning of the license agreement or when the service is performed.
Customer and software support fees are paid in advance over the life of the
license agreement. The service portion of the license agreement is recurring
revenue which is paid in advance over the term of the agreement. In the event
that a customer fails to pay its service fees, the license reverts to the
Company. Otherwise, the license is perpetual, and the service fees are recurring
revenue. Phoenix has increased the price of its products since the conclusion of
Fiscal 1995.
In the United States, license fees are based on the asset size of the bank.
Internationally, each bank is charged a base license fee and an incremental
license fee based on the number of branches for such bank. Implementation,
conversion, training and interface fees vary based on the complexity of a
particular project.
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<PAGE> 35
In the United States, the customer and software support fees are generally
15-20% of the license fee per year. Internationally, the customer and software
support fees are 20% of the base license fees and branch fees. As the asset size
of the bank increases or as branches are added, customers pay an additional
incremental license fee and increased service fees over the life of the license
agreement. The Company's VARs and agents license the Company's products at a
discount for relicensing.
SALES AND MARKETING
The Company markets its software and services directly through its sales
and marketing personnel and through VARs and agents that are involved in
providing products and services to the financial services industry. The
Company's sales and marketing department, including administrative staff,
consists of four individuals located at the Company's offices in Maitland,
Florida and three sales persons located in Oklahoma City, Oklahoma, Des Moines,
Iowa and Philadelphia, Pennsylvania. The Company currently does not have an
office outside of the United States; however, the Company plans to open an
international sales office in early 1997. In addition, the Company has limited
marketing relationships with representatives in Panama, Mexico, Columbia and
Nigeria.
The Company's direct sales personnel are experienced in the sales process
for banking software products. The Company's marketing personnel generate leads
for the sales force through a program of direct mail, networking, telemarketing,
seminars and trade shows, and contacts with independent consultants. The
marketing personnel also assist in the sales process by providing sales support
literature, PUG meetings and ongoing customer communications.
The Company's direct sales and marketing force is complemented by a growing
network of indirect distribution channels, including VARs and agents. Some VARs
and agents may also provide training, support and other services to the
end-user. In all cases, the Phoenix System software remains the sole property of
the Company, and if the Company terminates its relationship with any VAR or
agent, customers sold by that VAR or agent will to pay support fees to the
Company. The Company intends to expand its network for indirect distribution and
anticipates that the percentage of its total revenues derived from indirect
sales will increase in the future. In particular, the Company recently signed
the Unisys Agreement whereby Unisys exclusively markets the Phoenix System in
Central and South America, Mexico, the Caribbean and Bermuda. Unisys has
guaranteed a certain level of annual sales to retain its exclusive rights in
these territories. Additionally, in April 1996, the Company entered into a
strategic alliance with CSA whereby CSA will exclusively market the Phoenix
System to banks in certain countries in Africa and non-exclusively market the
Phoenix System to banks in the Republic of South Africa. CSA has guaranteed a
minimum number of sales to retain its exclusive right in the territory.
IMPLEMENTATION SERVICES
The Company provides comprehensive implementation services to customers
converting to the Phoenix System. Phoenix assigns each customer an
implementation team of experts who work with the customer through all phases of
the project, including project management, data mapping and conversion, software
installation and network certification, education and consulting. Each
implementation team can work on multiple projects at the same time. As of May
31, 1996, the Company had 29 people assigned to the implementation department.
The Company intends to hire additional people and add resources as necessary.
Project Management and Coordination. Phoenix provides extensive project
planning and coordination as part of the implementation process. Phoenix assigns
a full-time project manager to guide the customer through the installation
process and to coordinate all conversion and implementation activities.
Data Conversion. Application analysts and conversion programmers map and
convert a bank's current account data to the Phoenix System. Data conversion
activities include data mapping, program development, extensive testing,
detailed data auditing and a complete trial conversion prior to the final
implementation date.
Software Installation and Network Certification. Phoenix provides network
engineers to install software and certify the customer's network prior to
installation of the Phoenix System. This on-site service ensures that all
hardware and software is installed correctly and that the proper network
security is in place.
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Education. Phoenix offers a comprehensive education and training program
to customers. The Company offers training classes for product set-up at the
Company's headquarters in Maitland, Florida. Phoenix also provides hands-on
application training services at the customer site prior to installation.
Additional on-site training for ancillary products is available upon request.
Consulting. The Company's consultants are available to work closely with
customers. These consulting services generally consist of assisting customers
who are planning large implementations, who are engaged in operational
reorganizations or who wish to customize the Phoenix System to their unique
needs.
Fees for project management and coordination, data conversion, and software
installation and network certification are included in the cost of
implementation. Generally, fees for education and consulting are charged
separately from the Company's software products.
CUSTOMER SERVICE AND SUPPORT
The Company believes that maintaining a high level of support and service
is critical to customer satisfaction because of the critical nature of the
Phoenix System to a bank's day-to-day operations. The Company's customer service
and support personnel assist banks in the use of the Phoenix System and with the
maintenance of their network and technology infrastructures. As of May 31, 1996,
the Company had ten people in its product development group that primarily
provide customer service and support. Customer service and support personnel
provide service 24 hours a day, seven days a week, and have beepers, cellular
phones and laptop computers which enable them to answer a customer's question
from any location via a modem connection to the Company's computers. The Company
is in the process of and will continue to train personnel at Unisys and CSA and
will train personnel of additional VARs who in the future agree to market the
Phoenix System overseas so that these VARs will be able to provide certain
levels of service and support to customers overseas.
Product Support. Phoenix delivers product support services through all
traditional avenues, including telephone, Internet, electronic mail and
facsimile. Due to the unique nature of client/server computing systems, many
critical customer support activities can also be performed through high speed
telecommunication lines directly to a customer's location. Phoenix support
personnel have the ability to connect quickly to a server at a customer site and
to perform work as if they were physically at the customer's site. Using this
approach, Phoenix is able to offer effective and direct support to its customers
without the traditional expense associated with on-site visits.
Networking Support. Phoenix offers a full range of networking support
services upon request. Phoenix performs on-site network certification for all
customers during their initial software installation, and network engineers are
available for ongoing support by telephone. Networking support and on-site
consulting are available upon request for an additional fee.
Disaster Recovery Service. Phoenix also offers a disaster recovery service
that provides customers with assistance in reestablishing the Phoenix System's
processing capacity within 24 hours if a disaster occurs. The disaster recovery
service is a separate five-year contract which has an initial implementation fee
and annual service fees. This added-cost service satisfies the United States
bank regulatory obligation to maintain and annually test a disaster recovery
plan and allows Phoenix to generate additional recurring revenue from its
implemented customer base.
SupportNet. Phoenix also administers SupportNet, part of the Company's
World Wide Web site which provides an additional vehicle of support for client
banks. SupportNet is a free service which allows users with Internet access to
obtain support through features such as (i) online discussion forum, (ii) online
support documents for the Phoenix System, (iii) online software bug recording,
(iv) online enhancement requests and (v) online file transfers from the Company.
In mid-1997, the Company expects to add a feature called "knowledge base" which
will provide a first level of resolution for troubleshooting issues with the
Phoenix System.
Internet Consulting Service. Phoenix also offers Internet Consulting
Service ("ICS"), which provides both Internet and Intranet services to client
banks. ICS allows client banks to establish a presence on the
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<PAGE> 37
World Wide Web through home pages and web sites. ICS can also provide client
banks with the services to create an internal web environment, known as an
Intranet. Through client/server technology and the Company's software, the
client bank receives the benefit of an Intranet which enables the bank to
improve and increase productivity without additional cost. The ICS is an
added-cost service which allows Phoenix to generate additional recurring
revenues through monthly access maintenance fees.
PRODUCT DEVELOPMENT AND NEW PRODUCTS
Phoenix was founded in January 1993 for the purpose of developing and
marketing a new generation of integrated banking software applications that
would replace less flexible and technologically dated legacy systems. From the
Company's inception through Fiscal 1995, product development represented
approximately 40% of the Company's aggregate expenditures. Hewlett-Packard
provided developmental-stage assistance to the Company by supplying computer
hardware to the Company for development and testing of the Company's products.
Early in the Company's history, each of the U.S. Bank Partners participated in
the Company's joint application development program under which end-users were
involved in product development and testing. The joint application development
program helped reduce the development cycle by increasing the efficiency with
which design problems were identified and corrected. After the Offering, it is
anticipated that Hewlett-Packard will continue its strategic marketing alliance
with the Company and the U.S. Bank Partners will continue to contribute to plans
for new products and enhancements through the PUG.
Phoenix believes that its future success will depend in large part on its
ability to maintain and enhance its current product and service offerings and to
develop and introduce new products and features that will keep pace with
technological advances and satisfy evolving customer requirements. As of May 31,
1996, the product development group consisted of 34 individuals in addition to
10 customer service and support personnel. Phoenix develops and adjusts product
direction in response to two core trend areas: (i) developments within the
financial industry and (ii) changes within the technology arena.
Product Development Cycle. Phoenix develops plans for new products and
enhancements following extensive discussions with the PUG, which consists of all
current users of the Phoenix System. The U.S. Bank Partners continue to
participate in the development of the Company's products by their participation
in the PUG. The PUG meets at least twice a year with the Company to offer
recommendations and to help prioritize product development and enhancement
projects. In addition, the Company's product development personnel continually
develop new product ideas and enhancements. Once a product idea has been
formalized, the Company uses an internal review process to determine: (i)
whether to develop the enhancement; (ii) a development schedule; and (iii) a
budget for the enhancement.
Development Methodology. Development tools, such as 4GL programming tools,
enable rapid prototyping and have dramatically reduced development time.
Enhancements developed in a client/server environment take significantly less
time to complete than in a legacy system environment. Phoenix believes that the
efficiencies of its product architecture and development methodology allow it to
move products from planning to delivery more quickly than its legacy
system-based competitors.
Product Plans. The Company's product development efforts are currently
focused on enhancing the functionality of the Phoenix System so that it will be
attractive to a broader range of customers. Phoenix believes that it will be
able to improve its competitive position by successfully completing the
following new products, among others:
- Multi-language enhancements. Phoenix is presently completing the first
of several important system features that are designed to improve the
Company's competitive position in the international market. Phoenix has
designed a unique language independence engine that will allow the
Company's core product to be rapidly localized into any single-byte
character set language. This engine is currently being used to implement a
Spanish version of the Phoenix System which the Company plans to release
in late 1996.
- Multi-currency enhancements. Phoenix has designed and plans to implement
its multi-currency enhancement in late 1996. With the multi-currency
enhancement, the Phoenix System will support the
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<PAGE> 38
world currencies formatted in accordance with standards established by the
International Organization for Standardization.
- Secondary marketing and other enhancements. Significant enhancements for
the United States market are focused on the loan processing area, such as
investor reporting for secondary mortgage marketing including reports
required by the Federal Home Loan Mortgage Corporation and Federal
National Mortgage Association. Phoenix is also developing modules that
permit the processing of dealer loans, accounting for non-accrual loans
and the integration of data from third party sources such as credit card
processors, and brokerage accounts. Phoenix believes that such
enhancements will broaden the appeal of the Phoenix System for larger
banks.
- NT Version of the Phoenix System. The NT Version will employ Windows NT
as the network operating system and Microsoft SQL Server as the RDBMS and
will support both Windows 95 and Windows NT on the client. The Company
intends to release its NT Version during mid-1997. This enhancement will
improve the cost-competitiveness of the Phoenix System within the smaller
bank market (i.e., banks with assets under $100 million).
- Internet-banking enhancement. Phoenix plans to deliver an enhancement to
the Phoenix System that will allow the Company's customers to provide
on-line banking services through the Internet. The Company's client/server
architecture is built upon the same industry standards utilized on the
Internet. Phoenix believes that the delivery of an its Internet banking
capability will give the Phoenix System a competitive advantage over many
existing products. The Company intends to charge an additional fee for
this enhancement.
These potential new enhancements and products are subject to significant
technical risks, including delay in the development, introduction or production
of the new enhancements or products, failure to achieve market acceptance and
undetected errors or failures. See "Risk Factors -- Dependence on New Products
and Rapid Technological Change; Risk of Product Errors" and "-- Dependence on
Single Product Line."
COMPETITION
The financial institution software market is intensely competitive and
subject to rapid change. Competitors vary in size and in the scope and breadth
of the products and services offered. Phoenix encounters competition from a
number of sources, including FiServ, Inc., Bisys, Inc., Marshall & Isley Corp.,
Electronic Data Systems Corp., Jack Henry & Associates, Inc., ALLTEL Information
Services, Inc., Eastpoint Technology, Inc. and Perot Systems Corp., which all
offer core retail software systems to the financial institutions industry. See
"Risk Factors -- Intense Competition." In general, Phoenix competes on the basis
of: (i) product architecture, including distributed computing capability, access
to commercial SQL databases and ease of customization and integrations with
other applications; (ii) functionality, including the breadth and depth of
features and functions and ease of use; (iii) service and support, including the
range and quality of technical support, training, implementation and consulting
services and the capability to provide these on a global basis; (iv) management
expertise, including management's banking software experience and financial
services industry knowledge; and (v) product pricing in relation to performance.
Management believes that the Phoenix System is a market leader in the areas of
product architecture and management expertise and that the Company competes
favorably in the areas of functionality, service and support and product
pricing. However, competition could increase as a result of software industry
consolidations, including particularly the acquisition of any of the
client/server based retail banking system providers by one of the larger service
providers to the financial services industry. See "Risk
Factors -- Consolidations in the Financial Institutions Industry."
Financial institutions have two fundamental alternatives for obtaining data
processing capabilities: (i) in house applications, either those that are
developed internally or those that are purchased from third party vendors; and
(ii) outsourcing, either as a part of a total outsourcing solution or where a
third party acts as a service bureau. Until the introduction of client/server
technology, the only in-house processing systems offered were proprietary legacy
systems running on mainframe or minicomputer hardware. In the United States
market, client/server application software has only recently been made available
to banks, but it is gaining market acceptance and market share. In the
international market, there are a number of client/server
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<PAGE> 39
alternatives available, as well as traditional legacy systems. Management
believes the Company is currently the leading provider of client/server core
processing application software solutions to the banking industry.
The Company believes that none of its current competitors offers
application software that provides the level of flexibility and functionally
featured in the Company's customer relationship management, customer
profitability analysis or executive information components. The Company expects
additional competition from other established and emerging companies as the
client/server market continues to develop and expand. The Company also expects
that competition will increase as a result of consolidation in the banking
software industry. See "Risk Factors -- Intense Competition."
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
Phoenix relies primarily on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
its proprietary rights. Phoenix seeks to protect its software, documentation and
other written materials under trade secret and copyright laws, which afford only
limited protection. The Company's license agreements contain provisions which
limit the number of users, state that title remains with the Company, protect
confidentiality, permit the termination of license for misuse or abuse and
require licensees to notify the Company of infringements on the Company's
property and rights. Phoenix presently has no patents or patent applications
pending and has no trademark or copyright registrations. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. Policing unauthorized use of the Company's
products is difficult, particularly overseas, and while the Company is unable to
determine the extent to which piracy of its software products exists, software
piracy can be expected to be a persistent problem. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to as great an
extent as do the laws of the United States. Nevertheless, the Company believes
that due to the rapid pace of technological change in the information technology
and software industries, factors such as the technological and creative skills
of its employees, new product developments, frequent product enhancements and
the timeliness and quality of support services are more important to
establishing and maintaining a competitive advantage in the industry.
Phoenix does not believe that any of its products infringes the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim infringement by the Company with respect to current or future
products. The Company expects that software product developers will be
increasingly subject to infringement claims as the number of products and
competitors in the Company's industry segment grows and the functionality of
products in different industry segments overlaps. Any such claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require Phoenix to enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, operating results and
financial conditions. See "Risk Factors -- Dependence on Proprietary Technology;
Risks of Infringement."
EMPLOYEES
As of May 31, 1996, Phoenix had a total of 91 employees and contractors, of
which 44 were engaged in product development and support, 29 were in
implementation and training, six were in sales and marketing, nine were in
finance and administration and three were in executive management. All of the
Company's senior and executive officers have entered into employment agreements
with the Company. See "Management -- Employment Agreements." None of the
Company's employees is represented by a labor union. The Company has not
experienced any work stoppages and considers its relations with its employees to
be satisfactory.
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FACILITIES
Phoenix's principal administrative, sales, marketing, support and product
development facility is located in approximately 18,500 square feet of space in
a commercial building in Maitland, Florida. This facility is leased to the
Company pursuant to a main lease which terminates on January 31, 1998 and two
subleases which terminate on December 31, 1996 and March 31, 1997, respectively.
The Company is currently investigating potential facilities to relocate its main
headquarters to accommodate growth in its business. The Company believes that
suitable additional or alternative space will be available in the future on
commercially reasonable terms as needed.
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MANAGEMENT
OFFICERS AND DIRECTORS
The executive officers, directors and significant employees of the Company,
and their ages as of May 31, 1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE CLASS(1) POSITION
- --------------------------------------- --- -------- ---------------------------------------
<S> <C> <C> <C>
Executive Officers and Directors
Bahram Yusefzadeh(2).............. 50 III Chairman of the Board, Chief Executive
Officer and Director
Ralph H. Reichard................. 53 III President, Chief Operating Officer and
Director
Clay E. Scarborough............... 41 -- Senior Vice President and Chief
Financial Officer
Michael R. Newes.................. 50 -- Senior Vice President of International
Sales
Harold C. Boughton................ 44 -- Senior Vice President of National Sales
Gerald P. Nissen.................. 47 -- Senior Vice President of Technology
Services
Twanna C. Soifer.................. 47 -- Senior Vice President of Implementation
Services
Ronald E. Fenton(2)(3)............ 67 III Director
William E. Hess................... 59 I Director
James C. Holly(2)(3).............. 55 III Director
Paul A. Jones..................... 41 II Director
J. Michael Murphy................. 55 II Director
Glenn W. Sturm.................... 42 II Director
O. Jay Tomson..................... 59 I Director
Significant Employee
Ruthann M. Rackawack.............. 39 -- Treasurer
</TABLE>
- ---------------
(1) Class I term expires in 1997; Class II term expires in 1998; and Class III
term expires in 1999.
(2) Member of Compensation Committee. Mr. Holly is the Chairman of the
Compensation Committee, and Mr. Yusefzadeh is a non-voting member of the
Compensation Committee.
(3) Member of Audit Committee. Mr. Fenton is the Chairman of the Audit
Committee.
Executive Officers and Directors
Bahram Yusefzadeh. Mr. Yusefzadeh, the founder, Chairman of the Board and
Chief Executive Officer of Phoenix, has over 27 years of experience in the
banking software industry. In 1969, he co-founded Nu-Comp Systems, Inc.
("Nu-Comp"), where he developed the Liberty Banking System and served as Nu-
Comp's president and chief executive officer. Mr. Yusefzadeh became chairman of
the board of Broadway & Seymour, Inc. ("Broadway & Seymour") upon its
acquisition of Nu-Comp in June 1986 and remained in that position until November
1986. From 1986 to 1992, he worked for The Kirchman Corporation ("Kirchman"),
first as president of the product and marketing strategic division, and later as
president of both the independent banking group and the outsourcing division.
Mr. Yusefzadeh currently serves as a member of the Executive Committee and as a
non-voting member of the Compensation Committee.
Ralph H. Reichard. Mr. Reichard joined Phoenix as a consultant and advisor
in 1994. He officially joined the Company in January 1995 as President and Chief
Operating Officer. He also serves as a director and as a member of the Executive
Committee. From 1990 to 1994, Mr. Reichard was the president of the banking
business unit of Newtrend, L.P. ("Newtrend"), a software and outsourcing
services provider to banks, thrifts and credit unions. He served on Newtrend's
executive management committee and was responsible for the day-to-day operation
and management of the banking software and outsourcing business. From 1989 to
1990, Mr. Reichard served as president and chief operating officer for the
professional services division of Credit Card Software, Inc. He was president of
research and development for Kirchman from 1987 to 1989. From 1983 to 1987, he
was senior vice president and regional professional services manager for
Broadway and Seymour.
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Clay E. Scarborough. Mr. Scarborough joined the Company in March 1996 as a
Senior Vice President and Chief Financial Officer. From 1995 to 1996, he served
as chief financial officer and senior vice president of Medifax, Inc., a health
industry services company. From 1992 to 1995, he was chief financial officer and
vice president of administration for A.D.A.M. Software, Inc., a multimedia
software publishing company. In 1991, Mr. Scarborough served as vice president
of finance at Gerber Alley Healthcare, a hospital information systems software
company. From 1986 to 1991, Mr. Scarborough was employed by Digital
Communication Associates, a publicly traded data communications technology
company where he last served as director of finance. Mr. Scarborough holds a
M.B.A. from the Harvard Graduate School of Business Administration and is a
certified public accountant.
Michael R. Newes. Mr. Newes joined the Company in 1993 and serves as
Senior Vice President of International Sales. From 1990 to 1993, he was a senior
vice president for OKRA Marketing Corporation ("OKRA"), a financial institutions
data base software marketing company. He worked with Mr. Yusefzadeh at both
Nu-Comp and Kirchman and has nearly 25 years of experience in marketing, sales
and customer support for technology companies.
Harold C. Boughton. Mr. Boughton joined the Company in May 1996 as Senior
Vice President of National Sales and is responsible for all domestic sales and
marketing activities. From 1992 to 1996, Mr. Boughton worked for FiServ, Inc.
first as national sales manager for the CBS Service Bureau and later as national
sales manager for InformEnt. From 1990 to 1992 he served as regional sales
manager and national sales manager for DCR Technologies, an optical storage
technology company.
Gerald P. Nissen. Since February 1995, Mr. Nissen has served as Senior
Vice President of Technology Services for Phoenix and has responsibility for
product development, customer support, documentation, quality assurance,
networking services and disaster recovery services components of the Phoenix
System. From 1992 to 1995, Mr. Nissen worked at Newtrend in the banking business
unit where he served as senior vice president of product services and was
responsible for product development, product support and consulting services.
Twanna C. Soifer. Ms. Soifer joined the Company in 1993 as Senior Vice
President of Client Services and is responsible for training and implementation
of Phoenix System users. Prior to joining Phoenix, Ms. Soifer managed
documentation for the Horizon Product for Systematics, Inc. from 1991 to 1993.
From 1990 to 1991, she was a consultant for Prophet Management Information
Services and for OKRA. Prior to 1990, Ms. Soifer held management positions at
Kirchman and Broadway & Seymour.
Ronald E. Fenton. Mr. Fenton has been a director of Phoenix since 1993,
currently serves as a member of the Compensation Committee and Executive
Committee and is the Chairman of the Audit Committee. He has served as the
president, the chief executive officer and a director of BancSecurity
Corporation since 1982 and the president, chief executive officer and director
of Security Bank since 1976. Mr. Fenton is the chairman of the board of Story
County Bank & Trust, Story City, Iowa and is the chairman of the board of
Security Bank Jasper-Poweshiek, Kellogg, Iowa. He is also a director, executive
committee member and former chairman of the board of Shazam, Inc. ("Shazam"), a
regional electronic funds transfer network.
William E. Hess. Mr. Hess has been a director of the Company since 1993.
Since 1984, he has been the president of Iowa Savings Bank, and since 1981, he
has been chairman of the board of Sac City State Bank. He is also a director of
Audubon State Bank, Iowa Savings Bank, Perry State Bank, Raccoon Valley State
Bank and Home State Bank. Mr. Hess is a past director of Shazam, a past director
of the Iowa Bankers Mortgage Association and Iowa Bankers Association and a past
member of the member of the board of directors of the Iowa Department of
Banking.
James C. Holly. Mr. Holly has been a director of Phoenix since 1993,
currently serves as a member of the Audit Committee and the Executive Committee
and is Chairman of the Compensation Committee. For the past 19 years, he has
served as president, chief executive officer and director of Bank of the Sierra.
He is also the current president of the California Independent Bankers
Association. Mr. Holly holds an M.B.A. from the University of Wisconsin and was
a commissioned officer in the United States Army (Armor).
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<PAGE> 43
Paul A. Jones. Mr. Jones has been director of the Company since 1995. He
is the president, chief executive officer and a director of Glenview State Bank
and was the president of such bank from 1986 to 1996. Mr. Jones is a director of
Cummins-American Corp. and Cummins-Allison Corp.
J. Michael Murphy. Mr. Murphy has been a director of Phoenix since 1993.
Since 1977, he has served as president of Drum Service Co. of Florida, a large
steel drum reconditioning and recycling company. In 1995, he became the chairman
of the board of Lochaven Federal Savings and Loan Association, Orlando Florida.
He is the past president of the National Trade Association of Drum
Reconditioners and was chairman of the board of the International Federation of
Drum Reconditioners from 1990 to 1993. Mr. Murphy holds a M.B.A. from the
Harvard Graduate School of Business Administration.
Glenn W. Sturm. Mr. Sturm has been a director of the Company since 1996.
Since 1992, Mr. Sturm has been a partner in the law firm of Nelson Mullins Riley
& Scarborough, L.L.P. where he serves as corporate chairman. Prior to joining
Nelson Mullins Riley & Scarborough, L.L.P. Mr. Sturm was a shareholder of the
law firm of Trotter, Smith & Jacobs P.A.
O. Jay Tomson. Mr. Tomson has been a director of the Company since 1993
and was Chairman of the Board of the Company from August 1993 to February 1994.
Since 1974, he has served as chairman and chief executive officer of First
Citizens National Bank, and since 1977, he has been chairman of the board of
First Citizens Financial Corporation. He is a director of Seilon, Inc., a
reporting company under the Exchange Act. Mr. Tomson was a member of the Federal
Reserve Bank of Chicago from 1980 to 1986. He is a former director and president
of Shazam.
Significant Employee
Ruthann M. Rackawack. Ms. Rackawack has been the controller and treasurer
of the Company since 1994. From 1989 to 1994, she worked for Transportation
Consulting Group, Inc. ("TCG"), where she handled compliance audits and
established a fully automated job cost system. Ms. Rackawack was promoted from
business manager to controller and an associate of TCG in 1993.
DIRECTOR COMPENSATION
In February 1994, the Board of Directors adopted Incentive Stock Option
Plan Number 3 and Incentive Stock Option Plan Number 12 (collectively, the
"Director Plans"). Under each of the Director Plans, 83,632 shares of Common
Stock were authorized to be granted to directors of the Company. In February
1994, the Board of Directors granted options to purchase 18,585 shares of Common
Stock as compensation for Fiscal 1993 and Fiscal 1994, which options vested on
the date of grant, to each of the Company's nine directors or affiliates of
directors. The exercise price for options granted under the Director Plans was
$1.08 per share. During Fiscal 1994, two directors resigned from the Board of
Directors, and options to purchase 27,874 shares of Common Stock held by them
were reallocated to the seven remaining directors or affiliates of directors.
Six of the directors or affiliates of directors received options to purchase
3,982 shares of Common Stock at an exercise price of $4.30 per share, and Mr.
Yusefzadeh received options to purchase 3,982 shares of Common Stock at an
exercise price of $4.74 per share. Options for all 167,264 shares authorized
under the Director Plans have been granted, and all of the options expire on the
earlier of the last business day prior to an initial public offering or five
years from the date of grant. Pursuant to the March 1995 Plan (as defined
herein) and as compensation for serving as a director in Fiscal 1994, in March
1995, each director or his affiliate, except for Mr. Yusefzadeh, received
options to purchase 9,292 shares of Common Stock at an exercise price of $4.30
per share. Mr. Yusefzadeh received options to purchase 9,292 shares of Common
Stock at an exercise price of $4.74 per share. The options vested upon grant and
expire in the year 2005. All of such options, except for Mr. Yusefzadeh's
options which were granted at an exercise price of 110% of the fair market value
of the Common Stock, were issued at the fair market value of the Common Stock as
determined by the Board of Directors based on the Company's financial condition
and prospects at such time and recent sales of the securities of the Company. In
addition, the Company has paid all travel expenses and reimbursed the directors
for their out-of-pocket expenses related to their services as directors.
Directors do not receive cash fees for their services as directors of the
Company.
41
<PAGE> 44
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation earned
by the Chief Executive Officer and the other executive officers whose salary and
bonus for the calendar year ended December 31, 1995 were in excess of $100,000
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company and its subsidiary for that year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------
COMPENSATION SECURITIES
------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(#) COMPENSATION
- ----------------------------------------- ---- -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Bahram Yusefzadeh........................ 1995 $194,795 $19,000(1) 78,985 $7,538(2)
Chairman of the Board and Chief
Executive Officer
Ralph H. Reichard........................ 1995 140,000 -- 148,679 --
President and Chief Operating Officer
Michael R. Newes......................... 1995 107,436 40,474(3) 18,584 --
Senior Vice President of International
Sales
Gerald P. Nissen......................... 1995 100,833 -- 43,094 --
Senior Vice President of Technology
Services
</TABLE>
- ---------------
(1) Represents an incentive bonus earned in Fiscal 1994 but paid in Fiscal 1995.
(2) Includes $2,887 for long-term disability premiums paid by the Company,
$1,824 for term life insurance premiums paid by the Company for the Named
Executive Officer's beneficiaries and $2,827 for health insurance premiums
paid by the Company for the Named Executive Officer's dependents.
(3) Reflects an incentive-based commission of $36,474 paid for Fiscal 1995 and a
bonus of $4,000 earned in Fiscal 1994 but paid in Fiscal 1995.
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<PAGE> 45
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers in Fiscal 1995. No stock
appreciation rights were granted during such year.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANT REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(2)
OPTIONS IN BASE PRICE EXPIRATION -------------------
GRANTED FISCAL YEAR $/SH(1) DATE 5% ($) 10% ($)
---------- ----------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh.............. 9,292(3) 1.87% $ 4.74 2005 $ 21,036 $ 59,589
69,693(4) 14.05 4.74 2005 157,774 446,935
Ralph H. Reichard.............. 9,292(3) 1.87 4.30 2005 25,124 63,677
23,231(5) 4.68 4.30 1995 -- --
58,078(4) 11.71 4.30 2005 157,034 398,003
58,078(6) 11.71 4.30 2005 157,034 398,003
Michael R. Newes............... 9,292(3) 1.87 4.30 2005 25,124 63,677
9,292(4) 1.87 4.30 2005 25,124 63,677
Gerald P. Nissen............... 116(7) * 4.30 2005 314 795
2,323(5) * 4.30 1995 -- --
11,616(4) 2.34 4.30 2005 31,408 79,603
29,039(8) 5.86 4.30 2005 78,517 199,002
</TABLE>
- ---------------
* Indicates amount less than 1%.
(1) All options, except for those granted to Mr. Yusefzadeh, were granted at the
fair market value on the date of grant as determined by the Board of
Directors. For Mr. Yusefzadeh, options were granted at 110% of the fair
market value on the date of grant as determined by the Board of Directors.
(2) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
term will be at the assumed 5% and 10% levels or at any other defined
level. Unless the market price of the Common Stock appreciates over the
option term, no value will be realized from the option grants made to the
executive officers.
(3) Represents director stock options that are fully vested.
(4) Represents incentive stock options that vest ratably on each of February 1,
1996, 1997, 1998 and 1999.
(5) Represents options granted on June 22, 1995 which vested and were exercised
in 1995. See "-- Aggregate Option Exercises in Last Fiscal Year and Option
Values as of December 31, 1995."
(6) These options were granted as an employment inducement. 23,231 shares vested
on each of January 1, 1995 and 1996. The remaining 11,616 shares will vest
on December 31, 1996.
(7) Represents options granted on July 7, 1995 which vest on July 7, 1996 and
expire on July 6, 2005.
(8) These options were granted as an employment inducement and vest ratably on
each of March 18, 1995, 1996, 1997 and 1998.
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<PAGE> 46
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AS OF DECEMBER
31, 1995
The following table sets forth information concerning option exercises and
option holdings for Fiscal 1995 with respect to each of the Named Executive
Officers. No stock appreciation rights were exercised during such year or were
outstanding at the end of that year.
<TABLE>
<CAPTION>
NUMBER NUMBER OF VALUE OF
OF SECURITIES UNDERLYING UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY
ACQUIRED AT DEC. 31, 1995 OPTIONS AT DEC. 31, 1995(1)
ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh............. -- $ -- 9,292 69,693 $ 67,460 $ 505,971
Ralph H. Reichard............. 23,231 100,000 32,523 92,925 250,427 715,515
Michael R. Newes.............. -- -- 55,089 9,292 424,193 71,548
Gerald P. Nissen.............. 2,323 10,000 7,260 33,511 55,900 258,033
</TABLE>
- ---------------
(1) There was no public market for the Common Stock at December 31, 1995.
Accordingly, these values have been calculated based on an assumed initial
offering price of $12.00, less the applicable exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors was formed on March
18, 1995. The members of the Compensation Committee are Messrs. Fenton and
Holly, and Mr. Yusefzadeh is a non-voting member. Mr. Holly is chairman of the
Compensation Committee. Neither Mr. Fenton nor Mr. Holly has been an officer or
employee of the Company at any time.
Transactions with Ronald E. Fenton and Affiliates. Mr. Ronald E. Fenton,
the president, chief executive officer and a director of BancSecurity
Corporation ("BancSecurity"), is a director of the Company, Chairman of the
Audit Committee and a member of the Compensation Committee and Executive
Committee. From November 1994 through January 1995, the Company sold a total of
628,610 shares of Class E Common Stock to existing shareholders, employees,
officers and directors at a price of $4.30 per share pursuant to a rights
offering and certain preemptive rights (the "Rights Offering").
Pursuant to the Rights Offering, BancSecurity purchased 35,404 shares of
Class E Common Stock at a price of $4.30 per share in December 1994. In October
1993 and pursuant to the Company's Private Placement Memorandum, dated August
31, 1993 (the "August PPM"), BancSecurity purchased 92,924 shares of Class E
Common Stock at a price of $1.08 per share. In April 1993 and pursuant to the
Company's Private Placement Memorandum, dated April 5, 1993 (the "April PPM"),
BancSecurity purchased 92,924 shares of Class B Common Stock at a price of $1.08
per share.
In July 1995, Mr. Fenton exercised options to purchase 9,292 shares of
Class E Common Stock at a price of $4.30 per share. Pursuant to the Rights
Offering, Mr. Fenton purchased 5,929 shares of Class E Common Stock at a price
of $4.30 per share in December 1994. In November 1994, Mr. Fenton exercised
options to purchase 9,292 shares of Class E Common Stock at a price of $1.08 per
share and options to purchase 3,982 shares of Class E Common Stock at a price of
$4.30 per share. In September 1994, Mr. Fenton exercised options to purchase
9,293 shares of Class E Common Stock at a price of $1.08 per share. Pursuant to
the April PPM, Mr. Fenton purchased 4,646 shares of Class B Common Stock at a
price of $1.08 per share. As of April 30, 1996, Mr. Fenton did not own any
options to purchase capital stock of the Company.
The Company believes, based on available information regarding the Company
and its financial condition and prospects and recent sales of the Company
securities, that all of the shares sold and options granted to BancSecurity and
Mr. Fenton were sold or granted at a price equal to the fair market value per
share of the stock on the date of the sale or grant.
44
<PAGE> 47
In February 1996, the Company licensed the Phoenix System to BancSecurity.
Pursuant to the U.S. Bank Partners' Discount Program (as defined hereafter),
BancSecurity was given a discount on the license and service fees with an
aggregate value of approximately $299,000. See "Certain Transactions."
In May 1994, the Company borrowed $250,000 from BancSecurity, Iowa Savings
Bank, First Citizens National Bank and Bank of the Sierra for the purpose of
purchasing furniture and equipment. The loan matured in May 1995, was secured by
such furniture and equipment and bore interest at a rate of 9.0% per annum. The
Company repaid the note in full in May 1995.
Transactions with James C. Holly and Affiliates. Mr. James C. Holly, the
president, chief executive officer and director of Bank of the Sierra, is a
director of the Company, Chairman of the Compensation Committee and a member of
the Audit Committee and Executive Committee. Pursuant to the Rights Offering,
Bank of the Sierra purchased 38,044 shares of Class E Common Stock at a price of
$4.30 per share. In November 1994, Bank of the Sierra exercised options to
purchase 18,585 shares of Class E Common Stock at an exercise price of $1.08 per
share and options to purchase 3,982 shares of Class E Common Stock at an
exercise price of $4.30 per share. These options were transferred from Mr.
Holly, who was granted these options for his service as a director of the
Company during Fiscal 1993 and Fiscal 1994. Pursuant to the August PPM, Bank of
the Sierra purchased 23,231 shares of Class C Common Stock at a price of $2.15
per share and 46,462 shares of Class E Common Stock at a price of $1.08 per
share. Pursuant to the April PPM, Bank of the Sierra purchased 46,462 shares of
Class B Common Stock at a price of $1.08 per share. As of May 31, 1996, Bank of
the Sierra held outstanding options to purchase 9,292 shares of Class E Common
Stock at an exercise price of $4.30 per share. These options were granted to Mr.
Holly for his service as a director of the Company during Fiscal 1995. See
"-- Stock Option Plans."
Pursuant to the Rights Offering, Mr. Holly purchased 1,770 shares of Class
E Common Stock at a price of $4.30 per share in December, 1994. In March 1994,
Mr. Holly purchased, on his own behalf, 9,292 shares of Class E Common Stock at
a price of $1.08 per share. As of April 30, 1996, Mr. Holly did not own any
options to purchase capital stock of the Company.
The Company believes, based on available information regarding the Company
and its financial condition and prospects and recent sales of the Company's
securities, that all of the shares sold and options granted to Bank of the
Sierra and Mr. Holly were sold or granted at a price equal to the fair market
value per share of the stock on the date of sale or grant.
In March 1994, the Company licensed the Phoenix System to Bank of the
Sierra. Pursuant to the U.S. Bank Partners' Discount Program and because Bank of
the Sierra was the second commercial installation site for the Phoenix System,
Bank of the Sierra was given a discount on the customer and software support
fees with an aggregate value of approximately $354,000. See "Certain
Transactions."
Transactions with Bahram Yusefzadeh. Pursuant to the Rights Offering, in
January 1995 the Company issued the Yusefzadeh Family Limited Partnership, of
which Mr. Yusefzadeh is the general partner (the "Yusefzadeh Partnership"),
80,091 shares of Class E Common Stock at a price of $4.30 per share. In
exchange, the Yusefzadeh Partnership gave the Company a promissory note for
$344,760 which bears interest at a rate of 7.92% per year and is unsecured.
Pursuant to the Rights Offering, in December 1994 the Company issued the
Yusefzadeh Partnership 216,724 shares of Class E Common Stock at a price of
$4.30 per share. In exchange, the Yusefzadeh Partnership gave the Company a
promissory note for $932,910 which bears interest at a rate of 7.92% per year
and is unsecured. In November 1994, Mr. Yusefzadeh exercised options granted to
him as a director of the Company to purchase 18,585 shares of Class E Common
Stock at an exercise price of $1.18 per share and 3,982 shares of Class E Common
Stock at an exercise price of $4.74. The Company issued Mr. Yusefzadeh 22,567
shares of Class E Common Stock in exchange for a promissory note for $40,854
from Mr. Yusefzadeh which bears interest at a rate of 7.92% per year and is
unsecured. The principal and interest on the notes are due and payable upon the
consummation of the Offering. As of May 31, 1996, Mr. Yusefzadeh and the
Yusefzadeh Partnership owed $1,421,188 and $45,824 under the notes,
respectively. Mr. Yusefzadeh intends to repay all amounts due under the
promissory notes with the proceeds realized by him from this Offering.
45
<PAGE> 48
As part of the Company's initial capitalization in April 1993, Mr.
Yusefzadeh purchased 1,115,088 shares of Class A Common Stock. The Company
recorded a compensation expense of $6,000. In addition, Mr. Yusefzadeh has
outstanding options to acquire 78,985 shares of Common Stock at an exercise
price of $4.74 per share. See "-- Executive Compensation" and "-- Stock Option
Plans." In Fiscal 1993, the Company paid Mr. Yusefzadeh a salary of $20,000. In
Fiscal 1994, the Company paid Mr. Yusefzadeh a salary of $160,000 and a bonus of
$30,000. The bonus was a reimbursement of certain costs incurred by Mr.
Yusefzadeh with respect to the Company.
The Company believes, based on available information regarding the Company
and its financial condition and prospects and recent sales of the Company's
securities, that all of the shares sold and options granted to Mr. Yusefzadeh
and the Yusefzadeh Partnership were sold or granted at a price equal to or
greater than the fair market value per share of the stock on the date of sale or
grant. Mr. Yusefzadeh abstained from voting on the matters in which he had a
direct financial interest.
In May 1996, Mr. Yusefzadeh unconditionally guaranteed the Company's
obligations under the Line of Credit the Term Loan. See "Use of Proceeds." In
Fiscal 1994 and Fiscal 1995, the Company used Mr. Yusefzadeh's personal American
Express card for purchasing equipment and for other general business expenses,
including travel expenses for directors and office supplies. The Company paid
approximately $205,000 in Fiscal 1994 and approximately $175,000 in Fiscal 1995
to American Express directly in full reimbursement for the purchases by Mr.
Yusefzadeh. In January 1994, Mr. Yusefzadeh loaned an aggregate of $35,203 to
the Company to finance the Company's purchase of certain office equipment. The
loan is secured by such office equipment and is payable on demand with interest
payable at 12% per annum. As of May 31, 1996, the Company owed $45,073 under the
loan. The Company intends to repay this loan with the net proceeds realized by
the Company from this Offering. In addition, Mr. Yusefzadeh has personally
guaranteed the office lease for the Company's headquarters in Maitland, Florida
and certain other leases for general office equipment.
EMPLOYMENT AGREEMENTS
Yusefzadeh Agreement. On December 28, 1995, Mr. Yusefzadeh and the Company
entered into an employment agreement (the "Yusefzadeh Agreement") pursuant to
which he will serve as the Chief Executive Officer of the Company. The
Yusefzadeh Agreement provides that Mr. Yusefzadeh will receive a base salary of
not less than $200,000 per year, an annual bonus prior to the Offering and a
quarterly bonus after the Offering as determined by the Compensation Committee
based upon achievement of targeted levels of performance and such other criteria
as the Compensation Committee shall establish from time to time, and an
additional annual bonus as determined by the Compensation Committee. In
addition, he may participate in the Phoenix International Limited, Inc. Stock
Option Plan, dated October 21, 1995 (the "October 1995 Plan"), and will receive
health insurance for himself and his dependents, long-term disability insurance,
civic and social club dues, use of an automobile owned or leased by the Company
and other benefits of similarly situated employees. Mr. Yusefzadeh's base salary
may be increased upon a periodic review by the Board of Directors or a committee
thereof. The Yusefzadeh Agreement has a term of three years and renews daily
until either party fixes the remaining term at three years by giving written
notice. The Company can terminate Mr. Yusefzadeh's employment upon his death or
disability or for cause, and Mr. Yusefzadeh can terminate his employment for any
reason within a 90-day period beginning on the 30th day after any occurrence of
a change in control or within a 90-day period beginning on the one-year
anniversary of the occurrence of any change in control. If Mr. Yusefzadeh's
employment is terminated by the Company in breach of the Yusefzadeh Agreement or
if Mr. Yusefzadeh terminates the Yusefzadeh Agreement for any reason after a
change in control, the Company must pay Mr. Yusefzadeh one-twelfth of his annual
base salary and bonus for each of 36 consecutive 30-day periods following the
termination and must continue Mr. Yusefzadeh's life and health insurance until
he reaches age 65, and Mr. Yusefzadeh's outstanding options to purchase Common
Stock would vest and become immediately exercisable.
In the Yusefzadeh Agreement, the Company also granted Mr. Yusefzadeh, with
respect to his shares of Common Stock, piggyback and, after any termination of
employment or if he is no longer a director of the Company, demand registration
rights. See "Shares Eligible for Future Sale." Under the Yusefzadeh
46
<PAGE> 49
Agreement, Mr. Yusefzadeh agrees to maintain the confidentiality of the
Company's trade secrets. Mr. Yusefzadeh agrees that for a period of two years,
if he is terminated for cause, not to compete with or solicit employees or
customers of the Company within the United States.
Reichard Agreement. On December 28, 1995, Mr. Reichard and the Company
entered into an employment agreement (the "Reichard Agreement") pursuant to
which he will serve as the Chief Operating Officer and President of the Company.
The Reichard Agreement provides that Mr. Reichard will receive a base salary of
not less than $140,000 per year, an annual bonus prior to the Offering and a
quarterly bonus after the Offering as determined by the Compensation Committee
based upon achievement of targeted levels of performance and such other criteria
as the Compensation Committee shall establish from time to time, and an
additional annual bonus as determined by the Compensation Committee. In
addition, he may participate in the October 1995 Plan and will receive health
insurance for himself and his dependents, civic and social club dues, use of an
automobile owned or leased by the Company and other benefits of similarly
situated employees. Mr. Reichard's base salary may be increased upon a periodic
review by the Board of Directors or a committee thereof. The Reichard Agreement
has a term of three years and renews daily until either party fixes the
remaining term at three years by giving written notice. The Company can
terminate Mr. Reichard's employment upon his death or disability or for cause,
and Mr. Reichard can terminate his employment for any reason within a 90-day
period beginning on the 30th day after any occurrence of a change in control or
within a 90-day period beginning on the one-year anniversary of the occurrence
of any change in control. If Mr. Reichard's employment is terminated by the
Company in breach of the Reichard Agreement or if Mr. Reichard terminates the
Reichard Agreement for any reason after a change in control, the Company must
pay Mr. Reichard one-twelfth of his annual base salary and bonus for each of 36
consecutive 30-day periods following the termination and must continue Mr.
Reichard's life and health insurance until he reaches age 65, and Mr. Reichard's
outstanding options to purchase Common Stock would vest and become immediately
exercisable. Under the Reichard Agreement, Mr. Reichard agrees to maintain the
confidentiality of the Company's trade secrets. Mr. Reichard also agrees for a
period of two years, if he is terminated for cause, not to compete with or
solicit employees or customers of the Company within the United States.
Other Employment Agreements. In April and May of 1996, the Company entered
into employment agreements with each of Messrs. Newes, Nissen and Scarborough
and Ms. Soifer, and the Company intends to enter into an employment agreement
with Mr. Boughton (collectively, the "Other Agreements"). The Other Agreements
provide for a minimum base salary per year, an annual bonus prior to the
Offering and a quarterly bonus after the Offering as determined by the Chief
Executive Officer and President based upon achievement of targeted levels of
performance and such other criteria as the they shall establish from time to
time, and an additional annual bonus as determined by them. The agreement for
Mr. Newes contains, and for Mr. Boughton will contain, provisions for commission
compensation paid in accordance with a commission plan established each year by
the Chief Executive Officer and President. In addition, each employee may
participate in the October 1995 Plan and will receive insurance and other
benefits of similarly situated employees. Each of the Other Agreements, except
for Mr. Scarborough's, have a term of one year and renews daily until either
party fixes the remaining term at one year by giving written notice. The term of
Mr. Scarborough's agreement is 18 months. The Company can terminate each of the
employees upon death or disability or for cause, and the employee can terminate
his employment for any reason within one year of a change in control with
adequate justification. If the employee's employment is terminated by the
Company for any reason within one year after a change in control or if the
employee terminates the agreement with adequate justification, the Company must
pay the employee one-twelfth of his base salary and bonus for each of 12
consecutive 30-day periods following the termination and must continue the
employee's life and health insurance until he reaches age 65, and the employee's
outstanding options to purchase Common Stock would vest and become immediately
exercisable. For Mr. Scarborough, the Company would pay his base salary and
bonus for each of 18 consecutive 30-day periods following the termination. Under
the Other Agreements, each employee agrees to maintain the confidentiality of
the Company's trade secrets. The employee also agrees for a period of one year,
if he is terminated for cause or resigns without adequate justification, not to
compete with or solicit employees or customers of the Company within the United
States. Mr. Scarborough's non-compete and non-solicitation period is 18 months.
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<PAGE> 50
STOCK OPTION PLANS
From February 1994 through November 1995, the Board of Directors adopted 13
stock option plans (the "Stock Option Plans") which permitted options to be
granted to various classes of employees, officers, directors and service
providers of the Company. As of May 31, 1996, options to purchase a total of
580,545 shares of Common Stock were outstanding with exercise prices ranging
from $1.08 to $6.46. As of the Closing Date, options to acquire 126,211 shares
of Common Stock will be exercised or expire in accordance with their terms.
Accordingly, at the Closing Date, the Company will have outstanding options to
purchase 454,334 shares of Common Stock at prices ranging from $4.31 to $6.46
per share and authorized but unissued options to purchase 282,544 shares of
Common Stock. At such time, no options will be outstanding under plans 1 through
8 and plans 10 through 12. The Board of Directors intends to terminate all such
plans after the Closing Date. Therefore, no information regarding those plans is
set forth below.
March 1995 Plan. In March 1995, the Board of Directors adopted, and the
Company's shareholders approved, the Phoenix International Ltd., Inc. 1995 Stock
Option Plan (the "March 1995 Plan"). As of May 31, 1996, options to acquire
495,333 shares had been issued under the March 1995 Plan, and options to acquire
392,827 shares were outstanding. All of such options were issued at the fair
market value of the Common Stock as determined by the Board of Directors based
on the Company's financial condition and prospects at such time and recent sales
of the securities of the Company. Effective May 24, 1996, the Board of Directors
and shareholders approved an amendment to the March 1995 Plan which reduced the
number of authorized shares to 520,000, and the Board of Directors will not
issue any additional options under the March 1995 Plan.
October 1995 Plan. Effective October 21, 1995, the Board of Directors
adopted and the Company's shareholders approved the October 1995 Plan, the
primary focus of which is to provide an incentive to key employees who are in a
position to serve the best interests of the Company. Under the October 1995
Plan, a stock option committee comprised of two independent directors has
discretion to award either incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986 which permits the deferral
of taxable income related to the exercise of such options, or nonqualified
options not entitled to such deferral. Subject to the provisions of the October
1995 Plan, the stock option committee, in its discretion, selects the recipients
of awards and the number of shares or options granted thereunder and determines
other matters such as (i) vesting schedules, (ii) the exercise price of options
(which cannot be less than 100% of the fair market value of the Common Stock on
the date of grant for ISOs) and (iii) the duration of awards (which cannot
exceed ten years from the date of grant or modification of the option). During
May, 1996 the Board of Directors, and during June the shareholders, approved an
amendment to the October 1995 Plan which increased the number of authorized
shares to 250,000. As of May 31, 1996, options to acquire 61,507 options were
outstanding under the October 1995 Plan. All of such options were issued at the
fair market value of the Common Stock as determined by the Board of Directors
based on the Company's financial condition and prospects at such time and recent
sales of the securities of the Company.
1996 Director Stock Option Plan. In June 1996, the Company adopted the
Phoenix International Ltd., Inc. 1996 Director Stock Option Plan (the "1996
Director Plan"). The 1996 Director Plan provides for the granting of
non-qualified stock options to the directors of the Company. The 1996 Director
Plan authorizes the issuance of up to 99,000 shares of Common Stock pursuant to
options having an exercise price equal to the fair market value of the Common
Stock on the date the options are granted. The 1996 Director Plan contains
provisions providing for adjustment of the number of shares available for option
and subject to unexercised options in the event of stock splits, dividends
payable in Common Stock, business combinations or certain other events affecting
the Common Stock of the Company. The Board of Directors administers the 1996
Director Plan subject to certain limitations.
The 1996 Director Plan provides for the grant of options to purchase 2,000
shares to (i) each director of the Company on the date of such director's
election to the Board of Directors and on the anniversary date of such election
and (ii) each non-employee director of the Company on the date of such
director's election to a committee of the Board of Directors at an exercise
price equal to the fair market value of the Common Stock on the date the options
are granted. Each option shall be exercisable in full beginning six months after
the date
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<PAGE> 51
of grant and shall expire five years after the date of grant, unless cancelled
sooner as a result of termination of service or death, or unless such option is
fully exercised prior to the end of the option period. As of June 12, 1996,
options to acquire 18,000 shares of Common Stock were outstanding under the 1996
Director Plan.
PROFIT SHARING PLAN
The Company maintains a tax-qualified profit sharing plan for eligible
employees that includes a 401(k) component (the "Profit Sharing Plan"). All
full-time employees are eligible to participate in the Profit Sharing Plan upon
the attainment of age 21 and completion of six months of service. Under the
Profit Sharing Plan, an employee may elect to defer a portion of his
compensation by reducing his compensation by up to 20% and directing the Company
to contribute such reduction to the Profit Sharing Plan. Each year, the Company
will determine whether to make a discretionary matching contribution equal to a
percentage, determined by the Company, not to exceed 100% of the employee's
deferred compensation contribution. An employee must meet certain employment
requirements to be eligible to participate in any such matching contribution
made by the Company. The Company did not make any matching contributions in
Fiscal 1995. All contributions to the Profit Sharing Plan by or on behalf of
employees are subject to annual limits prescribed by the Internal Revenue Code
of 1986.
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<PAGE> 52
CERTAIN TRANSACTIONS
In June 1995, Mr. Reichard exercised options to purchase 23,231 shares of
Class E Common Stock at an exercise price of $4.30 per share, which is believed
by the Company to equal the fair market value per share of the Class E Common
Stock on the date of grant of the options. In addition, Mr. Reichard has
outstanding options to purchase 125,448 shares of Common Stock. See
"Management -- Executive Compensation" and "-- Stock Option Plans." In December
1995, the Company and Mr. Reichard entered into an employment agreement. See
"Management -- Employment Agreements -- Reichard Agreement."
In 1993, the Company granted 116,155 shares of restricted stock to William
Toole. Additionally, in 1993, the Company granted 23,231 shares of restricted
stock to Michael Newes, and in 1994, Mr. Yusefzadeh transferred to Mr. Newes
92,924 shares of restricted stock. As of the Closing Date, the restricted stock
will no longer be subject to any risk of forfeiture. In 1996, Messrs. Toole and
Newes will be paid a salary, benefits and a bonus and/or commission (subject to
certain performance criteria).
As an incentive to provide initial capital for the Company pursuant to the
April PPM and the August PPM, the Company agreed to give certain pricing
discounts to the U.S. Bank Partners on their initial contract with the Company
if they licensed the Phoenix System for use in their banks (the "U.S. Bank
Partners' Discount Program"). Pursuant to the U.S. Bank Partners' Discount
Program, the Company agreed to provide two types of discounts: (i) a credit
against the initial license fee equal to the amount of each U.S. Bank Partner's
investment in Class B Common Stock and Class C Common Stock and (ii) a 15%
credit on the first five years of customer and software support fees. The
Company has offered discounts on license fees totalling $855,000 in connection
with U.S. Bank Partner's investment in Class B Common Stock and Class C Common
Stock since its inception. As of May 31, 1996, the U.S. Bank Partners had used
such discounts totaling $450,000, all in Fiscal 1995, and the Company had signed
contracts in backlog with the U.S. Bank Partners with discounts totalling
$300,000. See Note 6 of Notes to Consolidated Financial Statements. The
following are a list of transactions where discounts have been given pursuant to
the U.S. Bank Partners' Discount Program. See "Management -- Compensation
Committee Interlocks and Insider Participation" for a discussion of the
transactions with BancSecurity and Bank of the Sierra. Two additional U.S. Bank
Partners' are eligible for the U.S. Bank Partners' Discount Program.
In February 1994, the Company licensed the Phoenix System to First Citizens
Financial Corporation ("FCFC"). Pursuant to the U.S. Bank Partners' Discount
Program and because FCFC agreed for one of its banks to serve as the first
commercial installation site of the Phoenix System, FCFC was given pricing
concessions on license fees, implementation fees and customer and software
support fees with an aggregate value of approximately $477,000. Mr. O. Jay
Tomson, the chairman of the board and chief executive officer of First Citizens
National Bank, is a director of the Company. In January 1995, the Company
licensed the Phoenix System to Glenview State Bank. Pursuant to the U.S. Bank
Partners' Discount Program, Glenview State Bank was given a discount on the
initial license fee with an aggregate value of approximately $164,000. Mr. Paul
A. Jones, the president of Glenview State Bank, is a director of the Company. In
December 1995, the Company licensed the Phoenix System to Iowa Savings Bank.
Pursuant to the U.S. Bank Partners' Discount Program, Iowa Savings Bank was
given a discount on the initial license fee with an aggregate value of
approximately $123,000. Mr. William Hess, the president of Iowa Savings Bank, is
a director of the Company.
The transactions under the U.S. Bank Partners' Discount Program are on
terms more favorable to officers, directors and principal shareholders of the
Company than they could obtain in a transaction with an unaffiliated third
party. Each of the transactions under the U.S. Bank Partners' Discount Program
was approved by a majority of the independent directors of the Company, and any
additional contracts under that program will be approved by a majority of the
independent directors of the Company. All future transactions, except for
contracts pursuant to the U.S. Bank Partners' Discount Program, between the
Company and its officers, directors, principal shareholders and their affiliates
will be approved by a majority of independent directors of the Company and will
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
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<PAGE> 53
PRINCIPAL AND SELLING SHAREHOLDERS
The table below sets forth certain information regarding beneficial
ownership of the Common Stock, as of May 31, 1996, and as adjusted to reflect
the sale of shares offered hereby by (i) each person known to the Company to own
beneficially more than 5% of the Common Stock, (ii) each director and Named
Executive Officer, (iii) all directors and executive officers of the Company as
a group and (iv) each Selling Shareholder. Unless otherwise indicated, the
persons listed below have sole voting and investment power over the shares of
Common Stock indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) OFFERING(1)(2)
------------------- SHARES -------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------------------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Bahram Yusefzadeh(3)............................. 1,740,188 56.8% 167,500 1,075,992 28.8%
Yusefzadeh Family Limited Partnership(4)......... 361,861 11.9 125,000 236,861 6.4
Ronald E. Fenton(5).............................. 246,030 8.1 -- 246,030 6.6
BancSecurity Corporation(6)...................... 221,252 7.3 -- 221,252 6.0
Michael R. Newes(7).............................. 199,586 6.5 55,000 144,586 3.8
James C. Holly(8)................................ 197,120 6.5 -- 197,120 5.3
Bank of the Sierra(9)............................ 186,058 6.1 -- 186,058 5.0
William E. Hess(10).............................. 151,004 5.0 -- 151,004 4.1
William M. Toole(11)............................. 127,612 4.2 60,000 67,612 1.8
Ralph H. Reichard(12)............................ 122,829 4.0 -- 122,829 3.3
O. Jay Tomson(13)................................ 117,813 3.9 -- 117,813 3.2
Community Grain Corporation(14).................. 102,555 3.4 -- 102,555 2.8
Paul A. Jones(15)................................ 67,943 2.2 -- 67,943 1.8
First Citizens Financial Corp.(16)............... 46,462 1.5 -- 46,462 1.3
Kanabec Credit Company(17)....................... 46,462 1.5 -- 46,462 1.3
W. J. Young & Co.(18)............................ 46,462 1.5 -- 46,462 1.3
Robert L. Ownby, Trustee(19)..................... 34,847 1.1 -- 34,847 *
Thomas J. Ownby(20).............................. 34,847 1.1 -- 34,847 *
J. Michael Murphy(21)............................ 31,859 1.0 -- 31,859 *
Gerald P. Nissen(22)............................. 21,204 * -- 21,204 *
Glenn W. Sturm................................... 11,616 * -- 11,616 *
Karen J. Gallagher(23)........................... 5,770 * -- 5,770 *
Todd W. Baum(24)................................. 5,431 * -- 5,431 *
Action Acres, Inc.(25)........................... 4,646 * -- 4,646 *
Greg A. Maakestad(26)............................ 2,323 * -- 2,323 *
Catherine J. Rottinghaus(27)..................... 1,859 * -- 1,859 *
Sharol J. McCoy(28).............................. 1,742 * -- 1,742 *
Sara L. Gray(29)................................. 1,162 * -- 1,162 *
Kimberly K. Knoke(30)............................ 1,162 * -- 1,162 *
Sue E. Pump(31).................................. 1,162 * -- 1,162 *
Martha Tomson Rodamaker(32)...................... 1,162 * -- 1,162 *
Kristin E. Schultz(33)........................... 1,162 * -- 1,162 *
All directors and executive officers as a group
(13 persons)................................... 2,852,600 87.0% 2,272,790 57.6%
</TABLE>
- ---------------
* Less than 1%
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares that such person or group has the
right to acquire within 60 days after May 31, 1996 or with respect to which
such person otherwise has or shares voting or investment power. For
purposes of computing the percentages of outstanding shares held by each
person or group of persons on a given date, shares which such person or
group has the right to acquire within 60 days after such date are deemed to
be outstanding for purposes of computing the percentage for such person or
group but are not deemed to be outstanding for the purpose of computing the
percentage of any other person or group.
(2) Assumes no exercise of the Underwriters' over-allotment option.
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<PAGE> 54
(3) Mr. Yusefzadeh's address is Phoenix International Ltd., Inc., 900 Winderley
Place, Suite 140, Maitland, Florida 32751. Includes (i) 979,684 shares held
in his name; (ii) 361,861 shares held by the Yusefzadeh Family Limited
Partnership of which Mr. Yusefzadeh is the general partner; (iii) 371,696
shares for which Mr. Yusefzadeh, in his capacity as trustee, holds legal
title pursuant to the Voting Trust Agreement (as defined below); (iv)
options to acquire 26,715 shares that are currently exercisable at an
exercise price of $4.74 per share; and (v) 232 shares held by his daughter.
Pursuant to a Voting Trust Agreement, dated April 4, 1993 (the "Voting
Trust Agreement"), among Bahram Yusefzadeh, as trustee, and certain holders
of Class A Common Stock, Mr. Yusefzadeh holds legal title to an additional
371,696 shares of Class A Common Stock with the power to vote such shares
of Class A Common Stock in his discretion in the best interests of the
Company. The Voting Trust Agreement provides that (i) the shareholders will
not sell or otherwise transfer their Class A Common Stock before March 1,
2003 and (ii) the agreement will terminate on the earlier of March 1, 2003
or the effective date of a public offering. Upon the termination of the
Voting Trust Agreement, legal title to the shares held subject to the trust
will be transferred from the trustee to the respective shareholders.
(4) The Yusefzadeh Partnership's address is c/o Bahram Yusefzadeh, Phoenix
International Ltd., Inc., 900 Winderley Place, Suite 140, Maitland, Florida
32751. Mr. Yusefzadeh is the general partner of the Yusefzadeh Partnership.
The Yusefzadeh Partnership disclaims beneficial ownership with respect to
all shares beneficially owned by Mr. Yusefzadeh other than through the
Yusefzadeh Partnership.
(5) Mr. Fenton's address is c/o Security Bank, 11 North First Avenue,
Marshalltown, Iowa 50158. Includes (i) 20,940 shares held in his name; (ii)
3,838 shares held by his individual retirement account; and (iii) 221,252
shares held in the name of BancSecurity Corporation. Mr. Fenton is the
president, chief executive officer and a director of BancSecurity
Corporation. Mr. Fenton disclaims beneficial ownership of the shares of
Common Stock held by BancSecurity Corporation.
(6) BancSecurity Corporation's address is 11 North First Avenue, Marshalltown,
Iowa 50158. Includes 16,959 shares which will be sold by BancSecurity
Corporation if the Underwriters exercise their over-allotment option. An
aggregate of 24,778 additional shares are beneficially owned by Mr. Fenton.
BancSecurity Corporation disclaims beneficial ownership with respect to Mr.
Fenton's shares.
(7) Includes (i) 26,019 shares held in Mr. Newes' name; (ii) 116,155 shares
held for Mr. Newes' benefit pursuant to the Voting Trust Agreement (of
which shares he will become the beneficial owner on the Closing Date); and
(iii) options to acquire 57,412 shares of Common Stock held by him which
are currently exercisable at exercise prices ranging from $1.08 to $4.30
per share. See Note (3) above.
(8) Mr. Holly's address is 86 North Main Street, Porterville, California 93258.
Includes (i) 11,062 shares held in his name; and (ii) 186,058 shares held
in the name of Bank of the Sierra. Mr. Holly is the president, chief
executive officer and director of Bank of the Sierra. Mr. Holly disclaims
beneficial ownership of the shares of Common Stock held by Bank of the
Sierra.
(9) Bank of the Sierra's address is 86 North Main Street, Porterville,
California 93258. An aggregate of 11,062 additional shares are beneficially
owned by Mr. Holly. Bank of the Sierra disclaims beneficial ownership with
respect to Mr. Holly's shares.
(10) Includes (i) 25,196 shares held in Mr. Hess's name; (ii) 5,111 shares held
by his individual retirement account; (iii) options to acquire 9,292 shares
of Common Stock held in his name which are currently exercisable at an
exercise price of $4.30 per share; (iv) 102,555 shares held in the name of
Community Grain Corporation, of which he is secretary and treasurer; (v)
2,950 shares held in the name of Dallas Investment Company, of which he is
president and director; (vi) 2,950 shares held in the name of Perry
Investment Company, of which he is president, director and chairman; and
(vii) 2,950 shares held in the name of Sac City Limited, of which he is
director, president, secretary and treasurer. Mr. Hess is the president of
Iowa Savings Bank and chairman of the board of Sac City State Bank. Mr.
Hess disclaims beneficial ownership of the shares of Common Stock described
in clauses (iv)-(vii) above.
(11) Includes (i) 2,323 shares held in Mr. Toole's name; (ii) 116,155 shares
held for Mr. Toole's benefit pursuant to the Voting Trust Agreement (of
which shares he will become the beneficial owner on the Closing Date); and
(iii) options to acquire 9,134 shares of Common Stock held by him which are
currently exercisable at exercise prices ranging from $1.08 to $4.30 per
share. See Note (3) above.
(12) Includes (i) 6,969 shares held in Mr. Reichard's name; (ii) 16,262 shares
held by his individual retirement account; (iii) options to acquire 70,273
shares held by him which are currently exercisable at
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<PAGE> 55
an exercise price of $4.30 per share; and (iv) 29,325 shares held by his
wife. Mr. Reichard disclaims any beneficial ownership with respect to his
wife's shares.
(13) Includes (i) 20,243 shares held in Mr. Tomson's name; (ii) 46,462 shares
held in the name of First Citizens Financial Corporation; (iii) 46,462
shares held in the name of Kanabec Credit Corporation; and (iv) 4,646
shares held in the name of Action Acres, Inc. Mr. Tomson is chairman of the
board of and owns controlling interest in First Citizens Financial
Corporation. In addition, Mr. Tomson owns controlling interest in Kanabec
Credit Corporation and Action Acres, Inc. Mr. Tomson disclaims beneficial
ownership of the shares of Common Stock held by each these entities.
Includes 3,982 shares which will be sold by Mr. Tomson if the Underwriters
exercise their over-allotment option.
(14) Includes 18,269 shares which will be sold by Community Grain Corporation if
the Underwriters exercise their over-allotment option.
(15) Includes (i) options to acquire 9,292 shares of Common Stock held by Mr.
Jones which are currently exercisable at an exercise price of $4.30 per
share and (ii) 58,651 shares held in the name of Cummins-American
Corporation. Mr. Jones is the president, chief executive officer and a
director of Glenview State Bank. He is also a director of Cummins-American
Corporation, and he and his immediate family control 94% of the voting
stock of Cummins-American Corporation. Mr. Jones disclaims beneficial
ownership of the shares of Common Stock held by Cummins-American
Corporation.
(16) Includes 27,877 shares which will be sold by First Citizens Financial
Corporation if the Underwriters exercise their over-allotment option.
(17) Includes 27,877 shares which will be sold by Kanabec Credit Corporation if
the Underwriters exercise their over-allotment option.
(18) Includes 23,231 shares which will be sold by W.J. Young & Co. if the
Underwriters exercise their over-allotment option.
(19) Includes 13,939 shares which will be sold by Robert Ownby, Trustee if the
Underwriters exercise their over-allotment option.
(20) Includes 17,423 shares which will be sold by Mr. Ownby if the Underwriters
exercise their over-allotment option.
(21) Includes (i) 18,585 shares held in Mr. Murphy's name and (ii) options to
acquire 13,274 shares of Common Stock held by him which are currently
exercisable at an exercise price of $4.30 per share.
(22) Includes (i) 2,323 shares held in Mr. Nissen's name and (ii) options to
acquire 18,701 shares of Common Stock held by him which are currently
exercisable at exercise prices ranging from $4.30 to $6.46 per share.
(23) Includes (i) 232 shares held in Ms. Gallagher's name and (ii) options to
acquire 5,538 shares that are currently exercisable at exercise prices
ranging from $1.08 to $4.30 per share. Also, includes 232 shares which will
be sold by Ms. Gallagher if the Underwriters exercise their over-allotment
option.
(24) Includes (i) 451 shares held in Mr. Baum's name and (ii) options to acquire
4,980 shares of Common Stock held in his name which are currently
exercisable at exercise prices ranging from $1.08 and $4.30 per share.
Also, includes 451 shares which will be sold if the Underwriters exercise
their over-allotment option.
(25) Such shares will be sold by Action Acres, Inc. if the Underwriters exercise
their over-allotment option.
(26) Includes 581 shares which will be sold by Mr. Maakestad if the Underwriters
exercise their over-allotment option.
(27) Includes 465 shares which will be sold by Ms. Rottinghaus if the
Underwriters exercise their over-allotment option.
(28) Includes 1,045 shares which will be sold by Ms. McCoy if the Underwriters
exercise their over-allotment option.
(29) Such shares will be sold by Ms. Gray if the Underwriters exercise their
over-allotment option.
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<PAGE> 56
(30) Includes 697 shares which will be sold by Ms. Knoke if the Underwriters
exercise their over-allotment option.
(31) Includes 465 shares which will be sold by Ms. Pump if the Underwriters
exercise their over-allotment option.
(32) Such shares will be sold by Ms. Rodamaker if the Underwriters exercise
their over-allotment option.
(33) Such shares will be sold by Ms. Shultz if the Underwriters exercise their
over-allotment option.
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<PAGE> 57
DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of the Company is only a
summary and is subject to the provisions of the Articles of Incorporation and
Bylaws, which are included as exhibits to the Registration Statement of which
this Prospectus forms a part, and the provisions of applicable law.
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The Company's capital stock currently is divided into five classes of
common stock (A, B, C, D and E). In addition, the Company is authorized to issue
preferred stock, with such rights and preferences as the Board of Directors
shall determine; however, no preferred stock has been issued. All shares of
Class A Common Stock, Class B Common Stock, Class C Common Stock, Class D Common
Stock and Class E Common Stock currently issued and outstanding by their terms
will be converted automatically on a one-for-one basis into shares of Common
Stock on the Closing Date. Accordingly, no information regarding the currently
outstanding shares of such classes of capital stock is set forth below.
On the Closing Date, officers of the Company will cause to be filed and to
take effect in Florida the Articles of Incorporation. Under the Articles of
Incorporation, the Board of Directors will have authority to issue 20,000,000
shares of Common Stock, par value $0.01 per share, and 10,000,000 shares of
preferred stock, par value $1.00 per share, in one or more classes or series
and, within certain limitations, to determine the voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and in liquidation, and conversion and other rights of such series. The Company
has no current plans to issue any shares of preferred stock. The rights of the
holders of the Common Stock discussed below are subject to such rights as the
Board of Directors may hereafter confer on the holders of preferred stock;
accordingly, such rights conferred on holders of preferred stock that may be
issued in the future under the Articles of Incorporation may adversely affect
the rights of holders of the Common Stock.
COMMON STOCK
Under the Articles of Incorporation, holders of Common Stock are entitled
to receive such dividends as may be legally declared by the Board of Directors.
Each shareholder is entitled to one vote per share on all matters to be voted
upon and will not be entitled to cumulate votes for the election of directors.
Holders of Common Stock will not have preemptive, redemption or conversion
rights and, upon liquidation, dissolution or winding up of the Company, will be
entitled to share ratably in the net assets of the Company available for
distribution to common shareholders. All outstanding shares prior to the
Offering will be, and all shares to be outstanding upon completion of the
Offering will be, validly issued, fully paid and non-assessable. The rights,
preferences and privileges of holders of Common Stock will be subject to any
classes or series of preferred stock that the Company may issue in the future.
PREFERRED STOCK
The Articles of Incorporation will provide that the Board of Directors
shall be authorized, without further action by the holders of the Common Stock,
to provide for the issuance of shares of the preferred stock in one or more
classes or series and to fix the designations, powers, preferences and relative,
participating, optional and other rights, qualifications, limitations and
restrictions thereof, including the dividend rate, conversion rights, voting
rights, redemption price and liquidation preference, and to fix the number of
shares to be included in any such classes or series. Any preferred stock so
issued may rank senior to the Common Stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, any such shares of preferred stock may have class or series voting
rights. Upon completion of the Offering, the Company will not have any shares of
preferred stock outstanding. Issuances of preferred stock, while providing the
Company with flexibility in connection with general corporate purposes, may,
among other things, have an adverse effect on the rights of holders of Common
Stock and, in certain circumstances, could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company or the effect of decreasing the market price of the Common
Stock. The Company has no present plan to issue any shares of preferred stock.
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<PAGE> 58
CLASSIFIED BOARD OF DIRECTORS
The Articles of Incorporation will divide the Board of Directors into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected at each annual
meeting of shareholders. The classification of directors, together with other
provisions in the Articles of Incorporation and Bylaws that limit the ability of
shareholders to remove directors and that permit the remaining directors to fill
any vacancies on the Board of Directors, will have the effect of making it more
difficult for shareholders to change the composition of the Board of Directors.
As a result, at least two annual meetings of shareholders may be required for
the shareholders to change a majority of the directors, whether or not such a
change in the Board of Directors would be beneficial to the Company and its
shareholders and whether or not a majority of the Company's shareholders
believes that such a change would be desirable. Currently, the terms of Class I
directors expire in 1997, the terms of Class II directors expire in 1998 and the
terms of Class III directors expire in 1999.
REMOVAL OF DIRECTORS AND FILLING VACANCIES
The Articles of Incorporation will provide that a director may be removed
by shareholders only for cause. The Articles of Incorporation will provide that
this removal requires the approval of the holders of 66.67% of the total voting
power of all outstanding securities of the Company then entitled to vote
generally in all matters submitted to shareholders (the "Voting Stock"), voting
together as a single class, subject to the rights of the holders of any class of
preferred stock then outstanding to remove directors elected by such holders
under specified circumstances or to vote separately as a class. Moreover, the
Florida Act and the Articles of Incorporation will also provide that, subject to
any rights of holders of any class of preferred stock then outstanding, all
vacancies on the Board of Directors, including those resulting from an increase
in the number of directors, may be filled solely by a majority of the remaining
directors, even if they do not constitute a quorum. When a director resigns from
the Board of Directors effective at a future date, a majority of directors then
in office, including the directors who are to resign, may vote on filling the
vacancy.
ADVANCE NOTICE PROVISIONS FOR SHAREHOLDER NOMINATIONS AND SHAREHOLDER PROPOSALS
The Bylaws establish an advance notice procedure for shareholders to make
nominations of candidates for election as directors or to bring other business
before any meeting of shareholders of the Company. Any shareholder nomination or
proposal for action at an upcoming shareholder meeting must be delivered to the
Company no later than the deadline for submitting shareholder proposals pursuant
to Rule 14a-8 under the Exchange Act. The presiding officer at any shareholder
meeting is not required to recognize any proposal or nomination which did not
comply with such deadline.
The purpose of requiring shareholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees or the
advisability of the other proposed business and, to the extent deemed necessary
or desirable by the Board of Directors, to inform shareholders and make
recommendations about such qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of shareholders. Although the
Bylaws do not give the Board of Directors any power to disapprove timely
shareholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of shareholder proposals if the proper procedures are not
followed and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal.
ANTI-TAKEOVER PROVISIONS UNDER THE FLORIDA ACT
The Company is subject to several anti-takeover provisions under the
Florida Act that apply to a public corporation organized under the Florida Act
unless the corporation has elected to opt out of such provisions in its articles
of incorporation or (depending on the provision in question) its bylaws. The
Company has not elected to opt out of these provisions. The Florida Act contains
a provision that prohibits the voting of shares in a publicly-held Florida
corporation which are acquired in a "control share acquisition" unless the
holders of a majority of the corporation's voting shares (exclusive of shares
held by officers of the corporation, inside directors or the acquiring party)
approve the granting of voting rights as to the shares acquired in the control
56
<PAGE> 59
share acquisition. A "control share acquisition" is defined as an acquisition
that immediately thereafter entitles the acquiring party to vote in the election
of directors within each of the following ranges of voting power: (i) one-fifth
or more but less than one-third of such voting power, (ii) one-third or more but
less than a majority of such voting power and (iii) more than a majority of such
voting power.
The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless: (i) the transaction is approved by a majority
of disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years, or (iii) the transaction is
approved by the holders of two-thirds of the corporation's voting shares other
than those owned by the interested shareholder. An "interested shareholder" is
defined as a person who, together with affiliates and associates, beneficially
owns more than 10% of the corporation's outstanding voting shares.
LIMITATION OF LIABILITY; INDEMNIFICATION MATTERS
Article 9 of the Bylaws requires the Company, to the fullest extent
permitted or required by the Florida Act, to (i) indemnify its directors against
any and all liabilities and (ii) advance any and all reasonable expenses,
incurred in any proceeding to which any such director is a party or in which
such director is deposed or called to testify as a witness because he or she is
or was a director of the Company. Generally, the Florida Act permits
indemnification of a director upon a determination that he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The right to indemnification granted in the Bylaws is not exclusive of
any other rights to indemnification against liabilities or the advancement of
expenses to which a director may be entitled under any written agreement, Board
resolution, vote of shareholders, the Florida Act or otherwise.
The Company intends to enter into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements will provide that no
indemnification or advancement of expenses shall be made (a) if a final
adjudication establishes that his actions or omissions to act were material to
the cause of action so adjudicated and constitute: (i) a violation of criminal
law (unless the indemnitee had reasonable cause to believe that his actions were
lawful); (ii) a transaction from which the indemnitee derived an improper
personal benefit; (iii) an unlawful distribution or dividend under the Florida
Act; or (iv) willful misconduct or a conscious disregard for the just interests
of the Company in a derivative or shareholder action; (b) for liability under
Section 16(b) of the Exchange Act, or (c) if a final decision by a court having
jurisdiction in the matter determines that indemnification is not lawful.
At present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted under the Bylaws
or the Florida Act.
57
<PAGE> 60
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
3,706,388 shares of Common Stock. Of these shares, the 1,077,500 (1,239,125
shares if the Underwriters' over-allotment option is exercised in full) shares
sold in the Offering will be freely tradeable without restriction or further
registration under the Securities Act, except for shares purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act (which may generally be sold only in compliance with Rule 144).
The remaining 2,628,888 shares of Common Stock are deemed "restricted
shares" under Rule 144 in that they were originally issued and sold by the
Company in private transactions in reliance upon exemptions from the
registration provisions of the Securities Act. Upon the expiration of the
Lock-up Agreements described below, to which substantially all of the restricted
shares are subject, approximately 473,000 shares will be eligible for sale in
the public market without restriction pursuant to Rule 144(k) as promulgated
under the Securities Act. Approximately 1,839,000 additional restricted shares
will be eligible for sale in the public market subject to the volume limitations
and other conditions of Rule 144 upon the expiration of the Lock-up Agreements.
The holders of approximately 317,000 additional restricted shares will not be
eligible to sell such shares pursuant to Rule 144 until the expiration of two
years from the date such restricted shares were acquired (i.e., between January
1, 1997 and July 1, 1998).
In addition to the restricted shares described in the preceding paragraph,
all of the approximately 213,000 shares of Common Stock which may be acquired
upon the exercise of vested stock options within 180 days following the date of
this Prospectus (collectively, the "Option Shares") are subject to the Lock-up
Agreements but may be eligible for resale following the expiration of the
Lock-up Agreements (subject, in the case of affiliates, to certain limitations)
pursuant to Rule 701 under the Securities Act or a Form S-8 registration
statement to be filed by the Company under the Securities Act. See
"Management -- Stock Option Plans." Additional options will continue to vest and
may be exercised and sold from time to time by option holders following the
expiration of the Lock-up Agreements.
Substantially all of the Company's officers, directors, shareholders and
optionholders have agreed to enter into Lock-up Agreements generally providing
that for a period of 180 days after the date of this Prospectus, they will not,
except in connection with the Offering, directly or indirectly, offer, sell,
loan, pledge or otherwise dispose of, or grant any options or other rights with
respect to, any shares of Common Stock or any securities that are convertible
into or exchangeable or exercisable for Common Stock owned by them without the
prior written consent of J.C. Bradford & Co. Similarly, the Company has agreed
generally that, for a period of 180 days after the date of this Prospectus, it
will not, directly or indirectly, issue, offer, sell, grant options to purchase
or otherwise dispose of any of its equity securities or any other securities
convertible into or exchangeable or exercisable for its Common Stock or any
other equity security, except that the Company may grant stock options under the
Stock Option Plans and issue shares of Common Stock upon the exercise of options
previously granted. J.C. Bradford & Co. does not presently intend to waive the
Lock-up Agreements. If a shareholder should request J.C. Bradford & Co. to waive
the 180 day lock-up period, J.C. Bradford & Co., consistent with past practice
with regard to other issuing companies, would take into consideration the number
of shares as to which such request relates, the identity of the requesting
shareholder, the relative demand for additional shares of Common Stock in the
market, the period of time since the completion of the Offering, and the average
trading volume and price performance of the Common Stock during such period.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons deemed to be affiliates, whose
restricted shares have been fully paid for and held for at least two years
(currently proposed by the Securities and Exchange Commission (the "Commission")
to be reduced to one year) from the date of issuance by the Company may sell
such securities in brokers' transactions or directly to market makers, provided
the number of shares sold in any three-month period does not exceed the greater
of 1% of the then outstanding shares of Common Stock (37,063 shares based on the
number of shares to be outstanding after the Offering) or the average weekly
trading volume of the Common Stock in the public market during the four calendar
weeks preceding the filing of the seller's Form 144. Sales under Rule 144 are
also subject to the availability of current public information concerning the
Company. After three years (currently proposed by the Commission to be reduced
two years) have elapsed from the date
58
<PAGE> 61
of issuance of restricted shares by the Company, such shares generally may be
sold without limitation by persons who have not been affiliates of the Company
for at least three months. Rule 144 also provides that affiliates who are
selling restricted shares which they have fully paid for and held for at least
two years must nonetheless comply with the above restrictions applicable to
restricted shares with the exception of the two year holding period requirement.
The Company intends to file one or more registration statements on Form S-8
to register all shares of Common Stock issuable under the Company's stock
options plans, as well as certain of the shares of Common Stock previously
issued under the plans. These registration statements are expected to be filed
as soon as practicable after the date of this Prospectus and are expected to
become effective immediately upon filing. Shares covered by these registration
statements will be eligible for sale in the public market after the effective
date of such registration statement and following the expiration of the Lock-up
Agreements, subject to Rule 144 limitations applicable to affiliates of the
Company. See "Management -- Stock Option Plans."
Prior to the Offering, there has been no established trading market for the
Common Stock, and no predictions can be made as to the effect that sales of
Common Stock under Rule 144, pursuant to a registration statement or otherwise,
or the availability of shares of Common Stock for sale, will have on the market
price prevailing from time to time. Sales of substantial amounts of Common Stock
in the public market, or the perception that such sales could occur, could
depress the prevailing market price. Such sales may also make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that it deems appropriate.
REGISTRATION RIGHTS
Under the Yusefzadeh Agreement, upon the termination of Mr. Yusefzadeh's
employment or in the event he is no longer a director of the Company for any
reason, he may request registration for sale under the Securities Act of all or
part of the Common Stock then held by him. However, the Company shall not be
required to effect a demand registration under the Securities Act if: (i) the
aggregate market value of the shares of Common Stock proposed to be registered
does not equal or exceed $12,000,000 prior to an initial public offering or
$2,000,000 after an initial public offering; (ii) within 12 months prior to any
such request for registration, a registration of securities of the Company has
been effected in which Mr. Yusefzadeh had the right to participate; (iii) the
Company receives such request for registration within 180 days preceding the
anticipated effective date of a proposed underwritten public offering of
securities of the Company approved by the Board of Directors prior to the
Company's receipt of such request; or (iv) the Board of Directors reasonably
determines in good faith that effecting such a demand registration at such time
would have a material adverse effect upon a proposed sale of all (or
substantially all) of the assets of the Company, or a merger, reorganization,
recapitalization, or similar transaction materially affecting the capital
structure or equity ownership of the Company which is actively being negotiated
with another party whose identity is disclosed to Mr. Yusefzadeh; provided,
however, that the Company may only delay a demand registration for a period not
exceeding six months (or until such earlier time as such transaction is
consummated or no longer proposed).
In addition, under the Yusefzadeh Agreement, Mr. Yusefzadeh has unlimited
piggyback registration rights if the Company proposes to make a registered
public offering, including an initial public offering, of any of its securities
under the Securities Act, other than an offering pursuant to a demand
registration or an offering registered on Form S-8, Form S-4 or comparable
forms. At the written request of Mr. Yusefzadeh, the Company shall include in
such registration and offering, and in any underwriting of such offering, all
shares of Common Stock as may have been designated at his request.
Mr. Yusefzadeh's registration rights are subject to reduction in certain
circumstances and after reasonable negotiations among the managing underwriters,
the Company and Mr. Yusefzadeh. Mr. Yusefzadeh is required to pay all transfer
taxes, if any relating to the sale of his shares, the fees and expenses of his
own counsel and his pro rata portion of any underwriting discount, fee or
commission or the equivalent thereof. All other expenses shall be borne by the
Company. The Company is also obligated to
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<PAGE> 62
indemnify Mr. Yusefzadeh in any of the Company's registrations against certain
losses and liabilities, including liabilities under the Securities Act and state
securities laws.
On June 12, 1996, the Company granted to each of Mr. Toole and Mr. Newes
registration rights with respect to 116,155 shares of Common Stock. For so long
as the shares are subject to resale restrictions, each shareholder shall have
the right to one demand registration of such shares under the Securities Act on
Form S-8, provided the shareholder is employed at the time of his request and
subject to other limitations such as any such registration not being adverse to
the Company's interests. In addition, each shareholder has the right to one
piggyback registration of the shares subject to certain limitations, including
the right of the managing underwriters to object to inclusion of the shares in
any such offering. The shareholders will pay their own expenses incurred in
connection with such registration.
60
<PAGE> 63
UNDERWRITING
Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co. and Advest, Inc., as representatives of the several Underwriters (the
"Representatives"), have agreed, severally, to purchase from the Company and the
Selling Shareholders the number of shares of Common Stock set forth below
opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
------------------------------------------------------------------------------ ---------
<S> <C>
J.C. Bradford & Co. ..........................................................
Advest, Inc. .................................................................
---------
Total............................................................... 1,077,500
========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.
Certain of the Selling Shareholders have granted the Underwriters an
option, exercisable not later than 30 days from the date of this Prospectus, to
purchase up to an aggregate of additional 161,625 shares of Common Stock from
the Selling Shareholders to cover over-allotments, if any. To the extent the
Underwriters exercise the option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table, and the Selling Shareholders
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters will sell these additional shares
on the same terms as those on which the 1,077,500 shares are being offered.
Upon the purchase by the Underwriters of the shares being offered hereby,
the Company has agreed to sell to J.C. Bradford & Co., for an aggregate of $500,
warrants (the "Bradford Warrants") to purchase up to 1/2 of 1% of the shares of
Common Stock outstanding on the Closing Date (not to exceed 19,000 shares) at an
exercise price per share equal to 120% of the initial public offering price. The
warrant exercise price has been determined by negotiation between the Company
and J.C. Bradford & Co. as to be within the Conduct Rules of the National
Association of Securities Dealers, Inc. and various state authorities. The
Bradford Warrants may not be sold, transferred, assigned, hypothecated or
otherwise disposed of for a period of three years from
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<PAGE> 64
the Closing Date, except to the officers and partners of J.C. Bradford & Co.,
and are exercisable during the four-year period commencing one year from the
Closing Date (the "Warrant Exercise Term") or, at the holders' option, are
exchangeable for their value in Common Stock at its then market price. During
the Warrant Exercise Term, J.C. Bradford & Co. is given, at nominal cost, the
opportunity to profit from a rise in the market price of the Company's Common
Stock. To the extent that the Bradford Warrants are exercised, dilution to the
interests of the Company's shareholders will occur. Further, the terms upon
which the Company will be able to obtain additional equity capital may be
adversely affected since J.C. Bradford & Co. can be expected to exercise or
exchange them at a time when the Company would, in all likelihood, be able to
obtain any needed capital on terms more favorable to the Company than those
provided in the Bradford Warrants. Any profit realized by J.C. Bradford & Co. on
the sale of the Bradford Warrants or the underlying shares of Common Stock may
be deemed additional underwriting compensation.
Prior to this Offering, there has been no public market for the Common
Stock. The offering price has been determined by negotiation among the Company,
the Selling Shareholders and the Representatives. In determining such price,
consideration was given to, among other things, the financial and operating
history and trends of the Company, the experience of its management, the
position of the Company in its industry, the Company's prospects and the
Company's financial results. Additionally, consideration was given to the status
of the securities markets, market conditions for new offerings of securities and
the prices of similar securities of comparable companies. J.C. Bradford & Co.
and Advest, Inc. intend to act as market makers with regard to the Common Stock.
Substantially all of the Company's officers and directors, shareholders and
optionholders have agreed with the Representatives not to offer, sell, loan,
pledge or otherwise dispose of or grant any options or other rights with respect
to, any shares of Common Stock or any securities that are convertible into or
exchangeable or exercisable for Common Stock owned by them prior to the
expiration of a period of 180 days following the date of this Prospectus,
without the prior written consent of J.C. Bradford & Co. Similarly, the Company
has agreed generally that, for a period of 180 days after the date of this
Prospectus, it will not, directly or indirectly, issue, offer, sell, grant
options to purchase or otherwise dispose of any of its equity securities or any
other securities convertible into or exchangeable or exercisable for its Common
Stock or any other equity security, except that the Company may grant stock
options under the Stock Option Plans and issue shares of Common Stock upon the
exercise of options previously granted. J.C. Bradford & Co. does not presently
intend to waive the Lock-up Agreements. If a shareholder should request J.C.
Bradford & Co. to waive the 180 day lock-up period, J.C. Bradford & Co.,
consistent with past practice with regard to other issuing companies, would take
into consideration the number of shares as to which such request relates, the
identity of the requesting shareholder, the relative demand for additional
shares of Common Stock in the market, the period of time since the completion of
the Offering, and the average trading volume and price performance of the Common
Stock during such period. After such 180-day period, such persons will be
entitled to sell, distribute or otherwise dispose of the Common Stock or options
to acquire Common Stock, subject to the provisions of applicable securities
laws. See "Shares Eligible for Future Sale."
The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including labilities under the Securities
Act, or will contribute to payments that the Underwriters or any such
controlling persons may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia. Glenn
W. Sturm, a partner of Nelson Mullins Riley & Scarborough, L.L.P., beneficially
owns 11,616 shares of Common Stock and serves as Secretary and a director of the
Company. Certain legal matters in connection with the Offering will be passed
upon for the Underwriters by Alston & Bird, Atlanta, Georgia.
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<PAGE> 65
EXPERTS
The consolidated financial statements of the Company at January 31, 1995,
December 31, 1995 and for the years ended January 31, 1994 and 1995 and the
eleven months ended December 31, 1995, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules to the Registration Statement. For further information with respect to
the Company and such Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed as a part of the
Registration Statement. Statements contained in this Prospectus concerning the
contents of any contract or any other document referred to are only summaries;
reference is made in each instance to the copy of such contract or document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in all respects by such reference to such exhibit. The Registration
Statement, including exhibits and schedules thereto, may be inspected without
charge at the public reference facility maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices located at Seven World Trade Center, New York,
New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
63
<PAGE> 66
PHOENIX INTERNATIONAL LTD., INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors........................................................ F-2
Consolidated Balance Sheets as of January 31, 1995, December 31, 1995 and March 31,
1996 (Unaudited).................................................................... F-3
Consolidated Statements of Operations for Years Ended January 31, 1994 and 1995,
Eleven Months Ended December 31, 1995 and the Unaudited Three-Month Periods Ended
March 31, 1995 and 1996............................................................. F-4
Consolidated Statements of Shareholders' Deficit for Years Ended January 31, 1994 and
1995, Eleven Months Ended December 31, 1995 and Unaudited Three-Month Period Ended
March 31, 1996...................................................................... F-5
Consolidated Statements of Cash Flows for Years Ended January 31, 1994 and 1995,
Eleven Months Ended December 31, 1995 and the Unaudited Three-Month Periods Ended
March 31, 1995 and 1996............................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 67
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Phoenix International Ltd., Inc.
We have audited the accompanying consolidated balance sheets of Phoenix
International Ltd., Inc. as of January 31, 1995 and December 31, 1995, and the
related consolidated statements of operations, shareholders' deficit and cash
flows for each of the two years in the period ended January 31, 1995 and the
eleven months ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Phoenix International Ltd., Inc. at January 31, 1995 and December 31, 1995, and
the consolidated results of its operations and its cash flows for each of the
two years in the period ended January 31, 1995 and the eleven months ended
December 31, 1995 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Atlanta, Georgia
March 1, 1996, except for Note 12,
as to which the date is May 8, 1996
F-2
<PAGE> 68
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31, DECEMBER 31, MARCH 31,
1995 1995 1996
----------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 615,290 $ 425,931 $ 350,981
Accounts receivable, net of allowance for doubtful accounts of
$10,000 at December 31, 1995 and March 31, 1996.............. 260,530 328,693 466,996
Unbilled accounts receivable................................... 8,412 108,320 146,881
Interest receivable, related party............................. 9,444 105,001 131,009
Prepaid expenses and other current assets...................... 94,989 174,339 199,908
Deferred tax asset............................................. 200,444 390,769 237,769
---------- ---------- ----------
Total current assets.................................... 1,189,109 1,533,053 1,533,544
Property and equipment:
Computer equipment and purchased software...................... 325,764 522,571 584,924
Furniture, office equipment and leasehold improvements......... 189,566 245,762 245,762
---------- ---------- ----------
515,330 768,333 830,686
Accumulated depreciation and amortization...................... (70,929) (191,826) (235,435)
---------- ---------- ----------
444,401 576,507 595,251
Capitalized software development costs, net of accumulated
amortization of $107,647 and $172,809 at December 31, 1995 and
March 31, 1996, respectively................................... 93,001 1,118,729 1,366,846
---------- ---------- ----------
Total assets............................................ $ 1,726,511 $ 3,228,289 $ 3,495,641
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable............................................... $ 136,661 $ 264,274 $ 389,129
Accrued expenses............................................... 222,789 279,521 355,959
Note payable................................................... 250,000 -- --
Note payable, related party.................................... 35,203 35,203 35,203
Payable to vendor.............................................. 200,000 140,000 140,000
Deferred revenue............................................... 2,501,270 3,077,393 2,951,926
---------- ---------- ----------
Total current liabilities............................... 3,345,923 3,796,391 3,872,217
Shareholders' deficit:
Preferred stock, $1.00 par value:
10,000,000 shares authorized, none issued and outstanding.... -- -- --
Class A common stock, $0.0043 par value:
1,500,000 shares authorized, 1,393,859 shares issued and
outstanding................................................ 6,000 6,000 6,000
Class B common stock, $0.43 par value:
10,000,000 shares authorized, 511,082 shares issued and
outstanding................................................ 220,000 220,000 220,000
Class C common stock, $2.15 par value:
200,000 shares authorized, 185,848 shares issued and
outstanding................................................ 400,000 400,000 400,000
Class D, non-voting common stock, $4.30 par value:
50,000 shares authorized, 23,231 shares issued and
outstanding at December 31, 1995 and March 31, 1996........ -- 100,000 100,000
Class E, non-voting common stock, $1.08 par value:
1,000,000 shares authorized, 790,894, 878,310 and 889,926
shares issued and outstanding at January 31, 1995, December
31, 1995 and March 31, 1996, respectively.................. 851,117 945,190 957,690
Additional paid-in capital..................................... 2,097,502 2,368,470 2,405,970
Stock subscriptions receivable................................. (1,350,524) (1,318,524) (1,318,524)
Accumulated deficit............................................ (3,843,507) (3,289,238) (3,147,712)
---------- ---------- ----------
Total shareholders' deficit............................. (1,619,412) (568,102) (376,576)
---------- ---------- ----------
Total liabilities and shareholders' deficit............. $ 1,726,511 $ 3,228,289 $ 3,495,641
========== ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE> 69
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
ELEVEN
MONTHS ENDED THREE MONTHS ENDED
YEAR ENDED JANUARY 31, DECEMBER 31, MARCH 31,
------------------------- ------------ ----------------------
1994 1995 1995 1995 1996
----------- ----------- ------------ --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
License fees and other................ $ 30,000 $ 57,776 $3,467,547 $ -- $1,127,607
Implementation, customer and software
support and other service fees..... -- 369,711 1,556,164 90,745 653,723
----------- ----------- ------------ --------- ----------
Total revenues................ 30,000 427,487 5,023,711 90,745 1,781,330
Expenses:
Costs of license fees and other....... -- -- 375,783 -- 131,029
Costs of implementation, customer and
software support and other service
fees............................... 104,818 637,427 1,246,886 222,822 457,196
Sales and marketing................... 96,911 358,948 983,290 224,839 268,818
General and administrative............ 225,458 981,930 1,058,190 287,072 358,260
Product development................... 621,373 1,362,780 654,797 60,272 299,067
----------- ----------- ------------ --------- ----------
Total expenses................ 1,048,560 3,341,085 4,318,946 795,005 1,514,370
Other income (expense):
Interest income....................... 3,603 26,610 121,815 29,607 28,647
Interest expense...................... -- (19,366) (12,060) (6,590) (1,081)
Other income (expense)................ 1,815 75,989 (4,252) 75,270 --
----------- ----------- ------------ --------- ----------
Income (loss) before income taxes....... (1,013,142) (2,830,365) 810,268 (605,973) 294,526
Income tax expense...................... -- -- 255,999 -- 153,000
----------- ----------- ------------ --------- ----------
Net income (loss)....................... $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
========== ========== ========== ========= =========
Net income (loss) per share............. $ (0.51) $ (1.11) $ 0.17 $ (0.20) $ 0.04
========== ========== ========== ========= =========
Weighted average shares outstanding..... 1,971,573 2,560,151 3,235,532 3,076,813 3,298,444
========== ========== ========== ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE> 70
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK,
ALL CLASSES ADDITIONAL STOCK TOTAL
----------------------- PAID-IN SUBSCRIPTION ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT DEFICIT
---------- ---------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at inception...................... -- $ -- $ -- $ -- $ -- $ --
Issuance of 1,393,859 shares of Class A
common stock as compensation for
services.............................. 1,393,859 6,000 -- -- -- 6,000
Issuance of 511,082 shares of Class B
common stock, net of issuance costs of
$44,314............................... 511,082 220,000 285,686 -- -- 505,686
Issuance of 46,462 shares of Class C
common stock.......................... 46,462 100,000 -- -- -- 100,000
Issuance of 185,848 shares of Class E
common stock.......................... 185,848 200,000 -- (25,000) -- 175,000
Net loss................................ -- -- -- -- (1,013,142) (1,013,142)
---------- ---------- ---------- ------------ ----------- -------------
Balance, January 31, 1994................. 2,137,251 526,000 285,686 (25,000) (1,013,142) (226,456)
Issuance of 139,386 shares of Class C
common stock.......................... 139,386 300,000 -- -- -- 300,000
Issuance of 605,046 shares of Class E
common stock, net of issuance costs of
$6,000................................ 605,046 651,117 1,478,566 (1,350,524) -- 779,159
Payment on stock subscription
receivable............................ -- -- -- 25,000 -- 25,000
Issuance of stock and stock options as
compensation for services............. -- -- 333,250 -- -- 333,250
Net loss................................ -- -- -- -- (2,830,365) (2,830,365)
---------- ---------- ---------- ------------ ----------- -------------
Balance, January 31, 1995................. 2,881,683 1,477,117 2,097,502 (1,350,524) (3,843,507) (1,619,412)
Issuance of 23,231 shares of Class D
common stock.......................... 23,231 100,000 -- -- -- 100,000
Issuance of 87,416 shares of Class E
common stock.......................... 87,416 94,073 270,968 -- -- 365,041
Payment on stock subscription
receivable............................ -- -- -- 32,000 -- 32,000
Net income.............................. -- -- -- -- 554,269 554,269
---------- ---------- ---------- ------------ ----------- -------------
Balance, December 31, 1995................ 2,992,330 1,671,190 2,368,470 (1,318,524) (3,289,238) (568,102)
Issuance of 11,616 shares of Class E
common stock (Unaudited).............. 11,616 12,500 37,500 -- -- 50,000
Net income (Unaudited).................. -- -- -- -- 141,526 141,526
---------- ---------- ---------- ------------ ----------- -------------
Balance, March 31, 1996 (Unaudited)....... 3,003,946 $1,683,690 $2,405,970 $(1,318,524) $(3,147,712) $ (376,576)
========= ========= ========= =========== =========== ============
</TABLE>
See accompanying notes.
F-5
<PAGE> 71
PHOENIX INTERNATIONAL LTD., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
ELEVEN THREE
MONTHS ENDED MONTHS ENDED
YEAR ENDED JANUARY 31, DECEMBER 31, MARCH 31,
------------------------- ------------- ----------------------
1994 1995 1995 1995 1996
----------- ----------- ------------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................... $(1,013,142) $(2,830,365) $ 554,269 $(605,973) $ 141,526
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization.......... 6,397 64,534 228,544 24,875 108,360
Stock and stock options issued for
compensation......................... 6,000 333,250 -- -- --
Provision for doubtful accounts........ -- -- 10,000 -- --
Deferred taxes......................... -- (200,444) (190,325) -- 153,000
Changes in operating assets and
liabilities:
Accounts receivable.................. -- (260,530) (78,163) 98,903 (138,303)
Unbilled accounts receivable......... (1,815) (6,597) (99,908) (781,564) (38,561)
Interest receivable, related party... -- (9,444) (95,557) (23,504) (26,008)
Prepaid expenses and other current
assets............................ (13,417) (81,572) (79,350) (186,207) (25,569)
Accounts payable..................... 91,157 45,504 127,613 300,612 124,855
Accrued expenses..................... 103,238 119,552 56,732 46,641 76,438
Deferred revenue..................... 149,435 2,351,833 576,123 949,686 (125,467)
----------- ----------- ------------- --------- ----------
Net cash provided by (used in) operating
activities............................... (672,147) (474,279) 1,009,978 (176,531) 250,271
INVESTING ACTIVITIES
Purchases of property and equipment........ (173,283) (342,047) (253,003) (110,673) (61,943)
Capitalized software development costs..... -- (93,001) (1,133,375) (304,663) (313,278)
----------- ----------- ------------- --------- ----------
Net cash used in investing activities...... (173,283) (435,048) (1,386,378) (415,336) (375,221)
FINANCING ACTIVITIES
Proceeds from short-term debt.............. 193,949 291,254 -- -- --
Net proceeds from issuance of common
stock.................................... 780,685 1,079,159 465,041 97,510 50,000
Payment on short-term debt................. -- -- (310,000) -- --
Cash payments for stock subscription
receivable............................... -- 25,000 32,000 31,290 --
----------- ----------- ------------- --------- ----------
Net cash provided by financing
activities............................... 974,634 1,395,413 187,041 128,800 50,000
Net increase (decrease) in cash and cash
equivalents.............................. 129,204 486,086 (189,359) (463,067) (74,950)
Cash and cash equivalents at beginning of
period................................... -- 129,204 615,290 605,309 425,931
----------- ----------- ------------- --------- ----------
Cash and cash equivalents at end of
period................................... $ 129,204 $ 615,290 $ 425,931 $ 142,242 $ 350,981
============ ============ ============= ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest................................. $ -- $ 14,942 $ 12,060 $ 6,590 $ 1,081
============ ============ ============= ========== ==========
Income taxes............................. $ -- $ 200,444 $ 313,984 $ 200,444 $ --
============ ============ ============= ========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Equipment provided by vendor............... $ -- $ 78,644 $ -- $ -- $ --
============ ============ ============= ========== ==========
Stock subscription receivable from sale of
Class E stock............................ $ 25,000 $ 1,350,524 $ -- $ -- $ --
============ ============ ============= ========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 72
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Phoenix International Ltd., Inc. (the Company), formed on January 11, 1993,
designs, develops, markets and supports highly adaptable, enterprise-wide
client/server application software for the financial services industry, with a
primary focus on middle market banks. The Company has one wholly-owned
subsidiary that is a foreign sales corporation. There was no activity in the
period January 11, 1993 to January 31, 1993.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
FISCAL YEAR
Fiscal 1993, fiscal 1994, and fiscal 1995 correspond with the years ended
January 31, 1994 and 1995, and the eleven months ended December 31, 1995,
respectively.
During 1995 the Company changed its fiscal year end from January 31 to
December 31. Accordingly, the financial statements for the period ended December
31, 1995 include only eleven months of operations.
Comparative unaudited results of operations for the eleven months ended
December 31, 1994 are as follows:
<TABLE>
<S> <C>
License fees and other.................................................. $ 57,475
Implementation, customer and software support and other service fees.... 363,377
-----------
Total revenues................................................ 420,852
Costs of license fees and other......................................... --
Costs of implementation, customer and software support and other service
fees.................................................................. 569,651
Sales and marketing..................................................... 341,915
General and administrative.............................................. 881,471
Product development..................................................... 1,325,506
-----------
Total expenses................................................ 3,118,543
Interest income......................................................... 17,266
Interest expense........................................................ (17,096)
Other income (expense).................................................. --
-----------
Net loss before income taxes............................................ (2,697,521)
Income tax expense...................................................... --
-----------
Net loss...................................................... $(2,697,521)
==========
</TABLE>
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results inevitably will differ from those estimates,
and such differences may be material to the financial statements.
F-7
<PAGE> 73
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of
common shares outstanding and dilutive common stock equivalents outstanding
during the periods presented. Pursuant to Securities and Exchange Commission
Staff Accounting Bulletin No. 83, common stock issued for consideration below
the public offering price and stock options issued with exercise prices below
the public offering price during the twelve-month period preceding the initial
filing of the Registration Statement have been included in the calculation of
weighted average shares outstanding, using the treasury stock method, as if they
were outstanding for all periods presented.
REVENUE RECOGNITION
Revenues are recorded in accordance with AICPA Statement of Position 91-1,
"Software Revenue Recognition." Revenue is derived principally from the
licensing of internally produced software and implementation and support
services. When the Company receives payment in advance of delivering the
products or providing services, these payments are deferred until earned.
Software license revenue is recognized upon delivery and when no significant
obligations remain as to the software system requirements. Implementation
service revenue is recognized as earned over the service period. Support
services are prebilled in advance, and revenue is recognized ratably over the
related prepayment period.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets (generally five years for computer
equipment and purchased software and four to seven years for furniture and
office equipment). Leasehold improvements are amortized over the related lease
term.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
The Company capitalizes certain software development costs in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." Costs
incurred internally to develop a computer software product are charged to
product development expense when incurred until technological feasibility
(determined by the establishment of a detailed program design, or in the absence
of such, a working model) has been established for the product. Thereafter, all
software production costs are capitalized and recorded at the lower of
unamortized cost or net realizable value. Capitalization ceases upon general
release to customers. After general release, capitalized costs are amortized
using the greater of the amount computed using a) the ratio that current gross
revenues for a product bear to the total of current and anticipated revenues for
that product or b) the straight-line method over the estimated useful life of
the related product (currently five years). Amortization for fiscal 1995 was
$107,647 and is included in costs of license fees and other.
Technological feasibility of the Phoenix System was established in December
1994. The Phoenix System was available for general release in June 1995.
ADVERTISING EXPENSE
Advertising costs are expensed as incurred. The Company incurred $10,477,
$12,625, and $116,196 in advertising costs during fiscal 1993, 1994 and 1995,
respectively.
F-8
<PAGE> 74
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK BASED COMPENSATION
The Company grants stock options generally for a fixed number of shares to
certain employees with an exercise price equal to or greater than the fair value
of the shares at the date of grant. The Company accounts for stock option grants
in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and, accordingly, recognizes no compensation expense for stock
option grants for which the terms are fixed. Compensation expense is recognized
for increases in the estimated fair value of common stock for stock options with
variable terms. In October 1995, the FASB issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," which
provides an alternative to APB Opinion No. 25 in accounting for stock-based
compensation issued to employees. However, the Company plans to continue to
account for stock-based compensation in accordance with APB Opinion No. 25.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement of Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less that
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. The Company will adopt
Statement 121 in the first quarter of 1996 and, based on current circumstances,
does not believe the effect of adoption will be material.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements include all adjustments,
consisting only of normal recurring accruals, which the Company considers
necessary for a fair presentation of the financial position of the Company as of
March 31, 1996 and the results of operations for the quarters ended March 31,
1995 and 1996, as presented in the accompanying unaudited interim financial
statements.
2. FINANCIAL INSTRUMENTS
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents
and trade accounts receivable.
The Company's cash and cash equivalents at December 31, 1995 are deposited
in two separate financial institutions in the amounts of $370,330 and $55,301.
Credit risk is subject to the financial security of each institution.
Accounts receivable related to license fees are unsecured, due under stated
terms, and for relatively large amounts from a small number of customers, all of
which are in the banking business. Credit risk with respect to trade accounts
receivable is limited due to the license agreements generally requiring
substantial prepayments. The remaining receivables are short-term in nature and
are generally related to implementation and support fees and reimbursable
expenses. There have been no accounts receivable written off to date.
F-9
<PAGE> 75
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments.
Cash and Cash Equivalents
The carrying amount reported in the balance sheet approximates the fair
value of cash and cash equivalents.
Accounts Receivable and Accounts Payable
The carrying amounts reported in the balance sheet for accounts receivable
and accounts payable approximate their fair value.
Short-Term Debt
The carrying amounts of the Company's borrowings are payable within the
next fiscal year and approximate their fair value.
3. SHORT-TERM OBLIGATIONS
<TABLE>
<CAPTION>
JANUARY 31, DECEMBER 31,
1995 1995
----------- ------------
<S> <C> <C>
Note payable -- Commercial loan agreement with a bank, collateralized
by equipment, with interest payable monthly at 9% per annum, paid in
May of 1995......................................................... $ 250,000 $ --
Note Payable, related party -- Note payable to a shareholder,
collateralized by certain office equipment, due on demand with
interest payable at 12% per annum................................... 35,203 35,203
Payable to vendor -- Payable to vendor represents non-interest bearing
funds received from a major hardware manufacturer. Repayment of
$100,000 of the funds received is to be made in $10,000 installments
as the Company sells the Phoenix System to customers for use on the
manufacturer's hardware. Six installments were paid in fiscal 1995.
Repayment of the additional $100,000 of funds received is due on
demand.............................................................. 200,000 140,000
</TABLE>
4. LEASE COMMITMENTS
The Company leases office space, equipment and furniture under
noncancellable operating leases. Total rent expense for all operating leases was
$33,736, $143,468 and $181,868 in fiscal 1993, 1994, and 1995, respectively.
Future minimum lease payments under noncancellable operating leases with terms
of one year or more consisted of the following at December 31, 1995:
<TABLE>
<S> <C>
Years ending December 31,
1996...................................................... $169,066
1997...................................................... 162,952
1998...................................................... 13,282
--------
$345,300
========
</TABLE>
A major shareholder in the Company has signed a personal guaranty of
approximately $62,000 related to the lease of the Company's primary office.
F-10
<PAGE> 76
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. CAPITALIZATION
Under the Company's Articles of Incorporation, amended October 21, 1995,
each holder of Class A common stock is entitled to ten votes per share. Each
holder of Class B and Class C common stock is entitled to one vote per share,
and holders of Class D and Class E common stock have no voting rights. All
classes of common stock share ratably in dividends and other distributions,
including distributions upon liquidation. Each share of Class C, Class D, and
Class E common stock is convertible into one share of Class B common stock on
the effective date of a firm commitment initial public offering where the
proceeds total at least $12,000,000. See Note 12. Prior to an initial public
offering, as defined, each holder of Class A, Class B, and Class C common stock
has preemptive rights to purchase shares of any class of shares which the
Company may issue.
In addition, prior to an initial public offering, the holders of Class A
common stock have the right to elect five members of the board of directors. The
remaining four directors are elected by the holders of Class B and Class C
common stock. Upon the completion of an initial public offering, the directors
shall be elected by the holders of Class A and Class B common stock voting as a
single class.
All shareholders of the Company are subject to an agreement which
stipulates the terms under which their shares can be sold, transferred or
pledged. Terms include, but are not limited to, a call option in favor of the
chief executive officer ("CEO") to purchase all outstanding shares of Class B,
Class C, Class D and Class E common stock if the Board of Directors should vote
in favor to liquidate the Company or sell substantially all of its assets.
The employment agreements for certain key founding employees include a
provision whereby the Company issued to them an aggregate of 255,541 shares of
Class A common stock in consideration of each employee's agreement to provide
his services to the Company for a period of five years. Such shares issued to
these employees are forfeited if the employee terminates employment for any
reason within five years and prior to any public offering of the Company's
common stock prior to March 1, 1998. One of these employees was terminated in
fiscal 1994, and upon majority vote by the Board of Directors, the Company
allowed the employee to retain ownership of the shares, subject to the voting
trust described below. The Company recognized $124,500 of compensation expense
related to the change in measurement date for this restricted stock as a result
of the Board's action and the increase in the estimated fair value of the
Company's common stock since the prior measurement date. There are 371,696
shares that were issued to employers and a consultant held in a Voting Trust,
with the Company's CEO as trustee, for a period of ten years or until any public
offering of the Company's stock.
The Board of Directors is authorized to issue up to 10,000,000 shares of
preferred stock, par value $1.00 per share. The terms of preferred stock have
not been designated and no shares have been issued.
The Company has reserved 3,960,699 shares of Class B common stock for
future issuance upon conversion of Class C, Class D and Class E common stock
into Class B common stock and conversion of outstanding options into options to
purchase Class B common stock. The Company has reserved 2,873,310 shares of
Class E common stock for future issuance upon exercise of options to purchase
Class E common stock.
STOCK OPTIONS
The Company has various stock option plans which authorize the Board of
Directors to grant employees, officers, and directors qualified and unqualified
options to purchase shares of the non-voting Class E common stock. Exercise
prices of stock options are determined by the Board of Directors and have been
the estimated fair market value at the date of the grant for options granted to
employees and 110% of estimated fair market value for options granted to the
CEO.
F-11
<PAGE> 77
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of option activity from inception to December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
PRICE PER
OPTIONS SHARE
-------- --------------
<S> <C> <C> <C>
Outstanding at February 1, 1994............................ -- --
Granted.................................................. 660,921 $1.08 - $4.30
Exercised................................................ (162,284) $1.08 - $4.30
Canceled................................................. (360,078) $1.08
--------
Outstanding at January 31, 1995............................ 138,559 $1.08 - $4.30
Granted.................................................. 563,233 $4.30 - $4.74
Exercised................................................ (86,835) $1.08 - $4.30
Canceled................................................. (15,564) $1.08 - $4.30
--------
Outstanding at December 31, 1995........................... 599,393 $1.08 - $4.74
========
</TABLE>
At December 31, 1995, of the 599,393 options outstanding, options to
purchase 350,882 shares are exercisable at prices ranging from $1.08 to $4.74
per share. The remaining 248,511 options outstanding vest over periods ranging
from four to five years from the date of grant. At December 31, 1995, the
Company had 2,273,917 shares available for future grant under the Company's
stock option plans.
6. RELATED PARTY TRANSACTIONS
The CEO has outstanding promissory notes due him of $35,203. (See Note 3).
Accrued interest on these notes totaled $83, $4,242 and $8,110 at January 31,
1994 and 1995, and December 31, 1995, respectively. The $1,318,524 stock
subscriptions receivable are due from the CEO and relate to the issuance of
319,382 shares of non-voting Class E common stock. Interest of $9,444 and
$105,001 is receivable on these stock subscriptions at January 31, 1995 and
December 31, 1995, respectively.
To encourage certain bank shareholders' initial investment in the Company,
the Company offered a discount, equal to the shareholders' initial investment,
to be applied toward the license fee if and when the shareholders licensed the
Phoenix System for use in their normal course of operations. Discounts offered
since inception total $855,000. Discounts of $300,000 were used in fiscal 1995,
leaving a balance of $555,000 of available discounts at December 31, 1995.
License fee revenue of $326,700, net of discounts used, was recorded in fiscal
1995 under license agreements with shareholders. Implementation and support
revenues of $116,300 and $254,200 recorded in fiscal 1994 and 1995,
respectively, were from shareholder banks.
7. INCOME TAXES
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1993 1994 1995
-------- --------- ---------
<S> <C> <C> <C>
Current foreign expense.............................. $ -- $ 200,444 $ 446,324
Deferred foreign benefit............................. -- (200,444) (190,325)
-------- --------- ---------
Total taxes.......................................... $ -- $ -- $ 255,999
======== ========= =========
</TABLE>
F-12
<PAGE> 78
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income tax assets and liabilities as of January 31, 1995
and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
JANUARY 31, DECEMBER 31,
1995 1995
----------- ------------
<S> <C> <C>
Deferred income tax liabilities:
Tax over book depreciation................................ $ (18,348) $ (1,664)
Capitalized software...................................... (36,177) (435,186)
----------- ------------
Total tax liabilities............................. (54,525) (436,850)
Deferred income tax assets:
Deferred revenue.......................................... 846,906 801,744
Foreign tax credit carryforwards.......................... 200,444 514,428
Research and development credit carryforwards............. 78,759 111,346
Net operating loss carryforwards.......................... 765,021 1,058,461
Other..................................................... 1,324 4,772
----------- ------------
Total tax assets.................................. 1,892,454 2,490,751
Valuation allowance for deferred income tax assets.......... (1,637,485) (1,663,132)
----------- ------------
Net deferred income tax assets.............................. $ 200,444 $ 390,769
========== ==========
</TABLE>
The net deferred income tax assets at January 31, 1995 and December 31,
1995 represent foreign withholding taxes paid upon remittance of cash by the
Company's customers but prior to recognition of revenue by the Company and
therefore relate to deferred revenue.
The reconciliation of income tax computed at the United States federal
statutory tax rates to income tax expense is:
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
----------- ----------- -----------
<S> <C> <C> <C>
Tax at United States statutory rates................ $ (344,468) $ (962,324) $ 275,491
Foreign withholding taxes........................... -- -- 255,999
State taxes......................................... (39,513) (110,384) 31,600
Tax credits......................................... (15,800) (263,402) (346,571)
Non-deductible compensation expense................. -- 129,634 --
Other............................................... (9,168) (22,060) 13,833
Change in valuation allowance....................... 408,949 1,228,536 25,647
----------- ----------- -----------
Total tax expense......................... $ -- $ -- $ 255,999
========= ========= =========
</TABLE>
At December 31, 1995, the Company has net operating loss carryforwards of
approximately $2,800,000 for income tax purposes that expire in years 2008
through 2010. The Company also has research and development tax credit
carryforwards of approximately $111,000 that expire in years 2008 through 2010
and foreign tax credit carryforwards of approximately $514,000 that expire in
years 2000 through 2001. Due to uncertainties related to the Company's ability
to generate sufficient taxable income in the future to realize the benefit of
net deferred income tax assets related principally to these carryforward items,
for financial reporting purposes a valuation allowance has been recognized to
reduce the net assets to an amount which is more likely than not to be realized.
The annual utilization of net operating loss carryforwards to offset future
taxable income may be limited due to changes in the ownership of the Company.
F-13
<PAGE> 79
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. EMPLOYEE BENEFITS
The Company maintains a 401(k) plan that covers substantially all
employees. The Company may, at its discretion, contribute by matching employee
deferrals. Defined contributions are limited to the maximum amount deductible
under the Internal Revenue Code. The Company did not make contributions to the
plan in fiscal 1993, 1994 or 1995.
9. MAJOR CUSTOMERS AND EXPORT SALES
Sales to major customers, as a percentage of total revenues, are as
follows:
<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994 FISCAL 1995
----------- ----------- -----------
<S> <C> <C> <C>
Customer A............................................ -- 16% --
Customer B............................................ -- 15% --
Customer C............................................ -- -- 43%
Customer D............................................ -- -- 19%
</TABLE>
Export sales from the United States, as a percentage of total revenues,
were 33% in fiscal 1994, of which 27% represents sales to Latin and South
America and 7% to the Pacific Rim, and 70% in fiscal 1995, of which 63%
represents sales to Latin and South America and 7% was to the Pacific Rim.
10. EMPLOYMENT AGREEMENTS
On December 28, 1995, the Company entered into employment agreements with
its CEO and President. Each agreement commits the Company, for three years, to
various obligations if the employee is terminated without cause or if there is a
change in the control of the Company. The major obligations are for salaries and
bonus, healthcare premiums and the vesting of previously granted stock options.
In addition, the CEO has certain demand and piggyback registration rights
related to common stock of the Company.
11. BACKLOG
At December 31, 1995 the backlog of committed revenues under existing
contracts consisted of $1,788,000 for software license fees, $1,250,000 for
implementation, and $4,218,000 for five-year customer support service
agreements.
12. SUBSEQUENT EVENTS
On March 21, 1996, the Company entered into a marketing agreement with a
leading banking hardware and software vendor. Under this agreement, the vendor
will receive exclusive rights to market the Phoenix System in Central and South
America, Mexico, the Caribbean and Bermuda for a period of three years. As
consideration for the exclusive agreement, the Company will receive $400,000 of
nonrefundable payments due $200,000 upon entering into the agreement and
$200,000 due in four equal monthly installments of $50,000. Such payments shall
be applied on a dollar-for-dollar basis as a credit for future royalties
payable. The Company will receive royalties from the sublicensing of the Phoenix
System by the vendor and 2% of the vendor's professional service fees related to
installation and implementation of the Phoenix System. The agreement is
cancellable after 12 months if specified annual unit sales levels are not
achieved by the vendor. Nonrefundable payments received will be recognized as
revenue as Phoenix systems are sublicensed by the vendor or when it becomes
probable that minimum unit sales levels will not be achieved.
On May 6, 1996, the board of directors approved a 2.3231-for-1 share split
of the Company's common stock. In addition, the Company amended its articles of
incorporation effective May 8, 1996 to reduce the par value of each of the
Company's five classes of common stock (Classes A through E) in accordance with
the
F-14
<PAGE> 80
PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
stock split and to increase the authorized shares of Class A common stock to
1,500,000. All share and per share amounts related to common stock have been
retroactively restated to reflect the stock split for all periods presented.
Also, on May 6, 1996, the board of directors approved a recapitalization
plan in which all outstanding shares of the Company's five classes of common
stock (Classes A through E) will be converted into Common Stock on a share for
share basis upon the effective date of the Offering. This recapitalization will
not change total stockholders' deficit and is not reflected in the accompanying
financial statements.
F-15
<PAGE> 81
[Insert Artwork To Be Determined]
Grapic comparing a non-integrated legacy system with the Company's highly
adaptable integrated enterprise-wide client/server application software system.
<PAGE> 82
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
COMMON STOCK ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1996 (FOR 25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Consolidated Financial and
Operating Data...................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 25
Management............................ 39
Certain Transactions.................. 50
Principal and Selling Shareholders.... 51
Description of Capital Stock.......... 55
Shares Eligible for Future Sale....... 58
Underwriting.......................... 61
Legal Matters......................... 62
Experts............................... 63
Additional Information................ 63
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,077,500 SHARES
[PHOENIX INTERNATIONAL LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
J.C. BRADFORD & CO.
ADVEST, INC.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 83
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting discounts and commissions) payable by the
Registrant in connection with the issuance and distribution of the securities
registered hereby. No portion of such expenses will be borne by the Selling
Shareholders.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 5,555
NASD filing fee................................................................... 2,112
Nasdaq National Market issuance fee............................................... 12,000
Printing and engraving............................................................ 125,000
Accountants' fees and expenses.................................................... 200,000
Blue sky fees and expenses........................................................ 10,000
Counsel fees and expenses......................................................... 400,000
Transfer Agent's fees............................................................. 5,000
Directors' and Officers' Insurance................................................ 132,000
Miscellaneous..................................................................... 35,333
--------
Total................................................................... $927,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article 607.0850 of the Florida Business Corporation Act (the "Florida
Act") and Article 9 of the Company's Amended and Restated Bylaws (the "Bylaws")
permit the Company to indemnify a present or former director of the Company for
liabilities, including legal expenses, arising by reason of service in such
capacity if such person shall have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and in any criminal proceeding if such person had no reasonable cause
to believe his conduct was unlawful. However, no indemnification may be made
with respect to any matter as to which the actions of such director shall have
been adjudged to constitute: (i) a violation of criminal law, unless the
individual had reasonable cause to believe his conduct was lawful or had no
reason to believe his conduct was unlawful; (ii) a transaction from which the
individual derived an improper personal benefit; (iii) a circumstance under
which the liability provisions of Section 607.0834 of the Florida Act, which
relates to unlawful distribution of Company assets, are applicable; or (iv)
willful misconduct or conscious disregard of the best interests of the Company
in a proceeding by or in the right of the Company to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder. Moreover, in the
case of actions brought by or in the right of the Company, indemnification may
be made if the person acted in good faith, and in a manner that such person
reasonably believed to be in, or not opposed to, the best interests of the
Company; provided, however, that no indemnification may be made for any claim,
issue or matter as to which such person shall have been adjudged to be liable,
unless, and only to the extent that, the court in which the judgment was made or
another court of competent jurisdiction determines that such person is entitled
to indemnification.
The Company intends to enter into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements will provide that no
indemnification or advancement of expenses shall be made (a) if a final
adjudication establishes that his actions or omissions to act were material to
the cause of action so adjudicated and constitute: (i) a violation of criminal
law (unless the indemnitee had reasonable cause to believe that his actions were
lawful); (ii) a transaction from which the indemnitee derived an improper
personal benefit; (iii) an unlawful distribution or dividend under the Florida
Act; or (iv) willful misconduct or a conscious disregard for the joint interests
of the Company in a derivative or shareholder action; (b) for liability under
II-1
<PAGE> 84
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"); or
(c) if a final decision by a court having jurisdiction in the matter determines
that indemnification is not lawful.
The Company intends to purchase a standard policy of directors' and
officers' liability insurance covering directors and officers of the Company
with respect to liabilities incurred as a result of their service in such
capacities and has purchased a rider to that policy covering liabilities under
federal and state securities laws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The share numbers presented below are provided with respect to the shares
of Class A Common, Class B Common, Class C Common, Class D Common and Class E
Common which are subject to the recapitalization on a share for share basis into
Common Stock, and reflect the 2.3231-for-one stock split in the form of a 132%
stock dividend on all shares of capital stock outstanding on May 6, 1996.
Class A Common Stock
In April 1993, the Company issued a total of 1,393,859 shares of Class A
Common Stock to five officers of the Company at $0.0043 per share. The Company
recorded a compensation expense of $6,000.
Class B Common Stock
Pursuant to a Private Placement Memorandum, dated April 5, 1993, the
Company offered 929,240 and sold 511,082 shares of Class B Common Stock to
investors for $1.08 per share. The aggregate consideration paid to the Company
for these shares of Class B Common was $550,000. Each of the investors was
either an accredited investor or known personally by officers of the Company
prior to the transaction. By its terms, this offering expired in October 1993.
Class C Common Stock and Class D Common Stock
Pursuant to a Private Placement Memorandum, dated August 31, 1993, the
Company offered 464,620 shares of Class C Common Stock and 116,155 shares of
Class D Common Stock for sale to investors. The offering prices were $2.15 per
share of Class C Common Stock and $4.30 per share of Class D Common Stock. The
investors purchased 185,848 shares of Class C Common Stock and 23,231 shares of
Class D Common Stock. The aggregate consideration paid to the Company was
$400,000 for shares of Class C Common Stock and $100,000 for shares of Class D
Common Stock. All purchasers of the Class C Common Stock were banks as defined
by the Securities Act. Each of the investors was either an accredited investor
or known personally by officers of the Company prior to the transaction. This
offering expired in February 1994.
Class E Common Stock
From February 1994 through May 31, 1996, the Company sold a total of
293,758 shares of Class E Common Stock to employees, officers, directors and
service providers of the Company. These sales were made pursuant to the exercise
of options granted by the Company under its Stock Option Plans to these
employees, officers, directors and service providers. The option exercise prices
range from $1.08 per share to $4.74 per share. The aggregate consideration
received by the Company for these shares of Class E Common Stock was $748,434.
From November 1994 through January 1995, the Company sold a total of
628,610 shares of Class E Common Stock to existing shareholders, employees,
officers and directors of the Company at a price of $4.30 per share pursuant to
a rights offering and certain preemptive rights associated therewith. Each of
the investors was either an accredited investor or known personally by officers
of the Company prior to the transaction. The aggregate consideration paid by the
investors for these shares of Class E Common Stock was $2,111,930.
Each issuance of securities described above was made in reliance on one or
more of the exemptions from registration provided by Sections 3(a)(11), 4(2) and
4(6) of the Securities Act, Regulation D and Rule 701, as promulgated by the SEC
pursuant to the Securities Act. Recipients of securities in these transactions
II-2
<PAGE> 85
represented their intention to acquire the securities for investment purposes
only and not with a view to or for the sale in connection with any distribution
thereof, and appropriate legends were affixed to the share certificates issued
in such transactions. All recipients of these securities had adequate access,
through their relationships with the Company, to information about the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement by and among the Company, J.C. Bradford & Co. and
Advest, Inc.
3.1 -- Amended and Restated Articles of Incorporation.
3.2 -- Amended and Restated Bylaws.
3.3 -- Amendment to Amended and Restated Articles of Incorporation, filed with the
Secretary of State of Florida on May 9, 1996.
3.4 -- Form of Amended and Restated Articles of Incorporation to be filed with the
Secretary of State of the State of Florida on the Closing Date.
3.5 -- Form of Amended and Restated Bylaws to be filed with the Secretary of State of the
State of Florida on the Closing Date.
3.6 -- Form of Amendment to Amended and Restated Articles of Incorporation.
4.1 -- See Exhibits 3.1 through 3.6 for provisions of the Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws defining the rights of the holders of
Common Stock of the Registrant.
4.2 -- Specimen Common Stock Certificate (hard copy to be filed separately).
4.3 -- Amended and Restated Phoenix International Ltd., Inc. Stockholders Agreement, dated
as of August 31, 1993, among Company, Bahram Yusefzadeh, Michael Newes, Terry
Soifer, George Taylor, William Toole and other shareholders, as amended.**
4.4 -- Form of Investment Intent and Non-Distribution Letter.**
4.5 -- Form of registration rights letter.
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P., counsel to the Registrant, as
to the legality of the shares being registered.*
9.1 -- Voting Trust Agreement, dated April 4, 1993.**
10.1 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 1, effective as of
February 19, 1994.**
10.2 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 2, effective as of
February 19, 1994.**
10.3 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 3, effective as of
February 19, 1994.**
10.4 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 4, effective as of
February 19, 1994.**
10.5 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 5, effective as of
February 19, 1994.**
10.6 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 6, effective as of
September 1, 1994.**
10.7 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 7, effective as of
September 1, 1994.**
10.8 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 8, effective as of
September 1, 1994.**
10.9 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 10, effective as of
October 31, 1994.**
10.10 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 11, effective as of
September 1, 1994.**
10.11 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 12, effective as of
February 19, 1994.**
</TABLE>
II-3
<PAGE> 86
<TABLE>
<C> <C> <S>
10.12 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan, effective as of
March 18, 1995.**
10.13 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan, effective as of
October 21, 1995.**
10.14 -- Employment Agreement by and between Company and Bahram Yusefzadeh, dated December
28, 1995.**
10.15 -- First Amendment to Employment Agreement by and between Company and Bahram
Yusefzadeh, dated May 22, 1996.
10.16 -- Employment Agreement by and between Company and Ralph Reichard, dated December 28,
1995.**
10.17 -- First Amendment to Employment Agreement by and between Company and Ralph Reichard,
dated May 22, 1996.
10.18 -- Employment Agreement by and between Company and Clay E. Scarborough, dated May 23,
1996.
10.19 -- Employment Agreement by and between Company and Michael R. Newes, dated April 12,
1996.**
10.20 -- Employment Agreement by and between Company and Gerald P. Nissen, dated April 12,
1996.**
10.21 -- Employment Agreement by and between Company and Twanna C. Soifer, dated April 12,
1996.**
10.22 -- Form of Employee Confidentiality Agreement.**
10.23 -- Promissory Note, dated November 17, 1994, from Bahram Yusefzadeh to Company in the
amount of $40,854.**
10.24 -- Promissory Note, dated December 19, 1994, from the Yusefzadeh Family Limited
Partnership to Company in the amount of $932,910.
10.25 -- Promissory Note, dated January 30, 1995, from the Yusefzadeh Family Limited
Partnership to Company in the amount of $344,760.
10.26 -- OEM Software License Agreement, dated June 30, 1995, between Company and Gupta
Corporation.+**
10.27 -- Value Added Remarketer Agreement, dated October 13, 1993, between Company and
Sybase, Inc.+**
10.28 -- Software License Agreement between Unisys Corporation and Company, dated March 16,
1996.+**
10.29 -- General Agreement for Strategic Relationship between Company and Hewlett-Packard
Company, dated April 30, 1993.+**
10.30 -- Form of Software License Agreement.+**
10.31 -- Form of International Software License Agreement.+**
10.32 -- Form of Disaster Recovery Service Agreement.+**
10.33 -- Form of Software Deposit Agreement.+**
10.34 -- Form of Confidentiality and Non-Disclosure Agreement.**
10.35 -- Form of Confidentiality Agreement.**
10.36 -- Form of Mutual Non-Disclosure Agreement.**
10.37 -- Form of Confidentiality/Non-Disclosure Agreement Remitting Access to System
Documentation and Data Files for Data Conversion.**
10.38 -- Form of Phoenix International Ltd., Inc. Confidentiality Agreement.**
10.39 -- Standard Commercial Lease, dated December 8, 1993, between Company and ABR Spectrum,
Ltd. with respect to Suite 140, 900 Winderley Place, Maitland, Florida premises, as
modified January 24, 1994.**
10.40 -- Sublease Agreement, dated September 28, 1995, between Company and CCS Technology
Group, Inc. with respect to Suite 120, 900 Winderley Place, Maitland, Florida
premises.**
10.41 -- The Principal Financial Group Prototype for Savings Plans (401k), as amended, and
the Group Annuity Contract for the Company.**
10.42 -- Remarketing Agreement and Support Authorization, dated as of April 22, 1996, between
the Company and Computer Systems Associates (Nigeria) Limited.+
</TABLE>
II-4
<PAGE> 87
<TABLE>
<C> <C> <S>
10.43 -- Amendment, dated May 24, 1996, to the Phoenix International Ltd., Inc. Stock Option
Plan, effective as of March 18, 1995.
10.44 -- Amendment, dated May 24, 1996, to the Phoenix International Ltd., Inc. Stock Option
Plan, effective as of October 21, 1995.
10.45 -- Revised Form of Stock Option Agreement for the Phoenix International Ltd., Inc.
Stock Option Plan, effective as of October 21, 1995.
10.46 -- Phoenix International Ltd., Inc. 1996 Director Stock Option Plan.
10.47 -- Form of the Company's Director Indemnity Agreement.
10.48 -- Promissory Note, dated May 14, 1996, from the Company to Barnett Bank of Central
Florida, N.A. ("Barnett Bank").
10.49 -- Business Loan Agreement, dated May 14, 1996, between the Company and Barnett Bank.
10.50 -- Commercial Security Agreement, dated May 14, 1996, between the Company and Barnett
Bank.
10.51 -- Continuing Unlimited Commercial Guarantee, dated May 14, 1995, made by Bahram
Yusefzadeh for the benefit of Barnett Bank.
10.52 -- Commitment letter dated May 1, 1996 from Barnett Bank to Company.
10.53 -- Master Note Modification Agreement, dated as of May 22, 1996, by and among Bahram
Yusefzadeh, the Yusefzadeh Family Limited Partnership and the Company.
10.54 -- Form of Promissory Note for employee loans from the Company.
10.55 -- Form of Stock Pledge and Security Agreement for employee loans from Company.
11.1 -- Statement re: Computation of Per Share Earnings.**
21.1 -- Subsidiary Schedule.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included as part of Exhibit
5.1).*
24.1 -- Powers of Attorney for the following individuals: Clay E. Scarborough, Michael R.
Newes, Ronald E. Fenton, William E. Hess, James C. Holly, Paul Jones, J. Michael
Murphy and O. Jay Tomson.**
24.2 -- Power of Attorney for Glenn W. Sturm (contained on the signature page of this
filing).
27.1 -- Article 5 Financial Data Schedule.
</TABLE>
- ---------------
+ Confidential treatment requested.
* To be filed by amendment.
** Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES. All information required by the
financial statement schedules is included in the Consolidated Financial
Statements and the accompanying Notes.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the
Representatives at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Representatives to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE> 88
The undersigned Registrant hereby undertakes that,
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4 ) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on June 14, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ BAHRAM YUSEFZADEH
------------------------------------
Bahram Yusefzadeh
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- -------------------------------- --------------
<C> <S> <C>
/s/ BAHRAM YUSEFZADEH Chairman of the Board and Chief June 14, 1996
- --------------------------------------------- Executive Officer (principal
Bahram Yusefzadeh executive officer)
* Chief Operating Officer, June 14, 1996
- --------------------------------------------- President and Director
Ralph H. Reichard
* Chief Financial Officer June 14, 1996
- --------------------------------------------- (principal financial and
Clay E. Scarborough accounting officer)
* Senior Vice President, Director June 14, 1996
- ---------------------------------------------
Michael R. Newes
* Director June 14, 1996
- ---------------------------------------------
Ronald E. Fenton
* Director June 14, 1996
- ---------------------------------------------
William E. Hess
* Director June 14, 1996
- ---------------------------------------------
James C. Holly
* Director June 14, 1996
- ---------------------------------------------
Paul Jones
* Director June 14, 1996
- ---------------------------------------------
J. Michael Murphy
* Director June 14, 1996
- ---------------------------------------------
O. Jay Tomson
</TABLE>
*By: /s/ BAHRAM YUSEFZADEH
---------------------------------
Bahram Yusefzadeh
Attorney-in-Fact
II-7
<PAGE> 90
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Bahram Yusefzadeh and Ralph H. Reichard,
and each of them, as true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any related
Registration Statement pursuant to Rule 462 under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully and to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all which such
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- -------------------------------- --------------
<C> <S> <C>
/s/ GLENN W. STURM Director June 14, 1996
- ---------------------------------------------
Glenn W. Sturm
</TABLE>
II-8
<PAGE> 91
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------ -------------------------------------------------------------------------- -----------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement by and among the Company, J.C. Bradford &
Co. and Advest, Inc.......................................................
3.1 -- Amended and Restated Articles of Incorporation............................
3.2 -- Amended and Restated Bylaws...............................................
3.3 -- Amendment to Amended and Restated Articles of Incorporation, filed with
the Secretary of State of Florida on May 9, 1996..........................
3.4 -- Form of Amended and Restated Articles of Incorporation to be filed with
the Secretary of State of the State of Florida on the Closing Date........
3.5 -- Form of Amended and Restated Bylaws to be filed with the Secretary of
State of the State of Florida on the Closing Date.........................
3.6 -- Form of Amendment to Amended and Restated Articles of Incorporation.......
4.1 -- See Exhibits 3.1 through 3.6 for provisions of the Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws defining the
rights of the holders of Common Stock of the Registrant...................
4.2 -- Specimen of Common Stock Certificate (hard copy to be filed separately)...
4.3 -- Amended and Restated Phoenix International Ltd., Inc. Stockholders
Agreement, dated as of August 31, 1993, among Company, Bahram Yusefzadeh,
Michael Newes, Terry Soifer, George Taylor, William Toole and other
shareholders, as amended**................................................
4.4 -- Form of Investment Intent and Non-Distribution Letter**...................
4.5 -- Form of registration rights letter........................................
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P., counsel to the
Registrant, as to the legality of the shares being registered*............
9.1 -- Voting Trust Agreement, dated April 4, 1993**.............................
10.1 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 1,
effective as of February 19, 1994**.......................................
10.2 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 2,
effective as of February 19, 1994**.......................................
10.3 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 3,
effective as of February 19, 1994**.......................................
10.4 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 4,
effective as of February 19, 1994**.......................................
10.5 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 5,
effective as of February 19, 1994**.......................................
10.6 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 6,
effective as of September 1, 1994**.......................................
10.7 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 7,
effective as of September 1, 1994**.......................................
10.8 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 8,
effective as of September 1, 1994**.......................................
10.9 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 10,
effective as of October 31, 1994**........................................
10.10 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 11,
effective as of September 1, 1994**.......................................
10.11 -- Phoenix International Ltd., Inc. Incentive Stock Option Plan No. 12,
effective as of February 19, 1994**.......................................
10.12 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
effective as of March 18, 1995**..........................................
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------ -------------------------------------------------------------------------- -----------
<C> <C> <S> <C>
10.13 -- Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
effective as of October 21, 1995**........................................
10.14 -- Employment Agreement by and between Company and Bahram Yusefzadeh, dated
December 28, 1995**.......................................................
10.15 -- First Amendment to Employment Agreement by and between Company and Bahram
Yusefzadeh, dated May 22, 1996............................................
10.16 -- Employment Agreement by and between Company and Ralph Reichard, dated
December 28, 1995**.......................................................
10.17 -- First Amendment to Employment Agreement by and between Company and Ralph
Reichard, dated May 22, 1996..............................................
10.18 -- Employment Agreement by and between Company and Clay E. Scarborough, dated
May 23, 1996..............................................................
10.19 -- Employment Agreement by and between Company and Michael R. Newes, dated
April 12, 1996**..........................................................
10.20 -- Employment Agreement by and between Company and Gerald P. Nissen, dated
April 12, 1996**..........................................................
10.21 -- Employment Agreement by and between Company and Twanna C. Soifer, dated
April 12, 1996**..........................................................
10.22 -- Form of Employee Confidentiality Agreement**..............................
10.23 -- Promissory Note, dated November 17, 1994, from Bahram Yusefzadeh to
Company in the amount of $40,854**........................................
10.24 -- Promissory Note, dated December 19, 1994, from the Yusefzadeh Family
Limited Partnership to Company in the amount of $932,910..................
10.25 -- Promissory Note, dated January 30, 1995, from the Yusefzadeh Family
Limited Partnership to Company in the amount of $344,760..................
10.26 -- OEM Software License Agreement, dated June 30, 1995, between Company and
Gupta Corporation+**......................................................
10.27 -- Value Added Remarketer Agreement, dated October 13, 1993, between Company
and Sybase, Inc.+**.......................................................
10.28 -- Software License Agreement between Unisys Corporation and Company, dated
March 16, 1996+**.........................................................
10.29 -- General Agreement for Strategic Relationship between Company and
Hewlett-Packard Company, dated April 30, 1993+**..........................
10.30 -- Form of Software License Agreement+**.....................................
10.31 -- Form of International Software License Agreement+**.......................
10.32 -- Form of Disaster Recovery Service Agreement+**............................
10.33 -- Form of Software Deposit Agreement+**.....................................
10.34 -- Form of Confidentiality and Non-Disclosure Agreement**....................
10.35 -- Form of Confidentiality Agreement**.......................................
10.36 -- Form of Mutual Non-Disclosure Agreement**.................................
10.37 -- Form of Confidentiality/Non-Disclosure Agreement Remitting Access to
System Documentation and Data Files for Data Conversion**.................
10.38 -- Form of Phoenix International Ltd., Inc. Confidentiality Agreement**......
10.39 -- Standard Commercial Lease, dated December 8, 1993, between Company and ABR
Spectrum, Ltd. with respect to Suite 140, 900 Winderley Place, Maitland,
Florida premises, as modified January 24, 1994**..........................
10.40 -- Sublease Agreement, dated September 28, 1995, between Company and CCS
Technology Group, Inc. with respect to Suite 120, 900 Winderley Place,
Maitland, Florida premises**..............................................
</TABLE>
<PAGE> 93
<TABLE>
<CAPTION>
LOCATION OF
EXHIBIT IN
SEQUENTIAL
EXHIBIT NUMBERING
NUMBER DESCRIPTION OF DOCUMENT SYSTEM
- ------ -------------------------------------------------------------------------- -----------
<C> <C> <S> <C>
10.41 -- The Principal Financial Group Prototype for Savings Plans (401k), as
amended, and the Group Annuity Contract for the Company**.................
10.42 -- Remarketing Agreement and Support Authorization, dated as of April 22,
1996, between the Company and Computer Systems Associates (Nigeria)
Limited.+.................................................................
10.43 -- Amendment, dated May 24, 1996, to the Phoenix International Ltd., Inc.
Stock Option Plan, effective as of March 18, 1995.........................
10.44 -- Amendment, dated May 24, 1996, to the Phoenix International Ltd., Inc.
Stock Option Plan, effective as of October 21, 1995.......................
10.45 -- Revised Form of Stock Option Agreement for the Phoenix International Ltd.,
Inc. Stock Option Plan, effective as of October 21, 1995..................
10.46 -- Phoenix International Ltd., Inc. 1996 Director Stock Option Plan..........
10.47 -- Form of the Company's Director Indemnity Agreement........................
10.48 -- Promissory Note, dated May 14, 1996, from the Company to Barnett Bank of
Central Florida, N.A. ("Barnett Bank")....................................
10.49 -- Business Loan Agreement, dated May 14, 1996, between the Company and
Barnett Bank..............................................................
10.50 -- Commercial Security Agreement, dated May 14, 1996, between the Company and
Barnett Bank..............................................................
10.51 -- Continuing Unlimited Commercial Guarantee, dated May 14, 1995, made by
Bahram Yusefzadeh for the benefit of Barnett Bank.........................
10.52 -- Commitment letter dated May 1, 1996 from Barnett Bank to Company..........
10.53 -- Master Note Modification Agreement, dated as of May 22, 1996, by and among
Bahram Yusefzadeh, the Yusefzadeh Family Limited Partnership and
the Company...............................................................
10.54 -- Form of Promissory Note for employee loans from Company...................
10.55 -- Form of Stock Pledge and Security Agreement for employee loans from
Company...................................................................
11.1 -- Statement re: Computation of Per Share Earnings**.........................
21.1 -- Subsidiary Schedule.......................................................
23.1 -- Consent of Ernst & Young LLP..............................................
23.2 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included as part of
Exhibit 5.1)*.............................................................
24.1 -- Powers of Attorney for the following individuals: Clay E. Scarborough,
Michael R. Newes, Ronald E. Fenton, William E. Hess, James C. Holly, Paul
Jones, J. Michael Murphy and O. Jay Tomson.**.............................
24.2 -- Power of Attorney for Glenn W. Sturm (contained on the signature page of
this filing)..............................................................
27.1 -- Article 5 Financial Data Schedule.........................................
</TABLE>
- ---------------
+ Confidential treatment requested.
* To be filed by amendment.
** Previously filed.
<PAGE> 1
EXHIBIT 1.1
FORM OF
UNDERWRITING
AGREEMENT
PHOENIX INTERNATIONAL LTD., INC.
1,077,500 Shares
of
Common Stock
UNDERWRITING AGREEMENT
__________, 1996
J. C. BRADFORD & CO.
ADVEST, INC.
As Representatives of the Several Underwriters
c/o J. C. Bradford & Co.
J. C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201
Ladies and Gentlemen:
Phoenix International Ltd., Inc., a Florida corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters") for whom you are acting as the representatives (the
"Representatives") 670,000 shares of the common stock, par value $.01 per share
("Common Stock"), of the Company (the "Company Shares"), and the shareholders
of the Company named on Schedule II hereto (the "Selling Shareholders") propose
to sell to the Underwriters 407,500 shares of Common Stock (the "Selling
Shareholder Shares"). The Company Shares and the Selling Shareholder Shares
are hereinafter referred to as the "Firm Shares". The Firm Shares are to be
sold to the Underwriters, acting severally and not jointly, in such amounts as
are set forth in Schedule I hereto opposite the name of each Underwriter.
Certain of the Selling Shareholders also propose to grant to the Underwriters
an option to purchase up to 161,625 additional shares of Common Stock as
provided for in Section 3 of this Agreement and in Schedule III hereto for the
purpose of covering over-allotments in connection with the distribution and
sale of the Firm Shares (the "Option Shares"). The Firm Shares and the Option
Shares are herein called the "Shares."
1. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter and agrees as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), a registration statement on Form S-1 (Registration
No. 333-03355), including the related preliminary prospectus relating to
the Shares, and has filed one or more amendments thereto. Copies of such
registration statement and any amendments, including any post-effective
amendments, and all forms of the related prospectuses contained therein and
any supplements thereto, have been delivered to you. Such registration
statement, together with any registration
<PAGE> 2
statement filed by the Company pursuant to Rule 462(b) of the Securities
Act, including the prospectus, Part II, all financial schedules and
exhibits thereto, and all information deemed to be a part of such
registration statement pursuant to Rule 430A under the Securities Act, as
amended, at the time when it shall become effective, is herein referred to
as the "Registration Statement," and the prospectus included as part of the
Registration Statement on file with the Commission that discloses all the
information that was omitted from the prospectus on the effective date
pursuant to Rule 430A of the Rules and Regulations (as defined below) and
in the form filed pursuant to Rule 424(b) under the Securities Act is
herein referred to as the "Final Prospectus." The prospectus included as
part of the Registration Statement on the date when the Registration
Statement became effective (including the information deemed to be a part
thereof pursuant to Rule 430A) is referred to herein as the "Effective
Prospectus." Any prospectus included in the Registration Statement and in
any amendment thereto prior to the effective date of the Registration
Statement is referred to herein as a "Preliminary Prospectus." For
purposes of this Agreement, "Rules and Regulations" mean the rules and
regulations promulgated by the Commission under either the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus, at
the time of filing thereof, complied with the requirements of the
Securities Act and the Rules and Regulations, and did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; except that the foregoing does not apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter specifically for use therein
(it being understood that the only information so provided is the
information included in the last paragraph on the cover page, the paragraph
relating to stabilization practices on the inside front cover and the first
four paragraphs under the caption "Underwriting" in the Final Prospectus).
When the Registration Statement becomes effective and at all times
subsequent thereto up to and including the First Closing Date (as
hereinafter defined), (i) the Registration Statement, the Effective
Prospectus and Final Prospectus and any amendments or supplements thereto
will contain all statements which are required to be stated therein in
accordance with the Securities Act, the Exchange Act and the Rules and
Regulations and will comply with the requirements of the Securities Act,
the Exchange Act and the Rules and Regulations, and (ii) neither the
Registration Statement, the Effective Prospectus nor the Final Prospectus
nor any amendment or supplement thereto will include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; except that the
foregoing does not apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
information so provided is the information included in the last paragraph
on the cover page, the paragraph relating to stabilization practices on the
inside front cover and the first four paragraphs under the caption
"Underwriting" in the Final Prospectus).
(c) The Company and each subsidiary of the Company (as used herein,
the term "subsidiary" includes any corporation, joint venture or
partnership in which the Company or any subsidiary of the Company has an
ownership interest in excess of 5%) is duly organized and validly existing
and in good standing under the laws of the respective jurisdictions of
their organization or incorporation, as the case may be, with full
corporate power and authority to own
- 2 -
<PAGE> 3
their properties and conduct their businesses as now conducted and
described in the Final Prospectus and the Registration Statement and are
duly qualified or authorized to do business and are in good standing in all
jurisdictions wherein the nature of their business or the character of
property owned or leased may require them to be qualified or authorized to
do business. The Company and its subsidiaries hold all licenses, consents
and approvals, and have satisfied all eligibility and other similar
requirements imposed by federal and state regulatory bodies, administrative
agencies or other governmental bodies, agencies or officials, in each case
as material to the conduct of the respective businesses in which they are
engaged. Each of the Company's subsidiaries is set forth on Exhibit 21 to
the Registration Statement.
(d) The outstanding stock of each of the Company's corporate
subsidiaries is duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding stock of each of the Company's
subsidiaries is owned by the Company, clear of any lien, encumbrance,
pledge, equity or claim of any kind, and was issued and sold in compliance
with all applicable Federal and State securities laws. No shares of
capital stock of the Company or any of its subsidiaries has been issued in
violation of any preemptive or similar rights. No options or warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into any shares of capital stock or of
ownership interests in any of the Company's subsidiaries are outstanding.
Other than as disclosed in the Effective Prospectus and the Final
Prospectus, neither the Company nor any of its subsidiaries is a partner or
joint venturer in any partnership or joint venture.
(e) The historical capitalization of the Company as of March 31,
1996 is as set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus, and the Company's capital stock
conforms to the description thereof contained in the Effective Prospectus
and the Final Prospectus, including under the caption "Description of
Capital Stock." All the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable.
None of the issued shares of capital stock of the Company have been issued
in violation of any preemptive or similar rights. The Shares have been
duly and validly authorized and, upon issuance and delivery and payment
therefor in the manner herein described, will be validly issued, fully paid
and nonassessable. There are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the transfer of, any
shares of Common Stock pursuant to the Company's articles of incorporation,
bylaws or other governing documents or any agreement or other instrument to
which the Company is a party or by which it may be bound except as
described in the Effective Prospectus and the Final Prospectus and except
for restrictions on transfer imposed under applicable securities laws.
Neither the filing of the Registration Statement nor the offer or sale of
the Shares as contemplated by this Agreement gives rise to any rights, for
or relating to the registration of any shares of Common Stock or any other
securities of the Company, other than rights relating to shares included in
the Firm shares or the Option Shares and such other rights as have been
waived by the holder or holders thereof to the date hereof. The
Underwriters will receive good and marketable title to the Shares to be
issued and delivered by the Company hereunder, free and clear of all liens,
encumbrances, claims, security interests, restrictions, shareholders'
agreements and voting trusts whatsoever. Except as disclosed in the
Effective Prospectus and the Final Prospectus, there are no outstanding
warrants, options, convertible securities or other rights to purchase or
commitments of sale related to or entitling any person to purchase or
otherwise acquire any securities or interest in the Company or any
subsidiary.
- 3 -
<PAGE> 4
(f) All offers and sales of the Company's securities prior to the
date hereof were at all relevant times exempt from the registration
requirements of the Securities Act and were duly registered or the subject
of an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
(g) The Company has full legal right, power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein, and this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms. No consent, approval, authorization or order of
any court or governmental agency or body or third party is required for the
performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except such as have been
obtained and such as may be required by the National Association of
Securities Dealers, Inc. ("NASD") or under the Securities Act, or state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters. The issue and sale of the
Shares by the Company, the Company's performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in a
breach or violation of, or conflict with, any of the terms and provisions
of, or constitute a default by the Company or any of its subsidiaries
under, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or to which the Company or any of its subsidiaries
or any of their respective properties is subject, the articles of
incorporation or bylaws of the Company or any of its subsidiaries or any
statute or any judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to the Company, or any subsidiary or
any of their respective properties. Neither the Company nor any subsidiary
is in violation of its articles of incorporation, bylaws or other governing
instrument or any law, administrative rule or regulation or arbitrators' or
administrative or court decree, judgment or order or in violation or
default (there being no existing state of facts which with notice or lapse
of time or both would constitute a default) in the performance or
observance of any obligation, agreement, covenant or condition contained in
any material contract, indenture, deed of trust, mortgage, loan agreement,
note, lease, agreement or other instrument or permit to which it is a party
or by which it or any of its properties is or may be bound.
(h) The consolidated financial statements and the related notes of
the Company, together with related notes and schedules, included in the
Registration Statement, the Effective Prospectus and the Final Prospectus
present fairly the financial position, results of operations and changes in
financial position and cash flow of the Company and its subsidiaries, at
the dates and for the periods to which they relate and have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, and all adjustments
necessary for a fair presentation of results for such periods have been
made. The other financial statements and schedules included in or as
schedules to the Registration Statement conform to the requirements of the
Securities Act, the Exchange Act and the Rules and Regulations and present
fairly the information presented therein for the periods shown. The
financial and statistical data set forth in the Effective Prospectus and
the Final Prospectus, including such data under the captions "Prospectus
Summary," "Use of Proceeds," "Dilution," "Capitalization," "Selected
Consolidated Financial and Operating Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business,"
"Management," "Principal and Selling Shareholders," and "Certain
Transactions," present fairly the information set forth therein, and such
data has been compiled and presented on a basis
- 4 -
<PAGE> 5
consistent with the financial statements presented therein and in the books
and records of the Company. The Company and its subsidiaries have no
material contingent obligations that are required to be disclosed in the
Company's financial statements in accordance with generally accepted
accounting principles which have not been so disclosed in the financial
statements included in the Registration Statement. Ernst & Young, LLP, who
have certified the financial statements of the Company, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(i) Subsequent to January 1, 1996, neither the Company nor any
subsidiary has sustained any material loss or interference with its
business or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, which is not disclosed in
the Effective Prospectus and the Final Prospectus; and subsequent to the
respective dates as of which information is given in the Registration
Statement, the Effective Prospectus and the Final Prospectus, (i) neither
the Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business, and (ii)
there has not been any change in the capital stock, partnership interests,
joint venture interests, long-term debt, obligations under capital leases
or short-term borrowings of the Company and its subsidiaries or any
issuance of options, warrants or rights to purchase the capital stock of
the Company, or any adverse change, or any development involving a
prospective adverse change, in the general affairs, management, business,
prospects, financial position, net worth or results of operations of the
Company or its subsidiaries, except in each case as described in or
contemplated by the Effective Prospectus and the Final Prospectus.
(j) Except as described in the Effective Prospectus and the Final
Prospectus, there is not pending, or to the knowledge of the Company
threatened, any action, suit, proceeding, inquiry or investigation, to
which the Company, any of its subsidiaries or any of their officers or
directors is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court, administrative
agency, governmental agency, body or otherwise, wherein an unfavorable
decision, ruling or finding could prevent or materially hinder the
consummation of this Agreement or result in a material adverse change in
the business condition (financial or other), prospects, financial position,
net worth or results of operations of the Company or its subsidiaries.
(k) There are no contracts or other documents required by the
Securities Act or by the Rules and Regulations to be described in the
Registration Statement, the Effective Prospectus or the Final Prospectus or
to be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(l) Except as described in the Effective Prospectus and the Final
Prospectus, the Company and each of its subsidiaries have good and
marketable title to all real and material personal property owned by them,
free and clear of all liens, charges, encumbrances or defects, except those
reflected in the financial statements hereinabove described. The real and
personal property and buildings referred to in the Effective Prospectus and
the Final Prospectus which are leased from others by the Company are held
under valid, subsisting and enforceable leases. The Company or its
subsidiaries owns or leases all such properties as are necessary to its
operations as now conducted.
- 5 -
<PAGE> 6
(m) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences and (v) such controls would
prevent or detect errors or irregularities in amounts that would be
material in relation to the Company's financial statements. Neither the
Company, any of its subsidiaries, nor any director, officer, agent,
employee or other person associated with or acting on behalf of the Company
or any such subsidiary has, directly or indirectly used any funds of the
Company or any of its subsidiaries for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
funds of the Company or any of its subsidiaries; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback or other payment, or received
or retained any funds, in violation of any law, rule or regulation.
(n) The Company and its subsidiaries have filed all federal, state
and local income and franchise tax returns required to be filed through the
date hereof and have paid all taxes shown as due therefrom; and there is no
tax deficiency, assessment, fine or penalty or that has been, nor does the
Company or any subsidiary have knowledge of any tax deficiency, assessment,
fine or penalty which is likely to be, asserted against the Company or its
subsidiaries, which if determined adversely could materially and adversely
affect the earnings, assets, affairs, business prospects or condition
(financial or other) of the Company or its subsidiaries. All tax
liabilities incurred as of the respective dates of the financial statements
have been adequately provided for in the financial statements of the
Company.
(o) The Company and its subsidiaries operate their business in each
jurisdiction in which the Company or any of its subsidiaries is doing
business in conformity with all applicable statutes, ordinances, decrees,
orders, rules and regulations of all applicable governmental bodies,
including federal, state and local governing bodies in the United States
and all foreign governments in areas outside of the United States. The
Company and its subsidiaries have all licenses, approvals or consents to
operate their respective business in all locations in which such businesses
are currently being operated, and the Company and its subsidiaries are not
aware of any existing or imminent matter which may adversely impact their
operations or business prospects other than as specifically disclosed in
the Effective Prospectus and the Final Prospectus. The Company has not
engaged in any activity, whether alone or in concert with one of its
customers, creating the potential for exposure to civil or criminal
monetary liability or other material sanctions under federal or state laws
regulating consumer credit transactions, debt collection practices or other
violations of law.
(p) Neither the Company nor any of its subsidiaries have failed to
file with the applicable regulatory authorities any statement, report,
information or form required by any applicable law, regulation or order;
all such filings or submissions were in compliance with applicable laws
when filed and no deficiencies have been asserted by any regulatory
commission, agency or authority with respect to such filings or
submissions. Neither the Company nor any of its subsidiaries have failed
to maintain in full force and effect any license or
- 6 -
<PAGE> 7
permit necessary or proper for the conduct of its business, or received any
notification that any revocation or limitation thereof is threatened or
pending, and there is not pending any change under any law, regulation,
license or permit which could materially adversely affect its business,
operations, property or business prospects. Neither the Company nor any of
its subsidiaries have received any notice of violation of or been
threatened with a charge of violating and, are not under investigation with
respect to a possible violation of any provision of any law, regulation or
order.
(q) No labor dispute exists with the Company's employees or with
employees of its subsidiaries or is imminent which could materially
adversely affect the Company or any of its subsidiaries. The Company is
not aware of any existing or imminent labor disturbance by its employees or
by any employees of its subsidiaries which could be expected to adversely
effect the condition (financial or otherwise), results of operations,
properties, affairs, management, business affairs or business prospects of
the Company or any of its subsidiaries.
(r) The Company and its subsidiaries own or possess the licenses,
patents, patent rights, copyrights, trademarks, service marks, trade names
and proprietary and other confidential information and trade secrets
presently employed by them in connection with the businesses now operated
by them, and neither the Company nor any of its subsidiaries have received
any notice of infringement of or conflict with asserted rights of others
with respect to any of the foregoing which, alone or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in
any adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or its
subsidiaries.
(s) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and adequate for the conduct of their
respective businesses and the value of their respective properties and is
customary for companies engaged in similar industries; and neither the
Company nor any such subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a comparable cost.
(t) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any
other distributions on such subsidiary's capital stock, from repaying to
the Company any loans or advances to such subsidiary or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company.
(u) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(v) Neither the Company nor any of its subsidiaries, nor any of the
directors, officers, employees or agents of the Company and its
subsidiaries have taken and will not take, directly or indirectly, any
action designed to cause or result in, or which has constituted or which
might be expected to constitute, stabilization or manipulation of the price
of the Common Stock.
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<PAGE> 8
(w) The Shares have been approved for listing on the Nasdaq Stock
Market's National Market upon notice of issuance.
(x) The Company has previously disclosed and delivered or made
available to the Underwriters or their representatives prior to the date
the Registration Statement was declared effective copies in each case of,
all pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term
is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), adopted, maintained, sponsored in whole or
in part, or contributed to, by the Company, its predecessors, or any
subsidiary of the Company or its predecessors for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate (collectively, the "Company Benefit Plans").
The Company and its subsidiaries (and each predecessor of the
Company or a subsidiary that adopted or contributed to a Company Benefit
Plan) have maintained all Company Benefit Plans (including filing all
reports and returns required to be filed with respect thereto) in
accordance with their terms and in compliance with the applicable terms of
ERISA, the Internal Revenue Code, and any other applicable federal and
state laws the breach or violation of which would have, individually or in
the aggregate, a material adverse effect on the earnings, assets, affairs,
business prospects or condition (financial or otherwise) of the Company and
its subsidiaries. Each Company Benefit Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code has either
received a favorable determination letter from the Internal Revenue Service
or timely requested such a letter, and has at all times been maintained in
accordance with Section 401 of the Internal Revenue Code, except where any
failure to receive or seek such a favorable determination letter or so
maintain such Company Benefit Plan would not have, individually or in the
aggregate, a material adverse effect on the earnings, assets, affairs,
business prospects or condition (financial or otherwise) of the Company and
its subsidiaries. Neither the Company nor its subsidiaries has engaged in
a transaction with respect to any Company Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject the Company or any subsidiary to a tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the earnings, assets, affairs,
business prospects or condition (financial or otherwise) of the Company and
its subsidiaries.
Neither the Company nor any subsidiary is obligated to provide
post-retirement medical benefits or any other unfunded post-retirement
welfare benefits (except COBRA continuation coverage required to be
provided by ERISA Section 601), which such liabilities to the Company would
have, individually or in the aggregate, a material adverse effect on the
earnings, assets, affairs, business prospects or condition (financial or
otherwise) of the Company and its subsidiaries. Neither the Company nor
any member of a group of trades or businesses under common control (as
defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with the Company have
at any time within the last six years sponsored, contributed to, or been
obligated under Title I or IV of ERISA to contribute to a "defined benefit
plan" (as defined in ERISA Section 3(35)). Within the last six years,
neither the Company nor any member of a group of trades or
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<PAGE> 9
businesses under common control (as defined in ERISA Sections 4001(a)(14)
and 4001(b)(1)) with Company have had an "obligation to contribute" (as
defined in ERISA Section 4212) to a "multiemployer plan" (as defined in
ERISA Sections 4001(a)(3) and 3(37)(A)).
(y) Neither the Company nor any "affiliate" (as defined in Florida
Statutes, Section 517.021(1), for purposes of this paragraph only) does
business with the government of Cuba or with any person or affiliate
located in Cuba that would require disclosure under Florida Statutes,
Section 517.075.
(z) Neither the Company nor any of its subsidiaries is in violation
of any federal or state law or regulation relating to occupational safety
and health and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and
state laws and regulations to conduct their respective businesses, and the
Company and each such subsidiary is in compliance with all terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not, singly
or in the aggregate, result in a material and adverse effect on the
earnings, assets, affairs, business prospects or condition (financial or
otherwise) of the Company and its subsidiaries.
(aa) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
(bb) Except where such failure to comply or violation would not,
singly or in the aggregate have a material adverse effect on the earnings,
assets, affairs, business prospects or condition (financial or otherwise)
of the Company and its subsidiaries, (i) the Company has complied with the
Immigration Reform and Control Act of 1986 and all Regulations promulgated
thereunder ("IRCA") with respect to the completion and maintenance of Forms
I-9, Employment Eligibility Verification Forms, for all of its current
employees and reverification of the employment status of any and all
employees whose employment authorization documents indicated a limited
period of employment authorization; (ii) with respect to all former
employees who left the Company's employment within three years prior to the
date hereof, the Company has complied with IRCA with respect to the
maintenance of Forms I-9 for at least three years or for one year beyond
the date of termination, whichever is later; (iii) the Company has not
violated any applicable laws relating to immigration and has employed only
individuals authorized to work in the United States and has never been the
subject of any inspection or investigation relating to its compliance with
or violation of IRCA; and (iv) the Company has not been warned, fined or
otherwise penalized by reason or any failure to comply with IRCA, and no
such proceeding is pending or threatened.
(cc) The property, assets and operations of the Company and its
subsidiaries comply in all material respects with all applicable federal,
state or local law, common law, doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters
(the "Environmental Laws"), except to the extent that failure to comply
with such Environmental Laws would not have a material adverse effect on
the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries. To the knowledge of the Company, none of the property,
assets or operations of the Company and its subsidiaries is the subject of
any foreign, federal,
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<PAGE> 10
state or local investigation evaluating whether any remedial action is
needed to respond to a release into the environment of any substance
regulated by, or form the basis of liability under, any Environmental Laws
(a "Hazardous Material"), or is in contravention of any Environmental Law
that would have a material adverse effect on the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and its subsidiaries. Neither the
Company nor the Subsidiary has received any notice or claim, nor are there
pending, reasonably anticipated or, or to the Company's knowledge,
threatened lawsuits against them with respect to violations of an
Environmental Law or in connection with the release of any Hazardous
Material into the environment. Neither the Company nor the Subsidiary has
any material contingent liability in connection with any release of
Hazardous Material into the environment.
(dd) The Company represents and warrants that the Phoenix System
includes design, performance and functionality so that a customer will not
experience invalid or incorrect results or abnormal software operation
related to calendar year 2000. The Company warrants that the Phoenix
System includes calendar year 2000 date conversion and compatibility
capabilities, including, but not limited to, date data century recognition,
same century and multiple century formula and date value calculations, and
user interface date data values that reflect the century.
2. Representations, Warranties and Covenants of the Selling
Shareholders. Each of the Selling Shareholders, severally and not jointly,
represents, warrants and covenants to each Underwriter and agrees as follows:
(a) Such Selling Shareholder now has, and at the First Closing Date
and Option Closing Date, as applicable (as such dates are hereinafter
defined) will have, or upon the exercise of options for the purchase of
such Shares will have, good and marketable title to the Selling Shareholder
Shares and Option Shares, as applicable, to be sold by such Selling
Shareholder, free and clear of any liens, encumbrances, equities and claims
(other than as imposed by the Securities Act or this Agreement), and full
right, power and authority to effect the sale and delivery of such Selling
Shareholder Shares and Option Shares; and upon the delivery of and payment
for the Selling Shareholder Shares and Option Shares pursuant to this
Agreement, good and marketable title to the Selling Shareholder Shares and
Option Shares, free and clear of any liens, encumbrances, equities, claims,
security interests, restrictions, shareholder agreements or voting trusts,
will be transferred to the Underwriters.
(b) Such Selling Shareholder has duly executed and delivered the
Custody Agreement and Power of Attorney in the form previously delivered to
the Representatives, appointing each of Bahram Yusefzadeh and Ralph H.
Reichard as such Selling Shareholder's duly authorized attorney-in-fact
(the "Attorney-in-Fact") and Clay E. Scarborough as the duly authorized
custodian (the "Custodian") of the Selling Shareholder Shares and the
Option Shares. The Attorney-in-Fact is authorized to execute, deliver and
perform this Agreement on behalf of such Selling Shareholder, to exercise
options relating to Selling Shareholder Shares or Option Shares, to deliver
the Selling Shareholder Shares and the Option Shares to be sold by such
Selling Shareholder hereunder, to accept payment therefor and otherwise to
act on behalf of such Selling Shareholder in connection with this
Agreement. Shares of Common Stock, in suitable form for transfer,
representing the Selling Shareholder Shares and the Option Shares to be
sold by each Selling Shareholder hereunder, have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery
pursuant to this Agreement. Such Selling Shareholder agrees that its
Selling Shareholder Shares and the Option Shares on deposit with the
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<PAGE> 11
Custodian are subject to the interest of the Underwriters hereunder, that
the arrangements made for such custody and the appointment of the
Attorney-in-Fact are to that extent irrevocable, and that the obligations
of such Selling Shareholder hereunder shall not be terminated by any act or
deed of the Selling Shareholders (or by any other person, firm or
corporation including the Company, the Custodian or the Underwriters) or by
operation of law (including the death of an individual Selling Shareholder
or the dissolution of a corporate Selling Shareholder) or by the occurrence
of any other event or events, except as provided in this Agreement and the
Custody Agreement. If such Selling Shareholder should dissolve, die or
become incapacitated, or if any other event should occur, before the
delivery of the Shares of such Selling Shareholder hereunder, which renders
such Selling Shareholder incapable of acting on his or its own behalf, the
Selling Shareholder Shares and the Option Shares deposited with the
Custodian shall be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such dissolution, death, incapacity,
or other event had not occurred, regardless of whether or not the Custodian
or the Attorney-in-Fact shall have received notice thereof.
(c) Such Selling Shareholder, acting individually or through the
Attorney-in-Fact, has duly executed and delivered this Agreement. This
Agreement constitutes a legal, valid and binding obligation of such Selling
Shareholder, enforceable against such Selling Shareholder in accordance
with its terms. All authorizations and consents necessary for the
execution and delivery of this Agreement and the Custody Agreement and
Power of Attorney on behalf of such Selling Shareholder and for the sale
and delivery of the Selling Shareholder Shares and Option Shares to be sold
by such Selling Shareholder hereunder has been given. Such Selling
Shareholder has the legal capacity and full right, power and authority to
execute this Agreement and the Custody Agreement and Power of Attorney.
(d) The performance of this Agreement and the Custody Agreement and
Power of Attorney and the consummation of the transactions contemplated
hereby and thereby by each of the Selling Shareholders will not result in a
breach or violation of, or conflict with, any of the terms or provisions
of, or constitute a default by such Selling Shareholder under, any
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other agreement or instrument to
which such Selling Shareholder or any of such Selling Shareholder's
properties is bound, any statute, or any judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to such
Selling Shareholder or any of such Selling Shareholder's properties, or
result in a breach of any of the terms and provisions of, or constitute a
default under, the organizational documents of such Selling Shareholder, if
not an individual.
(e) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of the Common Stock. Such Selling Shareholder has not distributed
and will not distribute any prospectus or other offering material in
connection with the offer and sale of the Shares other than any Preliminary
Prospectus filed with the Commission or the Final Prospectus or other
material permitted by the Securities Act.
(f) For a period of 180 days from the effective date of the
Registration Statement, such Selling Shareholder agrees that it will not,
except as expressly provided herein or with the prior written approval of
J. C. Bradford & Co., directly or indirectly, make, agree to or cause any
offer, sale (including short sale), loan, pledge or other disposition of,
or grant any options or other rights with respect to, or otherwise reduce
any risk of ownership, directly or indirectly, of
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<PAGE> 12
any shares of Common Stock or other capital stock of the Company, or any
securities that are convertible into or exchangeable or exercisable for
shares of Common Stock or other capital stock of the Company, or
derivatives thereof, or request the registration of any of the foregoing.
(g) To the knowledge of such Selling Shareholder, the
representations and warranties of the Company in Section 1 of this
Agreement are true and correct. Such Selling Shareholder has reviewed and
is familiar with the Registration Statement as originally filed with the
Commission, and as amended, and the Preliminary Prospectus. To the
knowledge of such Selling Shareholder, there are no facts, conditions or
information not disclosed in such Preliminary Prospectus that have
adversely affected or could adversely affect the business, financial
position, net worth or results of operations, or could adversely affect the
properties or assets, of the Company or any of its subsidiaries. To the
knowledge of such Selling Shareholder, the Preliminary Prospectus does not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such Selling
Shareholder represents that it was not prompted to sell the Selling
Shareholder Shares by any information concerning the Company or any
subsidiary that is not set forth in the Preliminary Prospectus, the
Effective Prospectus, or the Final Prospectus.
(h) At the time the Registration Statement became effective (A) such
parts of the Registration Statement and any amendments and supplements
thereto as specifically refer to each Selling Shareholder did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (B) such parts of the Effective Prospectus and Final
Prospectus as specifically refer to each Selling Shareholder did not and
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(i) Any certificate signed by or on behalf of any Selling
Shareholder as such and delivered to the Representatives or to counsel for
the Representatives shall be deemed a representation and warranty by such
Selling Shareholder to each Underwriter as to the matters covered thereby.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, each Selling Shareholder agrees to deliver to you prior to or
at the First Closing Date (as defined below) a properly completed and
executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof).
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company and each of the Selling Shareholders agree to sell
to each of the Underwriters, and each of the Underwriters, severally and
not jointly, agrees to purchase at a purchase price of $________ per share,
the number of Firm Shares set forth opposite such Underwriter's name in
Schedule I hereto.
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<PAGE> 13
(b) The Selling Shareholders also grant to the Underwriters an
option to purchase, solely for the purpose of covering over-allotments in
connection with the distribution and sale of the Firm Shares, all or any
portion of the Option Shares as set forth opposite such Selling
Shareholder's name on Schedule III hereto at the purchase price per share
set forth above. The option granted hereby may be exercised as to all or
any part of the Option Shares at any time within 30 days after the date the
Registration Statement becomes effective or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when
the New York Stock Exchange is open for trading, provided, however, that if
the Underwriters exercise the option granted hereby for less than all the
Option Shares, then each Selling Shareholder shall only be obligated to
sell to the Underwriters the number of Option Shares equal to the product
of (i) the number of Option Shares for which the Underwriters are
exercising the Option multiplied by (ii) the fraction determined by
dividing the number of Option Shares set forth opposite that Selling
Shareholder's name on Schedule II hereto by 161,625, except that the total
obligation of each Selling Shareholder shall be adjusted so that no Selling
Shareholder shall be obligated to sell fractional Option Shares. The
Underwriters shall not be under any obligation to purchase any Option
Shares prior to the exercise of such option. The option granted hereby may
be exercised by the Underwriters by the Representatives giving written
notice or notice by telephone (confirmed in writing) to the Selling
Shareholders or their Attorney-in-Fact setting forth the number of Option
Shares to be purchased and the date and time for delivery of and payment
for such Option Shares and stating that the Option Shares referred to in
such notice are to be used for the purpose of covering over-allotments in
connection with the distribution and sale of the Firm Shares. If such
notice is given prior to the First Closing Date (as defined herein), the
date set forth therein for such delivery and payment shall not be earlier
than two full business days thereafter or the First Closing Date, whichever
occurs later. If such notice is given on or after the First Closing Date,
the date set forth therein for such delivery and payment shall not be
earlier than three full business days thereafter. In either event, the
date so set forth shall not be more than 15 full business days after the
date of such notice. The date and time set forth in such notice is herein
called the "Option Closing Date." Upon exercise of the option, the Company
shall become obligated to sell to the Underwriters, and, subject to the
terms and conditions herein set forth, the Underwriters shall become
obligated to purchase, for the account of each Underwriter, from the
Company the number of Option Shares specified in such notice. Option
Shares shall be purchased for the accounts of the Underwriters in
proportion to the number of Firm Shares set forth opposite such
Underwriter's name in Schedule I hereto, except that the respective
purchase obligations of each Underwriter shall be adjusted so that no
Underwriter shall be obligated to purchase fractional Option Shares. To
the extent, if any, that the option is exercised, payment for the Option
Shares shall be made on the Option Closing Date in same day funds by
certified or bank cashier's check drawn to the order of, or by wire
transfer to the account of "Clay E. Scarborough, as Custodian," against
delivery of certificates therefor at the offices of J.C. Bradford & Co.,
330 Commerce Street, Nashville, Tennessee 37201, or at such other place as
you, the Company and the Attorney-in-Fact shall agree upon.
(c) Certificates in definitive form for the Firm Shares which each
Underwriter has agreed to purchase hereunder shall be delivered by or on
behalf of the Company and the Selling Shareholders to the Underwriters for
the account of such Underwriter against payment by such Underwriter or on
its behalf of the purchase price therefor by wire transfer or certified or
official bank check payable in same day funds, to the order of the Company
or the Selling Shareholders, as the case may be, at the offices of J. C.
Bradford & Co. ("Bradford"), 330 Commerce Street, Nashville, Tennessee
37201, or at such other place as may be agreed upon by Bradford, the
Company and the Selling Shareholders, at 10:00 A.M., Nashville time, on the
third (or if the
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<PAGE> 14
Firm Shares are priced, as contemplated by rule 15c6-1(c), promulgated
pursuant to the Exchange Act, after 4:30 P.M., Washington, D.C. time, the
fourth) full business day after this Agreement becomes effective, or at
such other time not later than the seventh full business day thereafter as
the Representatives, the Company and the Attorneys-in-Fact may determine,
such time of delivery against payment being herein referred to as the
"First Closing Date." The First Closing Date and the Option Closing Date
are herein individually referred to as the "Closing Date" and collectively
referred to as the "Closing Dates." Certificates in definitive form for
the Option Shares which each Underwriter shall have agreed to purchase
hereunder shall be similarly delivered by or on behalf of the Company on
the Option Closing Date. The certificates in definitive form for the
Shares to be delivered will be in good delivery form and in such
denominations and registered in such names as Bradford may request not less
than 48 hours prior to the First Closing Date or the Option Closing Date,
as the case may be. Such certificates will be made available for checking
and packaging at a location in as may be designated by you, at least 24
hours prior to the First Closing Date or the Option Closing Date, as the
case may be. It is understood that you may (but shall not be obligated to)
make payment on behalf of any Underwriter or Underwriters for the Shares to
be purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their
obligations hereunder.
4. Offering by the Underwriters. After the Registration Statement
becomes effective, the several Underwriters propose to offer for sale to the
public the Firm Shares and any Option Shares which may be sold at the price and
upon the terms set forth in the Final Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms.
5. Covenants of the Company. The Company covenants and agrees with each
of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and to comply with the provisions of and make
all requisite filings with the Commission pursuant to Rules 424, 430A and
434, if relied upon by the Company, of the Rules and Regulations and to
notify you promptly in writing of all such filings. The Company shall
notify you promptly in writing of any request by the Commission for any
amendment of or supplement (including any Term Sheet) to the Registration
Statement, the Effective Prospectus or the Final Prospectus or for
additional information; the Company shall prepare and file with the
Commission, promptly upon your request, any amendments of or supplements to
the Registration Statement, the Effective Prospectus or the Final
Prospectus which, in your reasonable opinion, may be necessary or advisable
in connection with the distribution of the Shares; and the Company shall
not file any amendment of or supplement to the Registration Statement, the
Effective Prospectus or the Final Prospectus to which you reasonably object
after reasonable notice thereof. The Company shall advise you promptly
after it receives notice and obtains knowledge of the issuance by the
Commission or any jurisdiction or other regulatory body of any stop order
or other order suspending the effectiveness of the Registration Statement,
suspending or preventing the use of any Preliminary Prospectus, the
Effective Prospectus or the Final Prospectus or suspending the
qualification of the Shares for offering or sale in any jurisdiction, or of
the institution of any proceedings for any such purpose; and the Company
shall use its best efforts to prevent the issuance of any stop order or
other such order and, should a stop order or other such order be issued, to
obtain as soon as possible the lifting thereof.
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<PAGE> 15
(b) The Company will take or cause to be taken all necessary action
and furnish to whomever you direct such information as may be reasonably
required in qualifying the Shares for offer and sale under the securities
or Blue Sky laws of such jurisdictions as the Underwriters may designate
and will continue such qualifications in effect for as long as may be
reasonably necessary to complete the distribution and for a period of not
less than one year after the Effective Date, provided that, in connection
therewith, the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction in which the Company is not currently so subject.
(c) Within the time during which a Final Prospectus relating to the
Shares is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act,
as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the continuance of
sales of or dealings in the Shares as contemplated by the provisions hereof
and the Final Prospectus. If during such period any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Final
Prospectus to comply with the Securities Act, the Company shall promptly
notify you and shall amend the Registration Statement or supplement the
Final Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
(d) The Company will furnish without charge to the Representatives
copies of the Registration Statement (two of which shall be signed and
shall be accompanied by all exhibits thereto) and will furnish, without
charge to the Representatives, each Underwriter and to any dealer in
securities, each Preliminary Prospectus, the Effective Prospectus and the
Final Prospectus, and all amendments and supplements thereto, including any
prospectus or supplement prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
(e) The Company will (i) deliver to you at such office or offices as
you may designate as many copies of the Preliminary Prospectus and Final
Prospectus as you may reasonably request, and (ii) for a period of not more
than nine months after the Registration Statement becomes effective or such
longer period that a Final Prospectus relating to the Shares is required to
be delivered under the Securities Act, send to the Underwriters as many
additional copies of the Final Prospectus and any supplement thereto as you
may reasonably request.
(f) The Company shall make generally available to its security
holders, in the manner contemplated by Rule 158(b) under the Securities Act
as promptly as practicable and in any event no later than 45 days after the
end of its fiscal quarter in which the first anniversary of the effective
date of the Registration Statement occurs, an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement.
(g) The Company will apply the net proceeds from the sale of the
Shares as set forth under the caption "Use of Proceeds" in the Final
Prospectus and, if then required under the Rules and Regulations, will file
timely reports on Form SR with the Commission in accordance with Rule 463
of the Securities Act or any successor provision.
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<PAGE> 16
(h) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to the Representatives,
without charge, copies of all reports and other communications (financial
or other) furnished by the Company to its shareholders and, as soon as
available, copies of any reports or financial statements furnished or filed
by the Company to or with the Commission or any national securities
exchange or over-the-counter market on which any class of securities of the
Company may be listed or traded and such additional information concerning
the business and financial condition of the Company and its subsidiaries as
you from time to time may reasonably request.
(i) The Company will, from time to time, after the effective date of
the Registration Statement file with the Commission such reports as are
required by the Securities Act, the Exchange Act and the Rules and
Regulations, and shall also file with state securities commissions in
states where the Shares have been sold by you (as you shall have advised us
in writing) such reports as are required to be filed by the securities acts
and the regulations of those states.
(j) Except pursuant to this Agreement or with the prior written
consent of J.C. Bradford & Co., the Company will not, and the Company has
provided agreements executed by each of the Company's officers, directors,
shareholders and optionholders providing that none of them will, for a
period of 180 days from the effective date of the Registration Statement,
directly or indirectly, make, agree to or cause any offer, sale (including
short sale), loan, pledge or other disposition of, or grant any options or
other rights with respect to, or otherwise reduce any risk of ownership,
directly or indirectly, of any shares of Common Stock or other capital
stock of the Company, or any securities that are convertible into or
exchangeable or exercisable for shares of Common Stock or other capital
stock of the Company, or derivatives thereof, or request the registration
of any of the foregoing.
(k) If at any time during the 30 day period after the Registration
Statement is declared effective, any rumor, publication or event relating
to or affecting the Company shall occur as a result of which, in your
opinion, the market price for the Shares has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Final Prospectus), the
Company will, after written notice from you advising it to do so, prepare,
consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(l) Neither the Company nor any of its officers, directors or
affiliates will take, directly or indirectly, any action designed to cause
or result in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
(m) The Company will cause the Shares to be listed on the Nasdaq
Stock Market at each Closing Date and will use its reasonable best efforts
to cause the Shares to be so listed for at least one year from the date
hereof.
(n) The Company shall not invest or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as
would require the Company or the Subsidiary to register as an investment
company under the Investment Company Act of 1940, as amended (the "1940
Act").
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<PAGE> 17
(o) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(p) On the First Closing Date, the Company will sell to J.C.
Bradford & Co., for $500 in cash, a warrant to purchase up to 1/2 of 1% of
the shares of Common Stock of the Company outstanding on the First Closing
Date (not to exceed 19,000 shares), such warrant to be substantially in the
form set forth in Exhibit A hereto.
6. Expenses. The Company and the Selling Shareholders agree with the
Underwriters that (a) whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
the Company will pay all fees and expenses incident to the performance of the
obligations of the Company and the Selling Shareholders, including, but not
limited to, (i) the Commission's registration fee, (ii) the expenses of
printing (or reproducing) and distributing the Registration Statement
(including the financial statements therein and all amendments and exhibits
thereto), each Preliminary Prospectus, the Effective Prospectus, the Final
Prospectus, any amendments or supplements thereto, and this Agreement and other
underwriting documents, including Underwriter's Questionnaires, Underwriter's
Powers of Attorney, Blue Sky Memoranda, Agreements Among Underwriters and
Selected Dealers Agreements, (iii) fees and expenses of accountants and counsel
for the Company and the Selling Shareholders, (iv) expenses of registration or
qualification of the Shares under state Blue Sky and securities laws, including
the fees and disbursements of counsel to the Underwriters in connection
therewith, (v) filing fees paid or incurred by the Underwriters and related
fees and expenses of counsel to the Underwriters in connection with filings
with the NASD, (vi) expenses of listing the Shares on the Nasdaq National
Market, (vii) any expenses for travel, lodging and meals incurred by the
Company in connection with marketing, dealer and other meetings attended by the
Company and the Underwriters in marketing the Shares, (viii) the costs and
charges of the Company's transfer agent and registrar and the cost of preparing
the certificates for the Shares, and (ix) all other costs and expenses incident
to the performance of its obligations hereunder not otherwise provided for in
this Section; and (b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, incurred by the Underwriters in connection with
investigating, preparing to market and marketing the Shares and proposing to
purchase and purchasing the Shares under this Agreement, will be borne and paid
by the Company if the sale of the Shares provided for herein is not consummated
by reason of the termination of this Agreement by the Representatives pursuant
to Sections 10 or 13 or because of any failure or refusal on the part of the
Company or the Selling Shareholders to comply with the terms or fulfill any of
the conditions of this Agreement. To the extent, if at all, that any of the
Selling Shareholders engage special legal counsel to represent them in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Shareholder. Any transfer taxes imposed on the sale of
the Shares to the several Underwriters will be paid by the Company and the
Selling Shareholders pro rata. . The Company and the Selling Shareholders
have agreed between themselves with regard to the sharing of fees and expenses.
7. Conditions to the Underwriters' Obligations. The respective
obligations of the Underwriters hereunder shall be subject, in their
discretion, to the accuracy of the representations and warranties of the
Company and the Selling Shareholders herein as of the date hereof and as of the
Closing Date as if made on and as of the Closing Date, to the accuracy of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company and the Selling Shareholders of all of their
covenants and agreements hereunder and to the following additional conditions:
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<PAGE> 18
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 4:00 p.m., Washington,
D.C. time, on the day following the date of this Agreement, or such later
time and date as shall have been consented to by the Representatives and
all filings required by Rule 424, Rule 430A or 434, if applicable, of the
Rules and Regulations shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened or,
to the knowledge of the Company or the Underwriters, shall be contemplated
by the Commission; any request of the Commission for additional information
(to be included in the Registration Statement or the Final Prospectus or
otherwise) shall have been complied with to your reasonable satisfaction;
and the NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering or the terms or the
Underwriters' participation in the same.
(b) No Underwriter shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective Prospectus or
Final Prospectus, or any amendment or any supplement thereto, contains an
untrue statement of fact which, in your judgment, is material, or omits to
state a fact which, in your judgment, is material and is required to be
stated therein or necessary to make the statements therein not misleading.
(c) The Representatives shall have received an opinion, dated the
Closing Date, from Nelson Mullins Riley & Scarborough, L.L.P., counsel for
the Company and the Selling Shareholders, to the effect that:
(i) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Florida,
with full corporate power and authority to own its properties and
conduct its business as now conducted.
(ii) Each of the Company's subsidiaries (as defined in this
Agreement) is a corporation duly organized and validly existing and
in good standing under the laws of the state of its incorporation,
with full corporate power and authority to own its properties and
conduct its business as now conducted. The outstanding stock of each
of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable. All of the outstanding stock of each
of the subsidiaries is owned by the Company, free and clear of all
possessory (and, to the knowledge of such counsel, other) liens,
encumbrances, pledges, equities or claims of any kind. To the
knowledge of such counsel, no options or warrants or other rights to
purchase from the Company or any subsidiary, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock or of ownership interests in any of the
Company's subsidiaries are outstanding.
(iii) The Company and each of its subsidiaries is duly
qualified or authorized to do business as a foreign corporation in
good standing in all jurisdictions where the nature of its business
or character of property owned or leased by it require it to be so
qualified or authorized to do business, except where the failure to
be so qualified or authorized to do business would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole.
(iv) As of the date specified therein, the Company had
historical authorized and issued capital stock as set forth under the
caption "Capitalization" in the Final
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<PAGE> 19
Prospectus, and the Company's capital stock conforms to the
description thereof contained under the caption "Description of
Capital Stock" in the Final Prospectus. All of the issued shares of
Common Stock (including the Selling Shareholder Shares and the Option
Shares) have been duly authorized and are validly issued, fully paid
and nonassessable. The Company Shares have been duly and validly
authorized, and upon issuance thereof and payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable.
(v) None of the issued shares of capital stock of the Company
(including the Selling Shareholder Shares and the Option Shares) have
been issued in violation of or subject to any preemptive or similar
rights arising under, and there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
transfer of, the Shares or any other shares of Common Stock pursuant
to, the Company's Articles of Incorporation, Bylaws or, to the
knowledge of such counsel, any agreement (other than this Agreement)
or instrument to which the Company or a Selling Shareholder is a
party or by which it may be bound. To the knowledge of such counsel,
neither the filing of the Registration Statement nor the offer or
sale of the Shares as contemplated thereby gives rise to any rights
for or relating to the registration of any shares of Common Stock or
any other securities of the Company. Upon issuance of the Company
Shares and payment therefor as provided in this Agreement, the
Underwriters will receive good and marketable title to the Company
Shares, free and clear of all liens, encumbrances, claims, security
interests, restrictions, shareholders agreements and voting trusts
whatsoever. The form of certificate for the Shares is in due and
proper form.
(vi) To the knowledge of such counsel, all sales of the
Company's securities prior to the date hereof were at all relevant
times duly registered or exempt from the registration requirements of
the Act and were duly registered or the subject of an exemption from
the registration requirements of applicable state securities or blue
sky laws, or if not registered or exempt in compliance with the Act
and applicable state securities or blue sky laws, any private rights
of action for rescission or damages arising from such failure to
register any such securities are time barred by applicable statutes
of limitations or equitable principles, including laches.
(vii) No consent, approval, authorization or order of any
court, governmental agency or body or, to the knowledge of such
counsel, any third party, is required for the performance of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except such as have been obtained
under the Act and such as may be required from the NASD or under
state securities or blue sky laws in connection with the purchase and
distribution of the Shares by the several Underwriters. The
performance of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby will not conflict
with or result in a breach or violation by the Company or any of its
subsidiaries of any of the terms or provisions of, or constitute a
default by the Company or any of its subsidiaries under, the Articles
of Incorporation or Bylaws of the Company or any of its subsidiaries,
or, to the knowledge of such counsel: (i) any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which the Company or any of its subsidiaries is a party or to
which the Company or any of its subsidiaries or their properties are
subject; (ii) any statute; or (iii) any judgment, decree, order, rule
or regulation of any court or governmental agency or body applicable
to the Company or
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<PAGE> 20
any of its subsidiaries or their properties; provided, however, that
such counsel need not express any opinion under this paragraph (vii)
as to compliance with federal securities laws (certain aspects of
which are covered elsewhere in this Agreement) or as to compliance
with the securities or blue sky laws of any other jurisdiction.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms, and the Company has the full corporate
power and authority to enter into this Agreement and to issue, sell
and deliver the Company Shares to be sold by it to the Underwriters
as provided herein.
(ix) To the knowledge of such counsel, except as described in
the Final Prospectus, there is not pending or threatened, any action,
suit, proceeding, inquiry or investigation to which the Company or
any of its subsidiaries is a party, or to which the property of the
Company or any of its subsidiaries is subject, before or brought by
any court or governmental agency or body, which, if determined
adversely to the Company or any of its subsidiaries, could result in
a material adverse change in the business, financial position, net
worth or results of operations, or could materially adversely affect
the properties or assets, of the Company and its subsidiaries, taken
as a whole.
(x) To the knowledge of such counsel, no default exists and no
event has occurred which, with notice or after the lapse of time to
cure or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or to which they or their properties are subject, which default or
event would have material adverse effect on the Company and its
subsidiaries, taken as a whole.
(xi) Neither the Company nor any subsidiary is in violation of
its Articles of Incorporation or Bylaws or, to the knowledge of such
counsel, in violation of any law, administrative rule or regulation
or arbitrators' or administrative or court decree, judgment or order
or, to the knowledge of such counsel, in violation or default (there
being no existing state of facts which with notice or lapse of time
or both would constitute a default) in the performance or observance
of any obligation, agreement, covenant or condition contained in any
material contract, indenture, deed of trust, mortgage, loan
agreement, note, lease, agreement or other instrument or permit to
which it is a party or by which it or any of its properties is or may
bound, where such violation or default could have a material adverse
effect on the business, financial position, net worth or results of
operations, or could materially adversely affect the properties or
assets, of the Company and its subsidiaries, taken as a whole, taking
into account any enforceable and valid indemnity that the Company may
have from a third party.
(xii) The Company and its subsidiaries own or possess the
licenses, patents, patent rights, copyrights, trademarks, service
marks, trade names and proprietary and other confidential information
and trade secrets presently employed by them in connection with the
businesses now operated by them, and neither the Company nor any of
its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, alone or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in any adverse
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<PAGE> 21
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company or its
subsidiaries.
(xiii) The Registration Statement and all post-effective
amendments thereto have become effective under the Act, no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no proceedings for that
purpose have been instituted or are pending, threatened or
contemplated by the Commission. All filings required by Rule 424 and
Rule 430A of the Rules and Regulations have been made. The
Registration Statement, the Effective Prospectus and Final
Prospectus, and any amendments or supplements thereto, as of their
respective effective or issue dates, complied as to form with the
requirements of the Act and the Rules and Regulations (other than the
financial statements, data and schedules which are contained therein,
and the section captioned "Underwriting" contained therein, as to
which such counsel need not express any opinion). The descriptions
in the Registration Statement, the Effective Prospectus and the Final
Prospectus of statutes, regulations, legal and governmental
proceedings, and contracts and other documents are accurate in all
material respects and present fairly the information required to be
stated. To the knowledge of such counsel, there are no pending or
threatened legal or governmental proceedings, statutes or regulations
required to be described in the Final Prospectus which are not
described nor are there any contracts or other documents of a
character required to be described in the Registration Statement or
the Final Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required. The Shares
have been approved for listing on the Nasdaq Stock Market's National
Market upon notice of issuance.
(xiv) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company" within the meaning of the 1940 Act.
(xv) This Agreement and the Custody Agreement and Power of
Attorney described herein have been duly executed and delivered by or
on behalf of each of the Selling Shareholders and constitute valid
and binding agreements of such Selling Shareholders enforceable
against such Selling Shareholders. To the knowledge of such counsel,
there are no facts which would cause any Selling Shareholder to lack
the legal capacity and full right, power and authority to execute
this Agreement and the Custody Agreement and Power of Attorney.
(xvi) To the knowledge of such counsel, the performance of
this Agreement and the Custody Agreement and Power of Attorney and
the consummation of the transactions contemplated thereby by each of
the Selling Shareholders will not result in a breach or violation of,
or conflict with, any of the terms or provisions of, or constitute a
default by any Selling Shareholder under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease
franchise, license or other agreement or instrument to which such
Selling Shareholder or any of such Selling Shareholder's properties
is bound, any statute, or any judgment, decree, order, rule or
regulation of any court or governmental agency or body applicable to
such Selling Shareholder; provided, however, that such counsel need
not express any opinion under this paragraph (xvi) as to compliance
with federal securities laws (certain aspects of which are covered
elsewhere
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<PAGE> 22
in this agreement) or as to compliance with the securities or blue
sky laws of any other jurisdiction.
(xvii) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation by the Selling Shareholders of the
transactions contemplated by this Agreement in connection with the
Selling Shareholder Shares and the Option Shares to be sold by each
Selling Shareholder hereunder, except such as have been obtained
under the Act and such as may be required from the NASD or under
state securities or blue sky laws in connection with the purchase and
distribution of the Shares by the several Underwriters.
(xviii)As of the Closing Date, the Selling Shareholders have
made good delivery, duly endorsed, to the Underwriters or to a
financial intermediary designated by the Underwriters of the Selling
Shareholder Shares and Option Shares, if applicable, and, assuming
that the Underwriters constitute bona fide purchasers as defined in
Section 8-302 of the Uniform Commercial Code, the Selling
Shareholders have transferred all rights and interests therein to the
Underwriters free and clear of any and all liens, pledges,
encumbrances, charges, agreements, equities, claims, security
interests, restrictions, shareholder agreements or voting trusts.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that the
Registration Statement, the Effective Prospectus and the Final
Prospectus or any amendment or supplement thereto contains an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (except that such counsel need express no view
as to financial statements, schedules and other financial information
included therein).
(d) The Underwriters shall have received an opinion or opinions,
dated the Closing Date, of Alston & Bird, counsel for the Underwriters,
with respect to the Registration Statement and the Final Prospectus, and
such other related matters as the Underwriters may require, and the Company
shall have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received from Ernst & Young, LLP,
a letter dated the date hereof and, at the Closing Date, a second letter
dated the Closing Date in form and in substance satisfactory to the
Representatives, stating that they are independent public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Act and the applicable Rules and Regulations, and to the effect
that:
(i) In their opinion, the financial statements and schedules
examined by them and included in the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published Rules and
Regulations and are presented in accordance with generally accepted
accounting principles consistently applied; and they have made a
review in accordance with standards established by the American
Institute of Certified Public Accountants of the consolidated interim
financial statements, selected financial data, and/or condensed
financial statements derived from audited financial statements of the
Company;
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<PAGE> 23
(ii) The unaudited summary and selected financial information
included in the Preliminary Prospectus and the Final Prospectus under
the captions "Prospectus Summary" and "Selected Consolidated
Financial and Operating Data", agrees with the corresponding amounts
in the audited financial statements included in the Final Prospectus
or previously reported on by them;
(iii) On the basis of a reading of the latest available
interim consolidated financial statements (unaudited) of the Company
and its subsidiaries, a reading of the minute books of the Company
and its subsidiaries, inquiries of officials of the Company
responsible for financial and accounting matters and other specified
procedures, all of which have been agreed to by the Representatives,
nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements included in the
Registration Statement do not comply as to form in all material
respects with the accounting requirements of the federal
securities laws and the related published rules and regulations
thereunder or are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with the basis for the audited financial statements contained in
the Registration Statement;
(B) any other unaudited financial statement data included
in the Final Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements from which
data was derived and any such unaudited data were not determined
on a basis substantially consistent with the basis for the
corresponding amounts in the audited financial statements
included in the Prospectus;
(C) at a specified date not more than three days prior
to the date of delivery of such respective letter, there was any
change in the consolidated capital stock, decline in
stockholders' equity or increase in long-term debt of the Company
and its subsidiaries, or other items specified by the
Underwriters in each case as compared with amounts shown in the
latest balance sheets included in the Final Prospectus, except in
each case for changes, decreases or increases which the Final
Prospectus discloses have occurred or may occur or which are
described in such letters; and
(D) for the period from the closing date of the latest
consolidated statements of income included in the Effective
Prospectus and the Final Prospectus to a specified date not more
than three days prior to the date of delivery of such respective
letter, there were any decreases in total revenues or net income
of the Company, or other items specified by the Underwriters, or
any increases in any items specified by the Underwriters, in each
case as compared with the corresponding period of the preceding
year, except in each case for decreases which the Final
Prospectus discloses have occurred or may occur or which are
described in such letter.
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information specified by you which are derived from the
general accounting records of the Company and its
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<PAGE> 24
subsidiaries, which appear in the Effective Prospectus and the Final
Prospectus and have compared and agreed such amounts, percentages
financial information with the accounting records of the Company and
its subsidiaries or to analyses and schedules prepared by the Company
and its subsidiaries from its detailed accounting records.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after discussions with officers of the Company
responsible for financial and accounting matters and with Ernst & Young
LLP, that such changes, decreases or increases as are set forth in such
letters do not reflect a material adverse change in the stockholders'
equity or long-term debt of the Company as compared with the amounts shown
in the latest consolidated balance sheets of the Company included in the
Final Prospectus, or a material adverse change in total revenues or net
income, of the Company, in each case as compared with the corresponding
period of the prior year.
(f) There shall have been furnished to you a certificate, dated the
Closing Date and addressed to you, signed by the Chief Executive Officer
and by the Chief Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in
Section 1 of this Agreement are true and correct, as if made at and
as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) the Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or are pending, or to their knowledge,
threatened under the Securities Act;
(iii) all filings required by Rule 424 and Rule 430A of the
Rules and Regulations have been made;
(iv) they have carefully examined the Registration Statement,
the Effective Prospectus and the Final Prospectus, and any amendments
or supplements thereto, and such documents do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; and
(v) since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment
or supplement to the Registration Statement, the Effective Prospectus
or the Final Prospectus which has not been so set forth.
(g) The representations and warranties of the Selling Shareholders
shall be true and correct as if made at and as of the Closing Date and each
Selling Shareholder shall deliver to you a certificate to that effect,
dated the Closing Date, signed by each Selling Shareholder or such Selling
Shareholder's duly appointed Attorney-in-Fact.
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<PAGE> 25
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, and except as
stated therein, the Company and its subsidiaries have not sustained any
material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
governmental action, order or decree, or become a party to or the subject
of any litigation which is material to the Company or its subsidiaries, nor
shall there have been any material adverse change, or any development
involving a prospective material adverse change, in the business,
properties, key personnel, capitalization, net worth, results of operations
or condition (financial or other) of the Company or its subsidiaries, which
loss, interference, litigation or change, in your judgment shall render it
inadvisable to commence or continue the offering of the Shares at the
offering price to the public set forth on the cover page of the Prospectus
or to proceed with the delivery of the Shares.
(i) The Shares shall have been approved for listing upon notice of
issuance on the Nasdaq Stock Market's National Market.
(j) You shall have been furnished by the Company and the Selling
Shareholders such additional documents and certificates as you may
reasonably request.
(k) The Agreements relating to the matters described in Sections
2(f) and 5(j) hereof shall be in full force and effect.
All such opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory to the Representatives and their counsel. The Company
and the Selling Shareholders shall furnish to the Representatives such
conformed copies of such opinions, certificates, letters and documents in such
quantities as the Representatives shall reasonably request.
The respective obligations of the Underwriters to purchase and pay for the
Option Shares shall be subject, in their discretion, to each of the foregoing
conditions to purchase the Firm Shares, except that all references to the
"Closing Date" shall be deemed to refer to the Option Closing Date, if it shall
be a date other than the Closing Date.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of the Securities Act, and the employees, officers, agents, and
representatives of each underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based in whole or in part upon (i) any inaccuracy in
the representations and warranties of the Company and the Selling
Shareholders contained herein, (ii) any failure of the Company or the
Selling Shareholders to perform their obligations hereunder or under law or
(iii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Effective Prospectus or Final Prospectus, or any amendment or supplement
thereto, any audio or visual materials supplied by the Company and used in
connection with the marketing of the Shares, including without limitation,
slides, videos, films and tape recordings, or in any Blue Sky application
or other written information furnished by the Company filed in any state or
other
- 25 -
<PAGE> 26
jurisdiction in order to qualify any or all of the Shares under the
securities laws thereof (a "Blue Sky Application"), or arise out of or are
based upon the omission or alleged omission to state in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus or Final
Prospectus or any amendment or supplement thereto or any Blue Sky
Application a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each
Underwriter, each such controlling person and the officers, employees,
agents and representatives of each Underwriter upon demand for any legal or
other expenses reasonably incurred by such Underwriter, such controlling
person and the officers, employees, agents and representatives of each
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, whether
or not such Underwriter or controlling person is a party to any action or
proceeding; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage, or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, the Preliminary Prospectus, the Effective Prospectus or Final
Prospectus or such amendment or such supplement in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the only
information so provided is the information included in the last paragraph
on the cover page and in the first five paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and the Final Prospectus and
the Effective Prospectus).
(b) Each of the Selling Shareholders, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter, each person, if
any, who controls any Underwriter within the meaning of the Securities Act,
and the officers, employees, agents and representatives of each Underwriter
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based in
whole or in part upon (i) any inaccuracy in the representations and
warranties of such Selling Shareholder contained herein, (ii) any failure
of such Selling Shareholder to perform his respective obligations hereunder
or under law or (iii) solely with respect to Mr. Yusefzadeh, any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or supplement thereto, or
in any Blue Sky Application or arise out of or are based upon the omission
or alleged omission to state in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus or any amendment
or supplement thereto or any Blue Sky Application a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter, each such controlling
person and the officers, employees, agents and representatives of each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter, such controlling person or the officers, employees, agents and
representatives of each Underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that Mr. Yusefzadeh shall not be
liable in his capacity as a Selling Shareholder pursuant to clause (iii) to
the extent that any such loss, claim, damage, or liability arises out of or
is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, the Preliminary
Prospectus, the Effective Prospectus or Final Prospectus or such amendment
or such supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for
use therein (it being understood that the only information so provided is
the information included in the last paragraph on the cover page, the
- 26 -
<PAGE> 27
paragraph relating to stabilization practices on the inside front cover and
the first five paragraphs under the caption "Underwriting" in any
Preliminary Prospectus and the Final Prospectus and the Effective
Prospectus).
(c) Notwithstanding Section 8(b) above, in no event shall the
liability of Mr. Yusefzadeh under Section 8(b) exceed the net proceeds
received by the Selling Shareholders from the Underwriters with respect to
the sale of the Shares.
(d) Neither the Company nor any Selling Shareholder will, without
prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding (or related cause of action or portion thereof)
in respect of which indemnification may be sought hereunder (whether or not
such Underwriter is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional
release of such Underwriter from all liability arising out of such claim,
action, suit or proceeding (or related cause of action or portion thereof).
(e) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of the Securities Act and each of the Selling Shareholders against
any losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling person or the Selling Shareholders may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state in the Registration Statement,
any Preliminary Prospectus, the Effective Prospectus or Final Prospectus or
any amendment or supplement thereto a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter specifically for use therein (it being
understood that the only information so provided is the information
included in the last paragraph on the cover page, the paragraph relating to
stabilization practices on the inside front cover and the first five
paragraphs under the caption "Underwriting" in any Preliminary Prospectus
and in the Effective Prospectus and the Final Prospectus);
(f) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, including
governmental proceedings, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 8 notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
under this Section 8. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may wish, jointly with any
other counsel satisfactory to such indemnified party; and after notice from
the indemnifying party to such indemnified party of its election to so
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal
- 27 -
<PAGE> 28
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation except that the indemnified party shall have the right to
employ separate counsel if, in its reasonable judgment, it is advisable for
the indemnified party and any other Underwriter to be represented by
separate counsel, and in that event the fees and expenses of separate
counsel shall be paid by the indemnifying party.
(g) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding part of this Section 8 is for any reason held to be unavailable
to the Underwriters, the Company or the Selling Shareholders or is
insufficient to hold harmless an indemnified party, then the Company and
the Selling Shareholders shall contribute to the damages paid by the
Underwriters, and the Underwriters shall contribute to the damages paid by
the Company and the Selling Shareholders; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, there
shall be considered the relative benefits received by each party from the
offering of the Shares (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances.
The Company and the Selling Shareholders and the Underwriters agree that it
would not be equitable if the amount of such contribution were determined
by pro rata or per capita allocation (even if the Underwriters were treated
as one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in the
aggregate exceeds the underwriting discount applicable to the Shares
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling persons
have otherwise been required to pay in respect of the same or any similar
claim. The Underwriters' obligations to contribute hereunder are several
in proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act shall
have the same rights to contribution as such Underwriter, and each director
of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, and the Selling Shareholders
shall have the same rights to contribution as the Company.
(h) The obligations of the Company and the Selling Shareholders
under this Section 8 shall be in addition to any liability which the
Company and the Selling Shareholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Securities Act; and the
obligations of the Underwriters under this Section 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the
Company within the meaning of the Securities Act and to the Selling
Shareholders.
9. Default of Underwriters. If any Underwriter defaults in its
obligation to purchase Shares hereunder and if the total number of Shares which
such defaulting Underwriter agreed but failed to purchase is ten percent or less
of the total number of Shares to be sold hereunder, the non-defaulting
Underwriters shall be obligated severally to purchase (in the respective
proportions which the number of
- 28 -
<PAGE> 29
Shares set forth opposite the name of each non-defaulting Underwriter in
Schedule I hereto bears to the total number of Shares set forth opposite the
names of all the non-defaulting Underwriters), the Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter
so defaults and the total number of Shares with respect to which such default
or defaults occur is more than ten percent of the total number of Shares to be
sold hereunder, and arrangements satisfactory to the other Underwriters, the
Company and the Selling Shareholders for the purchase of such Shares by other
persons (who may include the non-defaulting Underwriters) are not made within
36 hours after such default, this Agreement, insofar as it relates to the sale
of the Shares, will terminate without liability on the part of the
non-defaulting Underwriters, the Company or the Selling Shareholders except for
(i) the provisions of Section 8 hereof, and (ii) the expenses to be paid or
reimbursed by the Company pursuant to Section 6. As used in this Agreement,
the term "Underwriter" includes any person substituted for an Underwriter under
this Section 9. Nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. Default by the Selling Shareholders. If the Selling Shareholders
shall fail to sell the number of Firm Shares or Option that the Selling
Shareholders are obligated to sell, the Representatives may, at their option, by
notice to the Company, either (a) require the Company to sell and deliver the
number of Firm Shares or Option Shares as to which the Selling Shareholders have
defaulted or such lesser number as may be requested by the Representatives, (b)
elect to purchase the Firm Shares and the Option Shares that the Company and the
non-defaulting Selling Shareholders have agreed to sell pursuant to this
Agreement, or (c) terminate this Agreement without liability on the part of the
Underwriters or the Company, except for the provisions of Section 8 hereof and
the expenses to be paid or reimbursed by the Company pursuant to Section 6.
In the event of a default under this Section that does not result in the
termination of this Agreement, the Representatives shall have the right to
postpone the First Closing Date or Option Closing Date for a period not
exceeding ten days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. No action
taken pursuant to this Section shall relieve the Company or the Selling
Shareholder so defaulting from liability, if any, in respect of such default.
11. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Shareholders and the Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Selling Shareholders, any Underwriter or any controlling person,
(ii) any termination of this Agreement, and (iii) delivery of and payment for
the Shares.
12. Effective Date. This Agreement shall become effective at whichever
of the following times shall first occur: (i) at 11:30 a.m., Eastern Standard
Time, on the next full business day following the date on which the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement has become effective as the Representatives shall release the Firm
Shares for sale to the public; provided, however, that the provisions of
Sections 6, 8, 11 and 12 hereof shall at all times be effective. For purposes of
this Section 12, the Firm Shares shall be deemed to have been so released upon
the release by the Representatives for publication, at any time after the
Registration Statement has become effective, of any newspaper advertisement
relating to the Firm Shares or upon the release by the Representatives of
telegrams offering the Firm Shares for sale to securities dealers, whichever may
occur first.
- 29 -
<PAGE> 30
13. Termination. This Agreement may be terminated by the Representatives
by notice to the Company and the Selling Shareholders (i) at any time before it
becomes effective in accordance with Section 12 hereof; (ii) in the event that
at or prior to the First Closing Date the Company or the Selling Shareholders
shall have failed, refused or been unable to perform any agreement on the part
of the Company or the Selling Shareholders to be performed hereunder (or any
other condition to the obligations of the Underwriters hereunder is not
fulfilled); (iii) if at or prior to the Closing Date trading in securities on
the New York Stock Exchange, the American Stock Exchange or the over-the-counter
market shall have been suspended or materially limited or minimum or maximum
prices shall have been established on either of such Exchanges or such market,
or a banking moratorium shall have been declared by Federal or state
authorities; (iv) if at or prior to the Closing Date trading in securities of
the Company shall have been suspended; or (v) if there shall have been such a
material change in general economic, political or financial conditions or if the
effect of international conditions on the financial markets in the United States
shall be such as, in your reasonable judgment, makes it inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to proceed with the delivery of the
Shares. Termination of this Agreement pursuant to this Section 13 shall be
without liability of any party to any other party other than as provided in
Sections 6 and 8 hereof.
14. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of J. C. Bradford & Co., J.
C. Bradford Financial Center, 330 Commerce Street, Nashville, Tennessee 37201,
Attention: Michael C. Nunan or if sent to the Company shall be mailed, delivered
or telegraphed and confirmed in writing to the Company at 900 Winderley Place,
Suite 140, Maitland, Florida 32751, Attention: Bahram Yusefzadeh.
15. Miscellaneous. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company, the Selling Shareholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Company, the Selling
Shareholders and the several Underwriters and for the benefit of no other person
except that (i) the representations and warranties of the Company, the Selling
Shareholders and contained in this Agreement shall also be for the benefit of
any person or persons who control any Underwriter within the meaning of Section
15 of the Securities Act, and (ii) the indemnities by the Underwriters shall
also be for the benefit of the directors of the Company, officers of the Company
who have signed the Registration Statement and any person or persons who control
the Company within the meaning of Section 15 of the Securities Act. No
purchaser of Shares from any Underwriter will be deemed a successor because of
such purchase. The validity and interpretation of this Agreement shall be
governed by the laws of the State of Tennessee. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. You hereby
represent and warrant to the Company that you have authority to act hereunder on
behalf of the several Underwriters, and any action hereunder taken by you will
be binding upon all the Underwriters.
- 30 -
<PAGE> 31
If the foregoing is in accordance with your understanding of our
agreement, please indicate your acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Company, the Selling Shareholders and each of the several
Underwriters.
Very truly yours,
PHOENIX INTERNATIONAL LTD., INC.
By:
------------------------------
Name:
Title:
SELLING SHAREHOLDERS
By:
------------------------------
Attorney-in-Fact
Confirmed and accepted as of the
date first above written.
J. C. BRADFORD & CO.
ADVEST, INC.
For themselves and as Representatives
of the Several Underwriters
By: J. C. Bradford & Co.
By:
---------------------------
(Authorized Representative)
- 31 -
<PAGE> 32
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Number of Option
Number of Shares to be Purchased
Firm Shares If Maximum
Underwriter to be Purchased Option Exercised
- ----------- --------------- ----------------------
<S> <C> <C>
J. C. Bradford & Co.
Advest, Inc.
--------- -------
TOTAL 1,077,500 161,625
========= =======
</TABLE>
<PAGE> 33
SCHEDULE II
SCHEDULE OF SELLING SHAREHOLDERS
FIRM SHARES
<TABLE>
<CAPTION>
Number of Firm Shares
Selling Shareholder: to be Sold
- -------------------- ---------------------
<S> <C>
Bahram Yusefzadeh 292,500
William Toole 60,000
Michael R. Newes 55,000
-------
TOTAL 407,500
=======
</TABLE>
<PAGE> 34
SCHEDULE III
SCHEDULE OF SELLING SHAREHOLDERS
OPTION SHARES
<TABLE>
<CAPTION>
Maximum Number
of Option Shares
Selling Shareholder: to be Sold
- -------------------- ----------------
<S> <C>
-------
TOTAL 161,625
=======
</TABLE>
<PAGE> 35
EXHIBIT A
THIS WARRANT AND ANY SHARES ACQUIRED FROM THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE SECURITIES
OR BLUE SKY LAWS. NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
EXEMPTIONS FROM SUCH REGISTRATION. THIS WARRANT IS NON-TRANSFERABLE AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF, EXCEPT AS
OTHERWISE PERMITTED IN PARAGRAPH 9(a) HEREOF, UNLESS PREVIOUSLY CONSENTED TO BY
PHOENIX INTERNATIONAL LTD., INC.
No. ____ Right to Purchase
_________ Shares of
Common Stock
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, in consideration of $500 paid in cash this date by
J.C. Bradford & Co. ("Bradford") to Phoenix International Ltd., Inc., a Florida
corporation (the "Company"), Bradford is entitled to purchase from the Company,
at any time during the period specified in Paragraph 2 hereof, up to
_______________ (________) fully paid and non-assessable shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), at an
exercise price per share of $___________ (the "Exercise Price"). The term
"Warrant Shares", as used herein, refers to the ____________ shares of Common
Stock purchasable hereunder. The Warrant Shares and the Exercise Price are
subject to adjustment as provided in Paragraphs 4 and 5 hereof.
This Warrant is subject to the following terms, provisions and conditions:
1. Manner and Exercise; Issuance of Certificates; Payment for Shares.
(a) Subject to the provisions hereof, this Warrant may be exercised
by the holder hereof, in whole or in part, within the time period specified in
Paragraph 2 hereof by the surrender of this Warrant, together with a completed
Exercise Agreement in the form attached hereto, to the Company during normal
business hours on any business day at the Company's principal office in
Maitland, Florida (or such other office or agency of the Company as it may
designate by notice to the holder hereof), and payment to the Company in cash,
by certified or official bank check or immediately available federal funds of
the Exercise Price for the Warrant Shares specified in said Exercise Agreement.
Notwithstanding the preceding sentence, the holder, at its sole option, may
elect, in lieu of the payment of the Exercise Price in cash, check or federal
funds, to receive from the Company a lesser number of Warrant Shares having a
fair market value on the date of exercise equal to the difference between (i)
the fair market value on the date of exercise of the full number of Warrant
Shares as to which exercise is being made and (ii) the aggregate Exercise Price
of the full number of Warrant Shares as to which exercise is being made (such
lesser number of Warrant Shares so issuable to the holder shall be considered
<PAGE> 36
as and included within the meaning of the term "Warrant Shares" for all
remaining purposes hereof).
(b) In case of an exercise in part only, the Company will deliver to
the holder a new Warrant of like tenor in the name of the holder evidencing the
right to purchase the number of Warrant Shares as to which this Warrant has not
been exercised. The Warrant Shares so purchased shall be deemed to be issued to
the holder hereof as the record owner of such shares as of the close of business
on the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement delivered, and payment made for such shares as aforesaid.
Certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in said Exercise Agreement, shall be delivered to the
holder hereof within a reasonable time after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may
be requested by the holder hereof and shall be registered in the name of said
holder unless otherwise specified by the holder in the Exercise Agreement.
2. Period of Exercise. This Warrant is exercisable at any time on or
after July ____, 1997, and before 5:00 p.m. Maitland, Florida, local time on
July ___, 2001.
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance, be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof.
(b) Reservation of Shares. During the period within which this
Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of
this Warrant.
4. Protection Against Dilution. The number of shares of Common Stock
purchasable pursuant to the exercise of the rights under this Warrant and the
Exercise Price shall be adjusted as hereinafter set forth
(a) Stock Dividends, Subdivisions, Reclassifications, Etc. In case
at any time or from time to time after the date hereof the Company shall:
(i) take a record of the holders of its issued and outstanding
Common Stock for the purpose of entitling them to receive
a dividend payable in, or other distribution of, Common
Stock, or
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then, and in each such case, the Exercise Price shall be adjusted to that
price determined by multiplying the Exercise Price in effect immediately
prior to such event by a fraction
- 36 -
<PAGE> 37
(i) the numerator of which shall be the total number of outstanding shares
of Common Stock immediately prior to such event, and (ii) the denominator
of which shall be the total number of outstanding shares of Common Stock
immediately after such event.
(b) Adjustment of Number of Shares Purchasable. Upon each
adjustment in the Exercise Price, pursuant to Paragraph 4(a) above, such
number of shares of Common Stock purchasable hereunder shall be adjusted by
multiplying the number of shares of Common Stock by a fraction, the
numerator of which shall be the Exercise Price immediately prior to such
adjustment and the denominator of which shall be the Exercise Price in
effect upon such adjustment.
(c) Other Reclassifications. In case the Company reclassifies its
capital structure in a manner not covered by Paragraph 4(a) and (b) hereof,
an appropriate adjustment shall be made by the Company in its reasonable
discretion to the Exercise Price and Warrant Shares.
5. Adjustment for Reorganization, Consolidation, Merger, Etc.
(a) Prior to the expiration date of this Warrant, the Company shall
not consolidate with or merge into another corporation, or convey all or
substantially all of its assets to any other corporation or corporations,
whether affiliated or unaffiliated (any such corporation being included
within the meaning of the term "successor corporation"), or agree to so
consolidate, merge or convey assets unless and until, prior to consummation
of such consolidation, merger or conveyance, the successor corporation
thereto shall assume, by written instrument executed and mailed to the
holder of this Warrant, at such time, the obligation to issue and deliver
to such holder such shares of stock, securities or property as, in
accordance with the provisions of paragraph 5(b) below, such holder shall
be entitled to purchase or receive upon its exercise of this Warrant and
payment of the Exercise Price.
(b) In case any capital reorganization or reclassification of the
Common Stock of the Company (or any other corporation the stock or other
securities of which are at the time receivable on the exercise of this
Warrant) after the date of execution of this Warrant or in case, after such
date, the Company (or any such other corporation) shall consolidate with or
merge into another corporation, then and in each such case the holder of
this Warrant, upon its exercise of this Warrant and payment of the Exercise
Price, at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu
of the Common Stock of the Company (or such other corporation) the
proportionate share of all stock, securities or other property issued, paid
or delivered for or on all of the Common Stock of the Company (or such
other corporation) as is allocable to the shares of Common Stock then
called for by this Warrant, as if such holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Paragraph 4 and 5 hereof.
- 37 -
<PAGE> 38
6. Registration Rights of Warrant Shares.
(a) The Company shall promptly prepare, file and use its best
efforts to process to effectiveness one new registration statement to cover
a public offering of the Warrant Shares, upon a written request for
registration under the Securities Act of 1933, as amended (the "Act"), by
holders of at least 50% of the then-outstanding Warrant Shares made more
than one year after the date hereof and prior to the fifth anniversary
hereof. In connection with the registration statement, the Company shall
effect such filings under such state "blue sky" laws as the holders shall
request.
(b) The Company shall include the Warrant Shares in any new
registration statement filed by the Company relating to the public sale of
securities for cash, provided that requests therefor shall have been
received from the holders of the Warrant Shares to be included therein more
than one year after the date hereof and prior to the seventh anniversary
hereof. Anything herein to the contrary notwithstanding, if any shares to
be sold by selling stockholders are included in the registration statement
and if in the reasonable opinion of the lead underwriter who is expected to
market the securities covered by such new registration statement the
inclusion of all or part of the Warrant Shares shall be impracticable or
inadvisable, to the extent the inclusion of such Warrant Shares shall be so
impracticable or inadvisable, the rights of the holders of the Warrant
Shares under this Paragraph 6(b) to have the Warrant Shares included in
such registration statement shall be reduced pro rata, or suspended, as
appropriate, but only as to such registration statement. The Company
agrees to give written notice of any registration statement to any holder
of the Warrants or Warrant Shares at least thirty (30) days prior to the
filing of any such registration statement. The Company shall bear all
reasonable out-of-pocket expenses (as described in Paragraph 6(d))
associated with the registration of the Warrant Shares.
(c) The Company shall not be required to keep the registration
statement in effect for a period exceeding twelve (12) months.
(d) The Company shall pay the expenses of the registration. The
expenses shall include, without limitation, all legal and accounting fees
and expenses, filing fees, printing costs and all other expenses, except
the fees of the holders' own respective counsel shall be paid solely by
them. Neither the Company nor the holder shall impose any charge for the
services of its own personnel in connection with the registration of
Warrant Shares.
(e) Each holder shall provide the Company all information required
to be included in the registration statement concerning the holder and the
offering of the Warrant Shares by the holder. Further, the holder shall
indemnify and hold harmless the Company, its officers and directors and any
person who controls (within the meaning of the Act) the Company from all
losses, liabilities, damages and expenses (including reasonable attorneys'
fees) caused by, arising out of, or based upon any untrue statement of a
material fact contained in the registration statement, or any related
prospectus, or any omission of a material fact required or necessary to
make the statements not misleading, to the extent that the losses,
liabilities, damages or expenses resulted from any untrue statement or
omission contained in information furnished in writing to the Company by
the holder expressly for inclusion in the registration statement.
- 38 -
<PAGE> 39
(f) The Company shall indemnify and hold harmless the holder, its
officers, directors and underwriters and any person who controls (within
the meaning of the Act) the holder from all losses, liabilities, damages
and expenses (including reasonable attorneys' fees) caused by, arising out
of, or based upon any untrue statement of a material fact contained in the
registration statement, or any related prospectus, or any omission of a
material fact required or necessary to make the statements not misleading,
except to the extent that the losses, liabilities, damages, or expenses
resulted from any untrue statement or omission contained in information
furnished in writing to the Company by the holder expressly for inclusion
in the registration statement.
(g) The Company shall furnish to the holder the number of copies of
any prospectus which is a part of any registration statement filed
hereunder as the holder reasonably requests.
(h) The Company may, without the holder's approval, include in any
registration filed under this Paragraph 6, any other offering or sale of
shares by the Company or shareholders of the Company.
7. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax in respect thereof.
8. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
9. Transfer, Exchange and Replacement of Warrant.
(a) Warrant Transfer Provisions. PRIOR TO JULY ___, 1999, THIS
WARRANT MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT TO THE OFFICERS AND PARTNERS OF BRADFORD, UNLESS
PREVIOUSLY CONSENTED TO IN WRITING BY THE COMPANY, AND NO SALE, TRANSFER,
ASSIGNMENT, HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT PRIOR TO
SUCH DATE, EXCEPT TO THE OFFICERS AND PARTNERS OF BRADFORD, SHALL BE VALID
OR EFFECTIVE UNLESS PREVIOUSLY CONSENTED TO IN WRITING BY THE COMPANY. Any
transfer of this Warrant, if previously consented to by the Company, is
registrable at the office or agency of the Company referred to in Paragraph
9(d) below by the holder hereof in person or by his duly authorized
attorney, upon surrender of this Warrant properly endorsed.
(b) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of this Warrant and, in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company, or, in the case of
- 39 -
<PAGE> 40
any such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
(c) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any permitted transfer or any replacement as
provided in this Paragraph 9, this Warrant shall be promptly canceled by
the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of a Warrant pursuant to this
Paragraph 9(c).
(d) Register. The Company shall maintain at its principal office in
Maitland, Florida (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
permitted transferee, if any, and each prior owner of this Warrant, if any.
(e) Exercise or Transfer Without Registration. Anything in this
Warrant to the contrary notwithstanding, if, at the time of the surrender
of this Warrant in connection with any exercise, transfer or exchange of
this Warrant, this Warrant or the Warrant Shares shall not be registered
under the Securities Act of 1933, as amended, and under applicable state
securities or blue sky laws, the Warrant Shares issuable upon any exercise
of this Warrant shall contain a legend in form and content satisfactory to
the Company, and the Company may require, as a condition of allowing such
exercise, transfer or exchange, that (i) the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel, which opinion and counsel are acceptable to the Company, to the
effect that such exercise, transfer or exchange may be made without
registration under said Act and under applicable state securities or blue
sky laws and (ii) the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the
Company. The holder of this Warrant, by taking and holding the same,
represents to the Company that such holder is acquiring this Warrant for
investment and not with a view to the distribution thereof.
10. Notices. All notices, requests and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant
shall be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail, postage prepaid and addressed, to such holder at
the address shown for such holder on the books of the Company, or at such other
address as shall have been furnished to the Company by notice from such holder.
All notices, requests and other communications required or permitted to be
given or delivered hereunder to the Company shall be in writing and shall be
personally delivered, or shall be sent by certified or registered mail, postage
prepaid and addressed, to the office of the Company at 900 Winderly Place,
Suite 140, Maitland, Florida 32751, or at such other address as shall have
been furnished to the holder of this Warrant by notice from the Company. Any
such notice, request or other communication may be sent by telegram, facsimile
or telex, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail as provided above.
All notices, requests and other communications shall be deemed to have been
given either at the time of the delivery thereof to (or the receipt by, in the
case of a telegram, facsimile or telex) the person entitled to receive such
notice at the address of
- 40 -
<PAGE> 41
such person for purposes of this Paragraph 10, or, if mailed, at the completion
of the third full day following the date of such mailing thereof to such
address, as the case may be.
11. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
- 41 -
<PAGE> 42
12. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may not be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party (or any predecessor in interest thereof)
against which enforcement of the same is sought.
(b) Descriptive Headings. The descriptive headings of the several
Paragraphs of this Warrant are inserted for purposes of reference only and
shall not affect the meaning or construction of any of the provisions
hereof.
(c) Successors and Assigns. This Warrant shall be binding upon any
entity succeeding to the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets.
(d) Survival. The obligations of Paragraph 6 shall continue in
effect regardless of the expiration of this Warrant by exercise or by its
terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized undersigned officer as of July ___, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By:
-------------------------------------------
Bahram Yusefzadeh
Chief Executive Officer
Attest:
By:
-----------------------------
Name:
Title:
- 42 -
<PAGE> 43
FORM OF EXERCISE AGREEMENT
Dated:________________________
To: Phoenix International Ltd., Inc.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby exercises said Warrant with regard to _________ of the shares
of Common Stock covered by such Warrant, and makes payment herewith in full
therefor at the price per share provided by such Warrant either (i) in cash or
by certified or official bank check or by immediately available federal funds
in the amount of $________________ as provided in the first sentence of
Paragraph 1(a) of the Warrant or (ii) by acceptance of a lesser number of
shares of Common Sock as provided in the second sentence of Paragraph 1(a) of
the Warrant. Please issue a certificate or certificates for the Common Stock
in the name of the undersigned and pay any cash for any fractional share to the
undersigned. If this is an exercise of the Warrant in part only, please
deliver to the undersigned a new Warrant of like tenor in the name of the
undersigned evidencing the right to purchase the number of shares of Common
Stock as to which the within Warrant is not being exercised.
If the name(s) in which the shares of Common Stock are to be issued differ
from the name of the holder set forth on the within Warrant, or if the address
to which the certificate(s) representing such shares is to be forwarded is
different from the address of the holder of the Warrant as shown on the records
of the Company, or if more than one stock certificate is to be issued with
regard to such shares, the name(s) and denominations in which the stock
certificate(s) should be issued and/or the address to which the stock
certificate(s) should be forwarded is set forth below.
Name:
-----------------------------------------
Signature:
------------------------------------
Title of Signing Officer or Agent (if any):
----------------------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant or with the name of the
assignee appearing in the assignment
form.
<PAGE> 44
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within Warrant to:
<TABLE>
<CAPTION>
Name of Assignee Address No. of Shares
---------------- ------- -------------
<S> <C> <C>
</TABLE>
, and hereby irrevocably constitutes and appoints ____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated:
------------------------
In the presence of:
- ------------------------------
Name:
----------------------------------------
Signature:
-----------------------------------
Title of Signing Officer or Agent (if any):
---------------------------------------------
Address:
-------------------------------------
-------------------------------------
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
<PAGE> 1
Filed January 24, 1996 with Secretary of State, Tallahassee, Florida
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PHOENIX INTERNATIONAL LTD., INC.
The undersigned, for the purpose of amending and restating the
Articles of Incorporation of Phoenix International Ltd., Inc., a Florida
corporation (the "Corporation"), do hereby adopt the following Amended and
Restated Articles of Incorporation (the "Articles") pursuant to Section
607.1007 of the Florida Business Corporation Act (the "Act").
ARTICLE I
NAME AND PRINCIPAL OFFICE
The name of the Corporation is "Phoenix International Ltd., Inc." The
principal office of the Corporation is 900 Winderley Place, Suite 140,
Orlando, Florida 32751.
ARTICLE II
PURPOSE
The purpose is to engage in any activities or business permitted under
the Act. Prior to the completion of the Initial Public Offering (as defined
below), if any capital stock of the Corporation is held by any bank chartered
by any federal or state authority or by any holding company or subsidiary
thereof, the Corporation shall engage only in those activities or business
which are permissible for such holders under applicable federal laws and
regulations. The preceding restriction on activities or business shall
terminate upon completion of the Initial Public Offering. Prior to the Initial
Public Offering, this Article II shall be amended only by a vote in favor of
the amendment by a majority of the holders of Class B Stock and Class C Stock.
ARTICLE III
CAPITAL STOCK
A. Common Stock.
The aggregate number of shares of common stock which the Corporation
shall have authority to issue is 12,250,000 shares consisting of: 1,000,000
shares of Class A Common Stock, par value $0.01 per share (the "Class A
Stock"); 10,000,000 shares of Class B Common Stock, par value $1.00 per share
(the "Class B Stock"); 200,000 shares of Class C Common Stock, par value $5.00
per share (the "Class C Stock"); 50,000 shares of Class D Common
<PAGE> 2
Stock, par value $10.00 per share (the "Class D Stock"); and 1,000,000 shares
of Class E Common Stock, par value $2.50 per share (the "Class E Stock," and,
together with the Class A Stock, Class B Stock, Class C Stock, and Class D
Stock, the "Common Stock").
The relative rights, preferences and limitations of each class of
Common Stock are as follows:
(i) Dividends. Holders of the Common Stock shall be entitled to
receive such dividends and other distributions in cash, stock or property of
the Corporation as may be declared thereon by the Board of Directors from time
to time out of assets or funds of the Corporation legally available therefor.
(ii) Voting. At every meeting of the shareholders, each holder of
Class A Stock shall be entitled to ten votes per share, whether in person or
by proxy, for each share of Class A Stock outstanding in his name on the
transfer books of the Corporation. Each holder of Class B Stock and Class C
Stock shall be entitled to one vote per share, whether in person or by proxy,
for each share of Class B Stock or Class C Stock outstanding in his name on the
transfer books of the Corporation. The holders of Class D Stock and Class E
Stock shall have no right to vote at shareholders' meetings, except as provided
under the Act. Upon any transfer of the Class A Stock after the date of these
Articles, other than a transfer to a company or partnership which the holder of
the Class A Stock beneficially owns a majority of the economic interest or to a
member of the immediate family of the holder of the Class A Stock, such stock
shall be converted to Class B Stock.
(iii) Ranking. The Common Stock shall share ratably in
distributions upon liquidation, dissolution or winding up of the Corporation.
(iv) Conversion Rights. Each share of Class C Stock, Class D Stock
and Class E Stock shall be converted into one share of Class B Stock on the
effective date of the Initial Public Offering. For the purposes hereof, an
"Initial Public Offering" shall mean an initial public offering of the
Corporation's capital stock pursuant to a firm commitment underwriting by a
recognized regional or national investment bank where the proceeds from the
offering total at least $12,000,000.
(v) Preemptive Rights. Prior to the Initial Public Offering, each
holder of Class A Stock, Class B Stock and Class C Stock shall have the first
right to purchase shares (and securities convertible into shares) of any class,
kind or series of stock in this Corporation that may from time to time be
issued, whether or not presently authorized, including shares from the treasury
of this Corporation, in the ratio that the number of shares the shareholder
holds at the time of issue bears to the total number of shares outstanding of
Common Stock, exclusive of treasury shares. This right shall be deemed waived
by any shareholder who does not exercise it and pay for the shares preempted
within thirty days of receipt of a notice in writing from the Corporation,
stating the prices, terms and conditions of the issues of shares, and inviting
the shareholder to exercise its preemptive rights. This right may also be
waived by affirmative
2
<PAGE> 3
written waiver submitted by the shareholder to the Corporation within thirty
days of receipt of notice from the Corporation. Holders of stock of the
Corporation of a class other than Class A Stock, Class B Stock and Class C
Stock shall not have any preemptive rights. Upon completion of the Initial
Public Offering no holder of stock of the Corporation shall be entitled to
preemptive rights.
(vi) Cumulative Voting. Cumulative voting shall not be allowed in
the election of directors or for any other purpose.
B. Preferred Stock.
In addition to the Common Stock, the Corporation shall have the
authority, exercisable by its Board of Directors, to issue up to 10,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"),
any part or all of which shares of Preferred Stock may be established and
designated from time to time by the Board of Directors by filing an amendment
to these Articles, which is effective without shareholder action, in accordance
with the appropriate provisions of the Act, and any amendment or supplement
thereto (a "Preferred Stock Designation"), in such series and with such
preferences, limitations, and relative rights as may be determined by the Board
of Directors. The number of authorized shares of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of a majority of the votes of the Class A
Stock and Class B Stock and prior to the Initial Public Offering the Class C
Stock, voting together as a single class, without a vote of the holders of the
shares of Preferred Stock, or of any series thereof, unless a vote of any such
holders is required by law or pursuant to the Preferred Stock Designation or
Preferred Stock Designations establishing the series of Preferred Stock.
ARTICLE IV
DIRECTORS
The Corporation shall have nine directors. The Board of Directors
shall be divided into three classes to be known as Class I, Class II, and Class
III, which shall be as nearly equal in number as possible. Prior to the
Initial Public Offering, of the five directors elected by the holders of the
Class A Common Stock, one such director shall be classified as Class I, two
other such directors shall be classified as Class II and the remaining two
directors shall be classified as Class III. Of the four remaining directors
elected by the holders of the Class B Common Stock and Class C Common Stock,
two such directors shall be classified as Class I, another shall be classified
as Class II and the remaining director shall be classified as Class III.
Except in case of death, resignation, disqualification, or removal, each
director shall serve for a term ending on the date of the third annual meeting
of shareholders following the annual meeting at which the director was elected;
provided, however, that each initial director in Class I shall hold office
until the first annual meeting of shareholders after his election; each initial
director in Class II shall hold office until the second annual meeting of
shareholders after his election; and each initial director in Class III shall
hold office until the third annual meeting of shareholders after
3
<PAGE> 4
his election. Despite the expiration of a director's term, he shall continue
to serve until his successor, if there is to be any, has been elected and has
qualified. In the event of any increase or decrease in the authorized number
of directors, the newly created or eliminated directorships resulting from such
an increase or decrease shall be apportioned among the three classes of
directors so that the three classes remain as nearly equal in size as possible;
provided, however, that there shall be no classification of additional
- ------------------
directors elected by the Board of Directors until the next meeting of
shareholders called for the purposes of electing directors, at which meeting
the terms of all such additional directors shall expire, and such additional
directors positions, if they are to be continued, shall be apportioned among
the classes of directors and nominees therefor shall be submitted to the
shareholders for their vote. Upon the completion of the Initial Public
Offering, the directors shall be elected by the majority vote of the Class A
Stock and the Class B Stock, voting together as a single class.
ARTICLE V
ACTION BY WRITTEN CONSENT
Prior to the Initial Public Offering, any action required or permitted
by the Act to be taken at an annual or special meeting of shareholders may be
taken without a meeting, without prior notice, and without a vote if the action
is taken by the holders of outstanding stock of each voting group entitled to
vote thereon having not less that the minimum number of votes with respect to
each voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. Upon completion of the Initial Public Offering, all actions
by the shareholders shall be taken at a meeting, with prior notice, and with a
vote of the holders of the outstanding stock of each voting group entitled to
vote thereon.
ARTICLE VI
VOTING PROVISIONS
Upon the completion of the Initial Public Offering, for the following
actions by the Corporation to be submitted to the vote of the shareholders,
seven out of nine directors must vote in favor of submitting the action to the
shareholders:
(i) sale of substantially all of the assets of the
Corporation;
(ii) liquidation of the Corporation; or
(iii) the merger, consolidation or reorganization of the
Corporation;
provided, however, that the approval of a merger, consolidation or
- ------------------
reorganization of the Corporation shall also require the vote of 66-2/3% of the
votes of the Class A Stock and Class B Stock, voting together as a single
class.
<PAGE> 5
ARTICLE VII
AMENDMENTS
The power to adopt, alter, amend or repeal these Articles shall be
vested in the shareholders by majority vote.
These Amended and Restated Articles of Incorporation contain certain
amendments requiring shareholder approval. The following voting groups were
entitled to vote on these Articles as follows:
<TABLE>
<CAPTION>
Voting Group Designation
------------------------
Number of Shares Number of Shares Number of Shares
Class Entitled to Vote Voted in Favor Voted Against
----- ---------------- -------- -------
<S> <C> <C> <C>
Class A Stock 600,000 600,000 0
Class B Stock 220,000 185,000 35,000
Class C Stock 80,000 80,000 0
Class D Stock 10,000 10,000 0
Class E Stock 367,577 367,577 0
------- ------- ------
</TABLE>
The number of shares cast for these Articles by the shareholders in
each voting group was sufficient for approval by that voting group; which
shares were cast by written consents dated on or prior to November 20, 1995.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation this ______ day of _______________, 1995.
/s/ BAHRAM YUSEFZADEH
-------------------------------------------
BAHRAM YUSEFZADEH, Chief Executive Officer
ATTEST:
/s/ Ruthann Rackawack
- ------------------------------
Ruthann Rackawack, Secretary
(Corporate Seal)
5
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
PHOENIX INTERNATIONAL LTD., INC.
ADOPTED: NOVEMBER 20, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. PLACE OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 4. NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 5. QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. VOTING, PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 7. FIXING OF RECORD DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 8. SHAREHOLDERS' LIST FOR MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 9. NOMINATIONS OF DIRECTORS AND SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 10. VOTING TRUST AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III - DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1. GENERAL POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. NUMBER, TENURE, QUALIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. VACANCIES AND REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. PLACE OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. REGULAR MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 8. NOTICE, WAIVER BY ATTENDANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 9. QUORUM AND VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10. MANNER OF ACTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 11. COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 12. EXECUTIVE COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 13. ACTION WITHOUT A MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 14. CONFERENCE CALL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 15. CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1. GENERALLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3. TENURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. CHIEF EXECUTIVE OFFICER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. THE VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. TREASURER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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SECTION 9. SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 10. ASSISTANT OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V - CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1. FORM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS. . . . . . . . . . . . . . . . . . . . . 13
SECTION 3. TRANSFERS OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. DUTY OF CORPORATION TO REGISTER TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5. LOST, STOLEN OR DESTROYED CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. SECTION 607.0902 OF THE ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII - SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII - ANNUAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1. INDEMNIFICATION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2. INDEMNIFICATION OF OTHERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3. SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4. DETERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6. NON-EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8. INFORMATION TO SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 11. AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 12. CONTINUING BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 13. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 14. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 15. ADDITIONAL INDEMNIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 16. CHANGES IN THE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE X - NOTICES AND WAIVER OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2. WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1. EXECUTION OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2. DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES
OF OTHER CORPORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
PHOENIX INTERNATIONAL LTD., INC.
ADOPTED: NOVEMBER 20, 1995
________________________________________________________________________________
References in these Bylaws to "Articles of Incorporation" are to the
Amended and Restated Articles of Incorporation of Phoenix International Ltd.,
Inc., a Florida corporation (the "Corporation"), as amended and restated from
time to time.
All of these Bylaws are subject to contrary provisions, if any, of the
Articles of Incorporation (including provisions designating the preferences,
limitations, and relative rights of any class or series of shares), the Florida
Business Corporation Act (the "Act"), and other applicable law, as in effect on
and after the effective date of these Bylaws. References in these Bylaws to
"Sections" shall refer to sections of the Bylaws, unless otherwise indicated.
________________________________________________________________________________
ARTICLE I.
OFFICES
The address of the registered office of the Corporation is c/o
CT Corporation System, 1200 South Pine Island Road, City of Plantation, Florida
33324. The name of the registered agent at that address is CT Corporation
System. The Corporation may have other offices at such places within or
without the State of Florida as the Board of Directors may from time to time
designate or the business of the Corporation may require or make desirable.
ARTICLE II.
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. The Board of Directors may
designate any place within or without the State of Florida as the place of
meeting for any annual or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place within or without the State of Florida as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation in the State of Florida.
<PAGE> 6
SECTION 2. ANNUAL MEETING. An annual meeting of the
shareholders shall be held on such day, and at such time and place as the Board
of Directors shall determine, at which time the shareholders shall elect a
Board of Directors and transact such other business as may be properly brought
before the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
statute or the Articles of Incorporation, may be called by the Chairman of the
Board. In addition, the President or Secretary shall call a special meeting
when: (a) requested in writing by any three or more of the directors; or (b)
requested in writing by shareholders owning at least a majority of all shares
entitled to vote at the meeting. Such written request shall state the purpose
or purposes of the proposed meeting.
SECTION 4. NOTICE. Except as otherwise provided by statute
or the Articles of Incorporation, written notice stating the place, day, and
hour of each meeting of the shareholders, whether annual or special, shall be
delivered, either personally or by first-class mail, to each shareholder of
record entitled to vote at such meeting, not less than ten nor more than sixty
days before the meeting. If the notice is mailed at least thirty days before
the date of the meeting, it may be done by a class of United States mail other
than first class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to a shareholder at his address
as it appears on the records of the Corporation. Notice of any special meeting
of shareholders shall state the purpose or purposes for which the meeting is
called. Notice of any meeting of shareholders shall not be required to be
given to any shareholder who, in person or by his attorney thereunto
authorized, either before or after such meeting, shall waive such notice.
Attendance of a shareholder at a meeting, either in person or by proxy, shall
itself constitute waiver of notice and waiver of any and all objections to the
place and time of the meeting and manner in which it has been called or
convened, except when a shareholder attends a meeting solely for the purpose of
stating, at the beginning of the meeting, any such objections to the
transaction of business. Notice of the time and place of any adjourned meeting
need not be given otherwise than by the announcement at the meeting at which
adjournment is taken. If, however, after the adjournment of any meeting the
Board of Directors fixes a new record date for the adjourned meeting, a notice
of the adjourned meeting shall be given in compliance with this Section 4 to
each shareholder of record entitled to vote on the new record date.
SECTION 5. QUORUM. The holders of a majority of the stock
issued, outstanding and entitled to vote, present in person or represented by
proxy, shall constitute a quorum at all meetings of the shareholders and shall
be sufficient for the transaction of business, except as otherwise provided by
law or the Articles of Incorporation. If, however, such majority shall not be
present or represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or by proxy, shall have the power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall
be present. At such adjourned meeting at which a quorum shall be present in
person or by proxy, any business may be transacted that might have been
transacted at the meeting originally called. Once a share is represented for
any purpose at a meeting, it is
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<PAGE> 7
deemed present for quorum purposes for the remainder of the meeting and for any
adjourned meeting unless a new record date is or must be set for that adjourned
meeting.
SECTION 6. VOTING, PROXIES. At every meeting of the
shareholders, any shareholder having the right to vote shall be entitled to
vote in person or by proxy, but no proxy shall be voted after eleven months
from its date, unless the proxy provides for a longer period. Each holder of
Class A Common Stock shall have ten votes for each share of Class A Common
Stock registered in his name on the books of the Corporation. Each holder of
Class B Common Stock and Class C Common Stock shall have one vote for each
share of Class B Common Stock or Class C Common Stock, respectively, registered
in his name on the books of the Corporation. If a quorum is present, the
affirmative vote of a majority of the shares represented shall be the act of
the shareholders, except as otherwise provided by law or the Articles of
Incorporation. The holders of Class D Common Stock and Class E Common Stock
shall have no right to vote at shareholders' meetings, except as provided under
the Act.
SECTION 7. FIXING OF RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of dividends, or in order to make a determination of shareholders for
any other purpose, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not less than ten nor more than sixty days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of dividends, the date on which notice of the
meeting is mailed, or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 7, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than one hundred twenty days after the date fixed for the
original meeting.
SECTION 8. SHAREHOLDERS' LIST FOR MEETING. After fixing a
record date for a meeting, the Corporation shall prepare an alphabetical list
of the names of all its shareholders who are entitled to notice of the
shareholders' meeting, arranged by voting group with the address of, and the
number and class and series, if any, of shares held by, each. The
shareholders' list shall be available for inspection by any shareholder for a
period of ten days prior to the meeting, or such shorter time as exists between
the record date and the meeting, and continuing through the meeting at the
Corporation's principal office or at such other place as may be permitted by
statute. Subject to any limitations provided by statute, a shareholder or his
agent or attorney shall be entitled on written demand to inspect the list
during regular business hours and at such shareholder's expense, during the
period it is available for inspection. Refusal or failure to comply with
requirements of this Section 8 shall not affect the validity of any action
taken at a shareholders' meeting, unless otherwise provided by statute.
3
<PAGE> 8
SECTION 9. NOMINATIONS OF DIRECTORS AND SHAREHOLDER PROPOSALS.
(a) Nominations by the Board of Directors. The Executive
Committee of the Board of Directors shall have exclusive jurisdiction over the
selection of the management nominees for election from time to time as
directors.
(b) Nominations by Shareholders. Only persons who are
nominated by, or at the direction of, the Executive Committee or by a
shareholder who has given timely written notice to the Secretary of the
Corporation prior to the meeting at which Directors are to be elected will be
eligible for election as directors of the Corporation. For notice of
shareholder nominations to be timely, such notice must be received by the
Corporation not less than sixty days prior to the first anniversary of the
previous year's annual meeting. Such notification shall contain the following
information:
(i) the name, age and business and residence
addresses of each proposed nominee;
(ii) the principal business or occupation of each
proposed nominee during the last five years;
(iii) with respect to each proposed nominee, any
affiliation with or material interest in the Corporation or
any transaction involving the Corporation, and any affiliation
with or material interest in any person or entity having an
interest materially adverse to the Corporation;
(iv) the name and residence address of the
notifying shareholder; and
(v) the number of shares of common stock of the
Corporation owned by the notifying shareholder.
(c) Shareholder Proposals. At annual meetings only such
business may be conducted as has been brought before the meeting by, or at the
direction of, the Chairman of the Board or by a shareholder who has given
timely written notice to the Secretary of the Corporation of such shareholder's
intention to bring such business before such meeting. For notice of business
to be conducted at an annual meeting to be timely, such notice must be received
by the Corporation not less than ninety days prior to the first anniversary of
the previous year's annual meeting. Such notification shall contain the
following information:
(i) a brief description of the business desired
to brought before the annual meeting and the reasons for
conducting such business at the annual meeting;
(ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such
business;
4
<PAGE> 9
(iii) the class and number of shares of the
Corporation's capital stock that are beneficially owned by
such shareholder; and
(iv) any material interest of such shareholder in
such business.
(d) Certain Procedures. The chairman of any meeting of
shareholders at which one or more directors are to be elected may disregard any
nomination not made in accordance with this Section 9, and upon the chairman's
instructions, the vote tellers shall disregard all votes cast for such
nominees. In addition, the chairman of any annual meeting of shareholders may
disregard any shareholder proposals not made in accordance with this Section 9.
The chairman of any such meeting, for good cause shown and with proper regard
for the orderly conduct of business at the meeting, may waive in whole or in
part the operation of this Section 9.
(e) Section 14 of the Exchange Act. Upon completion of
the Initial Public Offering (as defined in the Articles of Incorporation),
notwithstanding anything to the contrary in this Section 9, any shareholder
requesting that a proposal be included in the Corporation's proxy statement
must also meet all of the requirements of Section 14 of the Securities Exchange
Act of 1934 and Regulation 14A thereunder.
SECTION 10. VOTING TRUST AGREEMENTS.
(a) Any number of shareholders of the Corporation may
create a voting trust for the purpose of conferring on a trustee or trustees
the right to vote or otherwise represent their shares. Any such agreement
shall be in writing, shall not exceed ten years in duration, and shall specify
the terms and conditions of the voting trust.
(b) On the transfer of such shares in trust, voting trust
certificates shall be issued by the trustee or trustees to the transferring
shareholders. Such trustee or trustees shall keep a record of the holders of
the voting trust certificates evidencing a beneficial interest in the voting
trust, giving the names and addresses of all such holders, and the number and
class of shares in respect of which the voting trust certificates held by each
are issued, and shall deposit a copy of such record with the Corporation at its
registered office.
(c) The counterpart of the voting trust agreement and the
copy of such record so deposited with the Corporation shall be subject to the
same right of inspection by shareholders of the Corporation, in person or by
attorney, as are the books and records of the Corporation, and such documents
shall be subject to examination by any holder of record voting trust
certificates either in person or by agent or attorney, at any reasonable time
for any reason.
(d) At any time before the expiration of a voting trust
agreement, as originally fixed, or as extended one or more times under this
Section 10, one or more holders of voting trust certificates may, by agreement
in writing, extend the duration of a voting trust agreement nominating the same
or substitute trustee or trustees, for an additional period not to exceed ten
years. Such extension agreement shall not affect the rights or obligations of
persons not parties to the agreement, and such persons shall be entitled to
remove their shares from the trust upon
5
<PAGE> 10
any such extension and to have their share certificates promptly reissued to
them. The extension agreement shall be executed in the manner specified in
clause (a) above and shall be subject to all other provisions of this Section
10.
ARTICLE III.
DIRECTORS
SECTION 1. GENERAL POWERS. Except as may be otherwise
provided by any legal agreement among shareholders, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, the Board of Directors.
In addition to the powers and authority expressly conferred by these Bylaws,
the Board of Directors may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by law, or by any legal agreement
among shareholders, or by the Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.
SECTION 2. NUMBER, TENURE, QUALIFICATIONS.
(a) Number and Qualifications. The Board of Directors
shall consist of nine members and may be changed from time to time thereafter
by resolution of the Board of Directors. Directors must be natural persons who
are eighteen years of age or older, and at least one director shall be a
citizen of the United States; provided, however, directors need not be
residents of the State of Florida or shareholders of the Corporation.
(b) Election and Term of Office Generally. The Board of
Directors shall be divided into three classes to be known as Class I, Class II,
and Class III, which shall be as nearly equal in number as possible. Prior to
the Initial Public Offering, of the five directors elected by the holders of
the Class A Common Stock, one such director shall be classified as Class I,
two other such directors shall be classified as Class II and the remaining two
directors shall be classified as Class III. Of the four remaining directors
elected by the holders of the Class B Common Stock and Class C Common Stock,
two such directors shall be classified as Class I, another shall be classified
as Class II and the remaining one director shall be classified as Class III.
Except in case of death, resignation, disqualification, or removal, each
director shall serve for a term ending on the date of the third annual meeting
of shareholders following the annual meeting at which the director was elected;
provided, however, that each initial director in Class I shall hold office
until the first annual meeting of shareholders after his election; each initial
director in Class II shall hold office until the second annual meeting of
shareholders after his election; and each initial director in Class III shall
hold office until the third annual meeting of shareholders after his election.
Despite the expiration of a director's term, he shall continue to serve until
his successor, if there is to be any, has been elected and has qualified. In
the event of any increase or decrease in the authorized number of directors,
the newly created or eliminated directorships resulting from such an increase
or decrease shall be apportioned among the three classes of directors so that
the three classes remain as nearly equal in size as possible; provided,
however, that there shall be no classification of additional directors elected
by the
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<PAGE> 11
Board of Directors until the next meeting of shareholders called for the
purposes of electing directors, at which meeting the terms of all such
additional directors shall expire, and such additional directors positions, if
they are to be continued, shall be apportioned among the classes of directors
and nominees therefor shall be submitted to the shareholders for their vote.
Upon completion of the Initial Public Offering, the directors shall be elected
by the majority vote of the Class A Common Stock and the Class B Common Stock,
voting together as a single class.
SECTION 3. VACANCIES AND REMOVAL.
(a) Vacancies. Prior to the Initial Public Offering, any
vacancy occurring in the Board of Directors may be filled by the affirmative
vote of the shareholders who are entitled to elect such director pursuant to
Section 2 of this Article III. Nominations for such vacancies shall be made in
accordance with Section 9 of Article I. Upon completion of the Initial Public
Offering, any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the directors. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
(b) Removal. Prior to the Initial Public Offering, no
director may be removed except by the shareholders who elected the director
pursuant to Section 2 of this Article III. At a meeting of such shareholders
called expressly for that purpose, any director elected by such shareholders
may be removed with or without cause by such shareholders if the number of
votes cast to remove the director exceeds the number of votes cast not to
remove such director. Upon completion of the Initial Public Offering,
directors may be removed by the affirmative vote of the shareholders. At a
meeting of the shareholders called expressly for the purpose of removing any
director, any director may be removed with or without cause if the number of
votes cast to remove the director exceeds the number of votes cast not to
remove such director. If any removed director is a member of any committee of
the Board of Directors, he shall cease to be a member of that committee when he
ceases to be a director.
SECTION 4. PLACE OF MEETING. The Board of Directors may hold
its meetings at such place or places within or without the State of Florida as
it may from time to time determine.
SECTION 5. COMPENSATION. Directors may be allowed such
compensation for attendance at regular or special meetings of the Board of
Directors and at any special meeting of standing committees thereof as may from
time to time be determined by resolution of the Board of Directors.
SECTION 6. REGULAR MEETINGS. A regular annual meeting of the
Board of Directors shall be held without other notice than as provided in these
Bylaws immediately after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide, by resolution, the time and
place within or without the State of Florida, for the holding of additional
regular meetings without other notice than such resolution.
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<PAGE> 12
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by the Chairman of the Board or by three directors
on not less than two days' notice by first-class mail, overnight courier,
telephone, telecopier, electronic communication, or personal delivery to each
director and shall be called by the Chairman of the Board, the Chief Executive
Officer, the President, or the Secretary in like manner and on like notice on
the written request of any three or more directors. Any such special meeting
shall be held at such time and place as shall be stated in the notice of the
meeting. The notice need not describe the purpose of the special meeting.
SECTION 8. NOTICE, WAIVER BY ATTENDANCE. No notice of a
meeting of the Board of Directors need be given to any director who signs a
waiver of notice either before or after the meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting and a
waiver of any and all objections to the place of the meeting, the time of the
meeting, or the manner in which it has been called or convened, except when a
director states, at the beginning of the meeting (or promptly upon arrival at
the meeting), any objection to the transaction of business because the meeting
is not lawfully called or convened.
SECTION 9. QUORUM AND VOTING. At all meetings of the Board
of Directors, the presence of a majority of the directors shall constitute a
quorum for the transaction of business. In the absence of a quorum, a majority
of the directors present at any meeting may adjourn from time to time until a
quorum is present. Notice of the time and place of any adjourned meeting need
only be given by announcement at the meeting at which adjournment is taken.
Except as set forth in the Articles of Incorporation, the act of a majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. A director who is present at a meeting when
corporate action is taken is deemed to have assented to the action unless he
objects at the beginning of the meeting (or promptly upon his arrival) to
holding such meeting or transacting specified business at the meeting, or he
votes against or abstains from voting on the action taken.
SECTION 10. MANNER OF ACTING. Notwithstanding any provision
in these Bylaws to the contrary, no contract or other transaction between the
Corporation and any one or more of its directors or between the Corporation and
any other corporation, firm, association or other entity, in which one or more
of its directors are directors or officers or are financially interested, shall
be void or voidable solely: (i) because of such relationship or interest; (ii)
because such director or directors are present at the meeting of the Board of
Directors or committee thereof which authorizes, approves or ratifies such
contracts or transactions; or (iii) because the presence of such director or
directors are counted for the purpose of determining the presences of a quorum
of directors if: (A) the facts of such relationship or interest are disclosed
or known to the Board of Directors or committee, and the Board of Directors or
the committee in good faith authorizes, approves, or ratifies the contract or
transaction by the affirmative vote or written consent of a majority of
disinterested directors or (B) the facts of such relationship or interest are
disclosed or known to the holders of the shares entitled to vote thereon and
the holders of a majority of such shares authorize, approve or ratify such
contract or transaction by vote or written consent with the shares of the
interested director not entitled to vote thereon. An interested director may
be counted in determining the presence of a quorum at a meeting of the Board of
Directors or committee thereof which authorizes, approves or ratifies such
contract or
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transaction, but shall not be counted in determining whether the Corporation
shall award any contract or engage in any transaction in which the director is
an interest person, which determination may only be authorized by a majority of
disinterested directors or by a solely disinterested director, even though such
directors or director may be less than a quorum.
SECTION 11. COMMITTEES. In furtherance and not in limitation
of the powers conferred by statute, the Board of Directors by resolution
adopted by a majority of the full Board of Directors may designate from among
its members one or more other committees each of which, to the extent provided
in such resolution or in the Articles of Incorporation or these Bylaws, shall
have authority to exercise all the powers of the Board of Directors which may
be lawfully delegated and not inconsistent with these Bylaws or the Act, at any
time and when the Board of Directors is not in session. The committee shall
elect a Chairman, and a majority of the entire committee shall constitute a
quorum; and the act of a majority of members present at a meeting at which a
quorum is present shall be the act of the committee provided all members of the
committee have had notice of such meeting or waived such notice.
SECTION 12. EXECUTIVE COMMITTEE. The Board of Directors by
resolution adopted by a majority of the entire Board of Directors may designate
two or more directors to constitute an Executive Committee. The Executive
Committee, when the Board of Directors is not in session, shall have and
exercise all of the authority of the Board of Directors in the management of
the Corporation except as may be limited by the resolution appointing the
Executive Committee or by the Act.
SECTION 13. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Board of Directors or committee. Such consent shall have
the same effect as a unanimous vote.
SECTION 14. CONFERENCE CALL MEETINGS. Members of the Board
of Directors, or any committee designated by such Board, may participate in a
meeting of such Board or committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section 14 shall constitute presence in person at such meeting.
SECTION 15. CHAIRMAN OF THE BOARD. The Board of Directors
shall elect at its annual meeting one of its members to serve as Chairman of
the Board. The Chairman shall preside at all meetings of the Board of
Directors and at all meetings of shareholders.
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ARTICLE IV.
OFFICERS
SECTION 1. GENERALLY. The Board of Directors at its first
meeting after each annual meeting shall elect a Chairman of the Board, who
shall be elected by the Board from its own number, a Chief Executive Officer
("CEO"), a President, one or more Vice Presidents, a Treasurer, a Secretary and
such other officers as it shall deem necessary. Any person may hold two or
more offices.
SECTION 2. COMPENSATION. The compensation of the CEO,
President and other executive officers of the Corporation shall be fixed by the
compensation committee of the Board of Directors. The Executive non-officer
members of the Committee shall constitute the compensation committee. The
compensation of all non-executive officers shall be fixed by the CEO and the
CEO shall report annually to the Board of Directors on the compensation of all
non-executive officers.
SECTION 3. TENURE. Each officer of the Corporation shall
hold office for the term for which he is elected or appointed, and until his
successor has been duly elected or appointed and has qualified, or until his
earlier resignation, removal from office or death. Any officer or agent may be
removed by the Board of Directors whenever in its judgment the best interests
of the Corporation will be served thereby. In addition, the CEO may remove any
officer or agent of the Corporation, except for the President or chief
financial officer, without the approval of the Board of Directors, whenever in
his judgment the best interests of the Corporation will be served thereby.
Removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. The Board of Directors may fill any
vacancy in the office of CEO, President or the chief financial officer, however
occurring, for the unexpired portion of the term. The CEO shall have the power
to fill any other office, however occurring, for the unexpired portion of the
term.
SECTION 5. CHIEF EXECUTIVE OFFICER. The CEO shall be
appointed by the Board of Directors and have direct control over the affairs,
property and business of the Corporation, supervise the formation of corporate
policies and long-range plans for the Corporation and shall perform such other
duties as may be assigned to him from time to time by the Board of Directors or
by these Bylaws. The CEO shall have the power to appoint and remove such
employees as the business may require and shall have general supervision over
all officers of the Corporation. The CEO shall have the authority to sign,
execute and acknowledge on behalf of the Corporation, all contracts, deeds,
mortgages, bonds, stock certificates for its shares, leases and all other
instruments necessary or proper to be executed in the course of the
Corporation's regular business, or which, may be authorized by resolution of
the Board of Directors from time to time or by these Bylaws. In the event of
the incapacity or inability to act of the CEO, or upon his request, the
President may act in his place, subject to the authority of the Board of
Directors. The CEO may remove any officer of the Corporation, except for the
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President and the chief financial officer. Prior to the Initial Public
Offering, Bahram Yusefzadeh shall serve as CEO until his resignation, death or
mental or physical incapacity.
SECTION 6. PRESIDENT. The President shall be the chief
operating officer of the Corporation. Subject to the direction and control of
the Board of Directors and the CEO, he shall supervise and conduct the
day-to-day operations of the Corporation; and, in general, he shall discharge
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors or the CEO. In the event of the CEO's
incapacity or inability to act, the President shall preside at the meetings of
the shareholders or of the Board of Directors. The President shall have the
authority to sign, execute and acknowledge on behalf of the Corporation, all
contracts, deeds, mortgages, bonds, stock certificates for its shares, leases
and all other instruments necessary or proper to be executed in the course of
the Corporation's regular business, or which, may be authorized by resolution
of the Board of Directors from time to time or by these Bylaws. In the event
of the incapacity or inability to act as the President, or upon his request,
the CEO may act in his place, subject to the authority of the Board of
Directors.
SECTION 7. THE VICE PRESIDENTS. The Vice President (or in
the event there be more than one Vice President, each of the Vice Presidents)
shall assist the President in the discharge of his duties as the President may
direct and shall perform such other duties as from time to time may be assigned
to him by the President or the Board of Directors. In the event of the
President's and CEO's incapacity or inability to act, the Vice President (or
in the event there be more than one Vice President, the Vice Presidents) shall
perform the duties of President, and when so acting, shall have all the power
of and be subject to all the restrictions upon the President. To the extent
authorized by the Corporation's policies, as such policies are in effect from
time to time, the Vice President (or in the event there be more than one Vice
President, the Vice Presidents) shall have the authority to sign, execute and
acknowledge on behalf of the Corporation, all contracts, deeds, mortgages,
bonds, stock certificates for its shares, leases and all other instruments
necessary or proper to be executed in the course of the Corporation's regular
business, or which may be authorized by resolution of the Board of Directors
from time to time or by these Bylaws.
SECTION 8. TREASURER. The Treasurer shall be the principal
accounting and financial officer of the Corporation. He shall: (a) have
charge of and be responsible for the maintenance of adequate books of account
for the Corporation; (b) have charge and custody of all funds and securities of
the Corporation, and be responsible therefor and for the receipt and
disbursement thereof; and (c) perform all the duties incident to the office of
treasurer and such other duties as from time to time may be assigned to him by
the President of the Board of Directors.
SECTION 9. SECRETARY. The Secretary shall: (a) attend and
keep the minutes of the shareholders' meetings and of the Board of Directors'
meetings in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these Bylaws and as
required by law; (c) be custodian of the corporate records and of the seal of
the Corporation and see that the seal of the Corporation is affixed to all
documents the execution of which on behalf of the Corporation under its seal is
duly authorized; (d) keep
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a register of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholder; (e) sign with the CEO,
President or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation; and (g) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the CEO, President or the Board of Directors.
SECTION 10. ASSISTANT OFFICERS. The Assistant Secretaries,
when authorized by the Board of Directors, may sign with the President or a
Vice President certificates for shares of the Corporation the issuance of which
shall have been authorized by resolution of the Board of Directors. The
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties as shall be assigned by the Vice President,
Secretary or Treasurer, respectively, or by the CEO, President or by the Board
of Directors.
ARTICLE V.
CAPITAL STOCK
SECTION 1. FORM. The interest of each shareholder shall be
evidenced by a certificate representing shares of stock of the Corporation,
which shall be in such form as the Board of Directors may from time to time
adopt and shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each certificate shall exhibit the name of the
Corporation, the holder's name, the number of shares and class of shares and
series, if any, represented thereby, a statement that the Corporation is
organized under the laws of the State of Florida, and the par value of each
share or a statement that the shares are without par value. Each certificate
shall be signed by the President or a Vice President and the Secretary or an
Assistant Secretary and may be sealed with the seal of the Corporation or a
facsimile thereof. In case any officer who signed, or whose facsimile
signature has been placed upon, such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of its issuance.
SECTION 2. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED
OWNERS. Prior to due presentation for transfer of registration of its shares,
the Corporation may treat the registered owner of the shares (or the beneficial
owner of the shares to the extent of any rights granted by a nominee
certificate on file with the Corporation pursuant to any procedure that may be
established by the Corporation in accordance with the Act) as the person
exclusively entitled to vote the shares, to receive any dividend or other
distribution with respect to the shares, and for all other purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it has
express or other notice of such a claim or interest, except as otherwise
provided by law.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares shall be
made upon the books of the Corporation kept by the Corporation or by the
transfer agent designated to transfer the shares, only upon direction of the
person named in the certificate or by an attorney lawfully constituted in
writing. Before a new certificate is issued, the old certificate shall be
surrendered
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for cancellation or, in the case of a certificate alleged to have been lost,
stolen, or destroyed, the provisions of these Bylaws shall have been complied
with.
SECTION 4. DUTY OF CORPORATION TO REGISTER TRANSFER.
Notwithstanding any of the provisions of Section 3 of this Article V, the
Corporation is under a duty to register the transfer of its shares only if:
(a) the share certificate is endorsed by the appropriate person or persons; (b)
reasonable assurance is given that each required endorsement is genuine and
effective; (c) the Corporation has no duty to inquire into adverse claims or
has discharged any such duty; (d) any applicable law relating to the collection
of taxes has been complied with; (e) the transfer is in fact rightful or is to
a bona fide purchaser; and (f) the transfer is in compliance with applicable
provisions of any transfer restrictions of which the Corporation shall have
notice.
SECTION 5. LOST, STOLEN OR DESTROYED CERTIFICATES. Any
person claiming a certificate of stock to be lost, stolen or destroyed shall
make an affidavit or affirmation of the fact in such manner as the Board of
Directors may require and shall, if the Board of Directors so requires, give
the Corporation a bond of indemnity in the form and amount and with one or more
sureties satisfactory to the Board of Directors, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.
SECTION 6. SECTION 607.0902 OF THE ACT. Pursuant to Section
607.0902(10) of the Act, control shares acquired in a control-share acquisition
with respect to which no acquiring person's statement has been filed with the
Corporation may, at any time during the period ending sixty days after the last
acquisition of control shares by the acquiring person, be subject to redemption
by the Corporation at the fair value thereof pursuant to procedures adopted by
the Corporation in accordance with these Bylaws and the Act.
ARTICLE VI.
FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day
of January in each year, or on such other date as may be established by the
Board of Directors of the Corporation.
ARTICLE VII.
SEAL
The corporate seal shall be in such form as the Board of
Directors may from time to time determine.
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ARTICLE VIII.
ANNUAL STATEMENTS
No later than one hundred twenty days after the close of each
fiscal year, or within such additional time thereafter as is reasonably
necessary to enable the Corporation to prepare its financial statements if, for
reasons beyond the Corporation's control, it is unable to prepare its financial
statements within the prescribed period, the Corporation shall mail annual
financial statements to each shareholder. Such financial statements shall
contain the content and be in the form required by Section 607.1620 of the Act,
as such provision may be amended from time to time.
ARTICLE IX.
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS. The Corporation
shall indemnify and hold harmless any person (an "Indemnified Person") who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action or suit by or in the
right of the Corporation) because he is or was a director of the Corporation,
against expenses (including, but not limited to, attorneys' fees and
disbursements, court costs and expert witness fees), and against any judgments,
fines, and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding; provided, however, that in
any case, no indemnification shall be made for any expenses, judgments, fines
and amounts paid in settlement to or on behalf of any director if a judgment or
other final adjudication establishes that his actions, or omissions to act,
were material to the cause of action so adjudicated and constitute:
(a) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful;
(b) a transaction from which the director derived an improper
personal benefit;
(c) a circumstance under which the liability provisions of
Section 607.0834 of the Act (dealing with unlawful distributions) are
applicable; or
(d) willful misconduct or a conscious disregard for the best
interests of the Corporation in a proceeding by or in the right of the
Corporation to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder.
SECTION 2. INDEMNIFICATION OF OTHERS. The Board of Directors
shall have the power to cause the Corporation to provide to officers, employees
and agents of the Corporation all or any part of the right to indemnification
and other rights of the type provided under this
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Article IX (subject to the conditions, limitations and obligations specified
therein) upon a resolution to that effect identifying such officers, employees
or agents (by position or name) and specifying the particular rights provided,
which may be different for each of the persons identified. Each officer,
employee or agent of the Corporation so identified shall be an "Indemnified
Person" for the purposes of the provisions of this Article IX.
SECTION 3. SUBSIDIARIES. The Board of Directors shall have
the power to cause the Corporation to provide to any director, officer,
employee or agent of the Corporation who also is or was a director, officer,
trustee, general partner, employee or agent of a Subsidiary (as defined below),
all or any part of the right to indemnification and other rights of the type
provided under Sections 1, 5 and 11 of this Article IX (subject to the
conditions, limitations and obligations specified therein), with regard to
amounts actually and reasonably incurred by such person because he is or was a
director, officer, trustee, general partner, employee or agent of the
Subsidiary. The Board of Directors shall exercise such power, if at all,
through a resolution identifying the person or persons to be indemnified (by
position or name) and the Subsidiary (by name or other classification), and
specifying the particular rights provided, which may be different for each of
the persons identified. Each person so identified shall be an "Indemnified
Person" for purposes of the provisions of this Article IX. As used in this
Article IX, "Subsidiary" shall mean (a) another corporation, joint venture,
trust, partnership or unincorporated business association more than 20% of the
voting capital stock or other voting equity interest of which was, at or after
the time the circumstances giving rise to such action, suit or proceeding
arose, owned, directly or indirectly, by the Corporation, or (b) a nonprofit
corporation that received its principal financial support from the Corporation
or its Subsidiaries.
SECTION 4. DETERMINATION. Notwithstanding any judgment,
order, settlement, conviction or plea in any action, suit or proceeding of the
kind referred to in Section 1 of this Article IX, an Indemnified Person shall
be entitled to indemnification as provided in such Section 1 unless a
determination that such Indemnified Person is not entitled to such
indemnification shall be made:
(a) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action,
suit or proceeding;
(b) if such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by the
Board of Directors (in which directors who are parties may
participate) consisting solely of two or more directors not at the
time parties to the proceeding;
(c) by independent legal counsel:
(i) selected by the Board of Directors prescribed
in paragraph (a) or the committee prescribed in paragraph (b);
or
(ii) if a quorum of the directors cannot be
obtained for paragraph (a) and the committee cannot be
designated under paragraph (b), selected by
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majority vote of the full Board of Directors (in which
directors who are parties may participate); or
(d) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit,
or proceeding or, if no such quorum is obtainable, by a majority vote
of shareholders who were not parties to such proceeding.
Notwithstanding any determination pursuant to the preceding sentence,
if such determination shall have been made at a time that the members
of the Board of Directors, so serving when the events upon which such
Indemnified Person's liability has been based occurred, no longer
constitute a majority of the members of the Board of Directors, then
subject to any requirements of the Act, such Indemnified Person shall
nonetheless be entitled to indemnification as set forth in Section 1
of this Article IX, unless the Corporation shall carry the burden of
proving, in an action before any court of competent jurisdiction, that
such Indemnified Person is not entitled to such indemnification.
SECTION 5. ADVANCES. Expenses (including, but not limited
to, attorneys' fees and disbursements, court costs, and expert witness fees)
incurred by the Indemnified Person in defending any action, suit or proceeding
of the kind described in Section 1 of this Article IX (or in Section 2 or 3 of
this Article IX, if the Board of Directors has specified that advancement of
expenses be made available to such Indemnified Person) shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as set forth herein. The Corporation shall promptly pay the amount
of such expenses to the Indemnified Person, but in no event later than ten days
following the Indemnified Person's delivery to the Corporation of a written
request for an advance pursuant to this Section 5, together with a reasonable
accounting of such expenses; provided, however, that the Indemnified Person
shall furnish the Corporation a written affirmation of his good faith belief
that he is entitled to indemnification for such amounts under this Article IX
and a written undertaking and agreement to repay to the Corporation any
advances made pursuant to this Section 5 if it shall be determined that the
Indemnified Person is not entitled to be indemnified by the Corporation for
such amounts. The Corporation shall make the advances contemplated by this
Section 5 regardless of the Indemnified Person's financial ability to make
repayment. Any advances and undertakings to repay pursuant to this Section 5
shall be unsecured and interest-free.
SECTION 6. NON-EXCLUSIVITY. Subject to any applicable
limitation imposed by the Act or the Articles of Incorporation, the
indemnification and advancement of expenses provided by or granted pursuant to
this Article IX shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
resolution, or agreement specifically or in general terms approved or ratified
by the affirmative vote of holders of a majority of the shares entitled to be
cast thereon.
SECTION 7. INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as
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such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Section 7.
SECTION 8. INFORMATION TO SHAREHOLDERS. If any expenses or
other amounts are paid by way of indemnification, otherwise than by court order
or action by the shareholders or by an insurance carrier pursuant to insurance
maintained by the Corporation, the Corporation shall, not later than the time
of delivery to shareholders of written notice of the next annual meeting of
shareholders, unless such meeting is held within three months from the date of
such payment, and, in any event, within fifteen months from the date of such
payment, deliver either personally or by mail to each shareholder of record at
the time entitled to vote for the election of Directors, a statement specifying
the persons paid, the amounts paid, and the nature and status at the time of
such payment of the litigation or threatened litigation.
SECTION 9. SECURITY. The Corporation may designate certain
of its assets as collateral, provide self-insurance or otherwise secure
its obligations under this Article IX, or under any indemnification agreement
or plan of indemnification adopted and entered into in accordance with the
provisions of this Article IX, as the Board of Directors deems appropriate.
SECTION 10. AMENDMENT. Any amendment to this Article IX that
limits or otherwise adversely affects the right of indemnification, advancement
of expenses, or other rights of any Indemnified Person hereunder shall, as to
such Indemnified Person, apply only to claims, actions, suits, or proceedings
based on actions, events or omissions (collectively, "Post-Amendment Events")
occurring after such amendment and after delivery of notice of such amendment
to the Indemnified Person so affected. Any Indemnified Person shall, as to any
claim, action, suit or proceeding based on actions, events or omissions
occurring prior to the date of receipt of such notice, be entitled to the right
of indemnification, advancement of expenses and other rights under this Article
IX to the same extent as if such provisions had continued as part of these
Bylaws without such amendment. This Section 10 cannot be altered, amended or
repealed in a manner effective as to any Indemnified Person (except as to
Post-Amendment Events) without the prior written consent of such Indemnified
Person.
SECTION 11. AGREEMENTS. The provisions of this Article IX
shall be deemed to constitute an agreement between the Corporation and each
person entitled to indemnification hereunder. In addition to the rights
provided in this Article IX, the Corporation shall have the power, upon
authorization by the Board of Directors, to enter into an agreement or
agreements providing to any person who is or was a director, officer, employee
or agent of the Corporation indemnification rights substantially similar to
those provided in this Article IX.
SECTION 12. CONTINUING BENEFITS. The indemnification and
advancement of expenses provided by or granted pursuant to this Article IX
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
SECTION 13. SUCCESSORS. For purposes of this Article IX, the
term "Corporation" shall include any corporation, joint venture, trust,
partnership or unincorporated business
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association that is the successor to all or substantially all of the business
or assets of this Corporation, as a result of merger, consolidation, sale,
liquidation or otherwise, and any such successor shall be liable to the persons
indemnified under this Article IX on the same terms and conditions and to the
same extent as this Corporation.
SECTION 14. SEVERABILITY. Each of the Sections of this
Article IX, and each of the clauses set forth herein, shall be deemed separate
and independent, and should any part of any such Section or clause be declared
invalid or unenforceable by any court of competent jurisdiction, such
invalidity or unenforceability shall in no way render invalid or unenforceable
any other part thereof or any separate Section or clause of this Article IX
that is not declared invalid or unenforceable.
SECTION 15. ADDITIONAL INDEMNIFICATIONS. In addition to the
specific indemnification rights set forth herein, the Corporation shall
indemnify each of its directors and such of its officers as have been appointed
by the Board of Directors to the full extent permitted by action of the Board
of Directors without shareholder approval under the Act or other laws of the
State of Florida as in effect from time to time.
SECTION 16. CHANGES IN THE ACT. The Board of Directors of
the Corporation may amend any Section of this Article IX without shareholder
approval such that each Section of this Article IX will be in conformity with
the Act at all times.
ARTICLE X.
NOTICES AND WAIVER OF NOTICE
SECTION 1. NOTICES. Except as otherwise provided in these
Bylaws, whenever under the provisions of these Bylaws notice is required to be
given to any shareholder, director or officer, such notice shall be given
either by personal notice, telephone, telecopier, or electronic communication,
or by overnight courier or mail by depositing the same in the post office or
letter box in a postpaid sealed envelope, addressed to such shareholder,
officer or director at such address as appears on the books of the Corporation,
and such notice shall be deemed to be given at the time when the same shall be
thus sent or mailed.
SECTION 2. WAIVER OF NOTICE. Whenever any notice whatsoever
is required to be given by law, by the Articles of Incorporation or by these
Bylaws, a waiver thereof, in writing, signed by the person or persons entitled
to such notice given before or after the time stated therein, which shall
include a waiver given by telephone, telecopier, or electronic communication,
shall be deemed equivalent thereto. No notice of any meeting need be given to
any person who shall attend such meeting.
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ARTICLE XI.
MISCELLANEOUS
SECTION 1. EXECUTION OF DOCUMENTS. The Board shall designate
the officers, employees, and agents of the Corporation who shall have power to
execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, and
documents for and in the name of the Corporation, and may authorize such
officers, employees, and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees, or agents of
the Corporation. Unless so designated or expressly authorized by these Bylaws,
no officer or agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable pecuniarily for any purpose or any amount.
SECTION 2. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation or otherwise as the Board or the Treasurer, or any other officer of
the Corporation to whom power in this respect shall have been given by the
Board, shall select.
SECTION 3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OF
OTHER CORPORATIONS. The Board shall designate the officers of the Corporation
who shall have authority to appoint from time to time agents of the Corporation
to exercise in the name and on behalf of the Corporation the powers and
rights which the Corporation may have as the holder of stock or other
securities in any other corporation, and to vote or consent in respect of such
stock or securities. Such designated officers may instruct the agents so
appointed as to the manner of exercising such powers and rights, and such
designated officers may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal or otherwise such
written proxies, powers of attorney, or other instruments as they may deem
necessary or proper in order that the Corporation may exercise such powers and
rights.
ARTICLE XII.
AMENDMENTS
Upon completion of the Initial Public Offering, these Bylaws
may be adopted, altered, amended or repealed and new Bylaws may be adopted by
the Board of Directors at any regular or special meeting of the Board of
Directors or by the shareholders at any regular or special meeting of the
shareholders. Action by the Board of Directors with respect to Bylaws shall be
taken by an affirmative vote of a majority of all directors then holding
office. Action by the shareholders with respect to these Bylaws shall be taken
by the affirmative vote of 66-2/3% of the votes of the Class A Common Stock and
Class B Common Stock, voting together as a single class, then entitled to vote
at a regular or special meeting of the shareholders.
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EXHIBIT 3.3
Filed May 9, 1996 with Secretary of State, Tallahassee, Florida
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PHOENIX INTERNATIONAL LTD., INC.
1. The name of the corporation is Phoenix International, Ltd.,
Inc. (the "Corporation").
2. The date of adoption by the Corporation's Board of Directors
of the resolution approving a 2.3231-for- one division of all shares of the
Company's capital stock outstanding on May 6, 1996 pursuant to this Amendment
to the Corporation's Articles of Incorporation is May 6, 1996.
3. All classes of the Corporation's authorized capital stock will
be subject to the division effected by this Amendment to the Corporation's
Articles of Incorporation.
4. This Amendment to the Corporation's Articles of Incorporation
does not adversely affect the rights or preferences of the holders of
outstanding shares of any class or series and does not result in the percentage
of authorized shares that remain unissued after the division exceeding the
percentage of authorized shares that were unissued before the division.
5. Pursuant to Section 607.1006 and Section 607.10025 of the
Florida Business Corporation Act (the "Act"), the first paragraph of Section A
of Article III of the Articles of Incorporation of the Corporation is hereby
amended as follows:
"III
CAPITAL STOCK
A. Common Stock
The aggregate number of shares of common stock which the
Corporation shall have authority to issue is 12,750,000 shares
consisting of: 1,500,000 shares of Class A Common Stock, par value
$0.0043 per share (the "Class A Stock"); 10,000,000 shares of Class B
Common Stock, par value $0.43 per share (the "Class B Stock"); 200,000
shares of Class C Common Stock, par value $2.15 per share (the "Class
C Stock"); 50,000 shares of Class D Common Stock, par value $4.30 per
share (the "Class D Stock"); and 1,000,000 shares of Class E Common
Stock, par value $1.08 per share (the "Class E Stock," and, together
with the Class A Stock, Class B Stock, Class C Stock, and Class D
Stock, the "Common Stock")."
6. The division of shares effected by this Amendment is to become
effective on the date of filing hereof with the Secretary of State of Florida.
<PAGE> 2
7. This Amendment to the Corporation's Articles of Incorporation
was adopted by the Corporation's Board of Directors without shareholder action
because shareholder action was not required pursuant to Section 607.10025 of
the Act.
IN WITNESS WHEREOF, Phoenix International, Ltd., Inc. has caused these
Articles of Amendment to be executed on this 7th day of May, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ Bahram Yusefzadeh
--------------------------------------
Bahram Yusefzadeh,
Chief Executive Officer and
Director of Phoenix International
Ltd., Inc.
<PAGE> 1
EXHIBIT 3.4
FORM OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PHOENIX INTERNATIONAL LTD., INC.
These Amended and Restated Articles of Incorporation of Phoenix
International Ltd., Inc., a Florida corporation (the "Corporation"), are hereby
adopted pursuant to Sections 607.1003 and 607.1007 of the Florida Business
Corporation Act (the "Act").
ARTICLE I
NAME AND PRINCIPAL OFFICE
The name of the Corporation is "Phoenix International Ltd., Inc." The
principal office of the Corporation is 900 Winderley Place, Suite 140,
Maitland, Florida 32751.
ARTICLE II
CAPITAL STOCK
The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is thirty million (30,000,000) shares of voting
common stock, par value $0.01 per share (the "Common Stock").
In addition to the Common Stock, the Corporation shall have the
authority, exercisable by its Board of Directors, to issue ten million
(10,000,000) shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), any part or all of such shares of Preferred Stock may be
established and designated from time to time by the Board of Directors by
filing an amendment to these Amended and Restated Articles of Incorporation,
which is effective without shareholder action, in accordance with the
appropriate provisions of the Act, and any amendment or supplement thereto (a
"Preferred Stock Designation"), in such series and with such preferences,
limitations, and relative rights as may be determined by the Board of
Directors. The number of authorized shares of Preferred Stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by
the affirmative vote of a majority of the votes of the Common Stock, without a
vote of the holders of the shares of Preferred Stock, or of any series thereof,
unless a vote of any such holders is required by law or pursuant to the
Preferred Stock Designation or Preferred Stock Designations establishing the
series of Preferred Stock.
<PAGE> 2
ARTICLE III
DIRECTORS
The Corporation shall have not more than eleven directors, and the
number of directors shall be set by the Board of Directors as set forth in the
Corporation's Bylaws. The Board of Directors shall be divided into three
classes to be known as Class I, Class II, and Class III, which shall be as
nearly equal in number as possible. Except in case of death, resignation,
disqualification, or removal for cause, each director shall serve for a term
ending on the date of the third annual meeting of shareholders following the
annual meeting at which the director was elected; provided, however, that each
------------------
initial director in Class I shall hold office until the first annual meeting of
shareholders after his election; each initial director in Class II shall hold
office until the second annual meeting of shareholders after his election; and
each initial director in Class III shall hold office until the third annual
meeting of shareholders after his election. Despite the expiration of a
director's term, he shall continue to serve until his successor, if there is to
be any, has been elected and has qualified. In the event of any increase or
decrease in the authorized number of directors, the newly created or eliminated
directorships resulting from such an increase or decrease shall be apportioned
among the three classes of directors so that the three classes remain as nearly
equal in size as possible; provided, however, that there shall be no
------------------
classification of additional directors elected by the Board of Directors until
the next meeting of shareholders called for the purposes of electing directors,
at which meeting the terms of all such additional directors shall expire, and
such additional directors positions, if they are to be continued, shall be
apportioned among the classes of directors and nominees therefor shall be
submitted to the shareholders for their vote.
No director may be removed from the Board of Directors except
by the shareholders for cause. Any vacancy occurring on the Board of
Directors, including a vacancy resulting from an increase in the number of
directors, may only be filled by the affirmative vote of the remaining
directors even if the remaining directors constitute less than a quorum of the
Board of Directors.
ARTICLE IV
LIMITATION ON DIRECTOR LIABILITY
No director of the Corporation shall be personally liable for monetary
damages to the Corporation or any other person for any statement, vote,
decision or failure to act, regarding corporate management or policy by a
director, unless the director breached or failed to perform his duties as a
director and the director's breach of, or failure to perform, those duties
constitute:
(i) a violation of criminal law, unless the
director had reasonable cause to believe his conduct was lawful or had
no reasonable cause to believe his conduct was unlawful;
(ii) a transaction from which the director
received an improper personal benefit;
<PAGE> 3
(iii) a circumstance under which the liability
provisions of Section 607.0834 of the Act are applicable;
(iv) in a proceeding by or in the right of the
Corporation to procure a judgement in its favor or by or in the right
of a shareholder, conscious disregard or willful misconduct for the
best interests of the Corporation; or
(v) in a proceeding by or in the right of someone
other than the Corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or
in a manner exhibiting wanton and willful disregard of human rights,
safety or property.
If at any time the Act shall have been amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Act, as so amended, without further action
by the shareholders, unless the provisions of the Act, as amended, require
further action by the shareholders. Any repeal or modification of the
foregoing provisions of this Article Four shall not adversely affect the
elimination or limitation of liability or alleged liability pursuant hereto of
any director of the Corporation for or with respect to any alleged act or
omission of the director occurring prior to such a repeal or modification.
ARTICLE V
ACTION BY WRITTEN CONSENT
All actions by the shareholders shall be taken at a meeting, with
prior notice which complies with the notice provisions of the Corporation's
Bylaws, and with a vote of the holders of the outstanding stock of each voting
group entitled to vote thereon.
ARTICLE VI
SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders, for any purpose or purposes, may be
called only by the Executive Committee of the Board of Directors or by the
Chief Executive Officer of the Corporation. In addition, the Secretary shall
call a special meeting when requested in writing by the holders of at least 50%
of all of the shares entitled to vote at a meeting. Such written shareholder
request shall comply with the notice provisions of the Corporation's Bylaws.
<PAGE> 4
ARTICLE VII
VOTING PROVISIONS
The affirmative vote of at least 66 2/3% of the directors is required
for the following actions by the Corporation to be submitted to a vote of the
shareholders:
(i) sale of substantially all of the assets of
the Corporation;
(ii) liquidation of the Corporation;
(iii) the merger, consolidation or reorganization
of the Corporation, unless the shareholders of the Corporation own at
least a majority of the combined voting power of the corporation
resulting from such merger, consolidation or reorganization; or
(iv) any increase in the number of directors above
eleven directors;
provided, further, that the affirmative vote of 66 2/3% of the holders of the
- ------------------
Common Stock is required for shareholder approval of any action outlined in
the clauses above.
ARTICLE VIII
AMENDMENTS
These Amended and Restated Articles of Incorporation may only be
altered, amended or repealed by the affirmative vote of the holders of 66 2/3%
of the outstanding stock entitled to vote thereon.
<PAGE> 5
These Amended and Restated Articles of Incorporation contain certain
amendments requiring shareholder approval. The following voting groups were
entitled to vote on these Amended and Restated Articles of Incorporation as
follows:
<TABLE>
<CAPTION>
Voting Group Designation
------------------------
Number of Shares Number of Shares Number of Shares
Class Entitled to Vote Voted in Favor Voted Against
----- ---------------- -------------- -------------
<S> <C> <C> <C>
Class A Stock
Class B Stock
Class C Stock
Class D Stock
Class E Stock _______________ _______________ ______________
Totals
</TABLE>
The number of shares cast for these Amended and Restated Articles of
Incorporation by the shareholders in each voting group was sufficient for
approval by that voting group.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation this ______ day of _______________, 1996.
__________________________________________
BAHRAM YUSEFZADEH, Chief Executive Officer
<PAGE> 1
EXHIBIT 3.5
AMENDED AND RESTATED BYLAWS
OF
PHOENIX INTERNATIONAL LTD., INC.
ADOPTED: JUNE , 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Voting, Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 7. Fixing of Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Shareholders' List for Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 9. Nominations of Directors and Shareholder Proposals. . . . . . . . . . . . . . . . . . . . . 3
Section 10. Voting Trust Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III -Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1. General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2. Number and Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3. Vacancies and Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4. Place of Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6. Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8. Notice, Waiver by Attendance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Quorum and Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 10. Manner of Acting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 11. Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12. Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 13. Action Without a Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 14. Conference Call Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 15. Chairman of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV - Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Chief Executive Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. President. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7. Chief Financial Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8. The Senior Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 9. Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10. Secretary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11. Assistant Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V - Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2. Rights of Corporation with Respect to Registered Owners. . . . . . . . . . . . . . . . . . 12
Section 3. Transfers of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Duty of Corporation to Register Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. Lost, Stolen or Destroyed Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6. Section 607.0902 of the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII - Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII - Annual Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX - Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 1. Indemnification of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2. Indemnification of Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4. Determination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5. Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Non-Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. Information to Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 11. Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 12. Continuing Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 13. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 14. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 15. Additional Indemnifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 16. Changes in the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE X - NOTICES AND WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE XI - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1. Execution of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2. Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3. Proxies in Respect of Stock or Other Securities of Other Corporations. . . . . . . . . . 18
ARTICLE XII - Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
PHOENIX INTERNATIONAL LTD., INC.
ADOPTED: , 1996
________________________________________________________________________________
References in these Bylaws to "Articles of Incorporation" are to the
Amended and Restated Articles of Incorporation of Phoenix International Ltd.,
Inc., a Florida corporation (the "Corporation"), as amended and restated from
time to time.
All of these Bylaws are subject to contrary provisions, if any, of the
Articles of Incorporation (including provisions designating the preferences,
limitations, and relative rights of any class or series of shares), the Florida
Business Corporation Act (the "Act"), and other applicable law, as in effect on
and after the effective date of these Bylaws. References in these Bylaws to
"Sections" shall refer to sections of the Bylaws, unless otherwise indicated.
________________________________________________________________________________
ARTICLE I
OFFICES
The address of the registered office of the Corporation is c/o
CT Corporation System, 1200 South Pine Island Road, City of Plantation, Florida
33324. The name of the registered agent at that address is CT Corporation
System. The Corporation may have other offices at such places within or
without the State of Florida as the Board of Directors may from time to time
designate or the business of the Corporation may require or make desirable.
ARTICLE II
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. The Board of Directors may
designate any place within or without the State of Florida as the place of
meeting for any annual or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place within or without the State of Florida as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation in the State of Florida.
<PAGE> 6
SECTION 2. ANNUAL MEETING. An annual meeting of the
shareholders shall be held on such day, and at such time and place as the Board
of Directors shall determine, at which time the shareholders shall elect a
Board of Directors and transact such other business as may be properly brought
before the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by the
Act or the Articles of Incorporation, may be called only by the Executive
Committee or the Chief Executive Officer. In addition, the Secretary shall
call a special meeting when requested in writing by shareholders owning at
least 50% of all shares entitled to vote at the meeting. Such written
shareholder request shall comply with the notice provisions of Section 9
hereof.
SECTION 4. NOTICE. Except as otherwise provided by the
Act or the Articles of Incorporation, written notice stating the place, day,
and hour of each meeting of the shareholders, whether annual or special, shall
be delivered, either personally or by first-class mail, to each shareholder of
record entitled to vote at such meeting, not less than ten nor more than 60
days before the meeting. If the notice is mailed at least 30 days before the
date of the meeting, it may be done by a class of United States mail other than
first class. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to a shareholder at his address
as it appears on the records of the Corporation. Notice of any special meeting
of shareholders shall state the purpose or purposes for which the meeting is
called. Notice of any meeting of shareholders shall not be required to be
given to any shareholder who, in person or by his attorney thereunto
authorized, either before or after such meeting, shall waive such notice.
Attendance of a shareholder at a meeting, either in person or by proxy, shall
itself constitute waiver of notice and waiver of any and all objections to the
place and time of the meeting and manner in which it has been called or
convened, except when a shareholder attends a meeting solely for the purpose of
stating, at the beginning of the meeting, any such objections to the
transaction of business. Notice of the time and place of any adjourned meeting
need not be given otherwise than by the announcement at the meeting at which
adjournment is taken. If, however, after the adjournment of any meeting the
Board of Directors fixes a new record date for the adjourned meeting, a notice
of the adjourned meeting shall be given in compliance with this Section 4 to
each shareholder of record entitled to vote on the new record date.
SECTION 5. QUORUM. The holders of a majority of the
stock issued, outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders and shall be sufficient for the transaction of business, except as
otherwise provided by law or the Articles of Incorporation. If, however, such
majority shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
by proxy, shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of voting stock shall be present. At such adjourned meeting at which a
quorum shall be present in person or by proxy, any business may be transacted
that might have been transacted at the meeting originally called. Once a share
is represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjourned meeting unless
a new record date is or must be set for that adjourned meeting.
<PAGE> 7
SECTION 6. VOTING, PROXIES. At every meeting of the
shareholders, any shareholder having the right to vote shall be entitled to
vote in person or by proxy, but no proxy shall be voted after eleven months
from its date, unless the proxy provides for a longer period. Each holder of
Common Stock shall have one vote for each share of Common Stock registered in
his name on the books of the Corporation. If a quorum is present, the
affirmative vote of a majority of the shares represented shall be the act of
the shareholders, except as otherwise provided by law, the Articles of
Incorporation or these Bylaws.
SECTION 7. FIXING OF RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of dividends, or in order to make a determination of shareholders for
any other purpose, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not less than ten nor more than 60 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of dividends, the date on which notice of the
meeting is mailed, or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 7, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than one hundred twenty days after the date fixed for the
original meeting.
SECTION 8. SHAREHOLDERS' LIST FOR MEETING. After fixing
a record date for a meeting, the Corporation shall prepare an alphabetical list
of the names of all its shareholders who are entitled to notice of the
shareholders' meeting, arranged by voting group with the address of, and the
number and class and series, if any, of shares held by, each. The
shareholders' list shall be available for inspection by any shareholder for a
period of ten days prior to the meeting, or such shorter time as exists between
the record date and the meeting, and continuing through the meeting at the
Corporation's principal office or at such other place as may be permitted by
the Act. Subject to any limitations provided by the Act, a shareholder or his
agent or attorney shall be entitled on written demand to inspect the list
during regular business hours and at such shareholder's expense, during the
period it is available for inspection. Refusal or failure to comply with
requirements of this Section 8 shall not affect the validity of any action
taken at a shareholders' meeting, unless otherwise provided by the Act.
SECTION 9. NOMINATIONS OF DIRECTORS AND SHAREHOLDER
PROPOSALS.
(a) Nominations by the Board of Directors. The Executive
Committee of the Board of Directors shall have exclusive jurisdiction over the
selection of the management nominees for election from time to time as
directors.
(b) Nominations by Shareholders. Only persons who are
nominated by, or at the direction of, the Executive Committee or by a
shareholder who has given timely written notice to the Secretary prior to the
meeting at which directors are to be elected will be eligible
<PAGE> 8
for election as directors of the Corporation. For notice of shareholder
nominations to be timely, such notice must be received by the Corporation not
less than 90 days prior to the first anniversary of the previous year's annual
meeting. Such notification shall contain the following information:
(i) the name, age and business and
residence addresses of each proposed nominee;
(ii) the principal business or occupation
of each proposed nominee during the last five years;
(iii) with respect to each proposed
nominee, any affiliation with or material interest in the
Corporation or any transaction involving the Corporation, and
any affiliation with or material interest in any person or
entity having an interest materially adverse to the
Corporation;
(iv) the name and residence address of
the notifying shareholder; and
(v) the number of shares of common stock
of the Corporation owned by the notifying shareholder.
(c) Shareholder Proposals. At annual and special
meetings only such business may be conducted as has been brought before the
meeting by, or at the direction of, the Chairman of the Board or by a
shareholder who has given timely written notice to the Secretary of the
Corporation of such shareholder's intention to bring such business before such
meeting. For notice of business to be conducted at an annual or special
meeting to be timely, such notice must be received by the Corporation, in the
case of an annual meeting, not less than 90 days prior to the first anniversary
of the previous year's annual meeting or, in the case of a special meeting, not
less than 90 days prior to the date of the meeting as set forth in the written
request to the Corporation provided pursuant to Section 3 hereof. Such
notification shall contain the following information:
(i) a brief description of the business
desired to brought before the annual meeting and the reasons
for conducting such business at the annual meeting;
(ii) the name and address, as they appear
on the Corporation's books, of the shareholder proposing such
business;
(iii) the class and number of shares of
the Corporation's capital stock that are beneficially owned by
such shareholder; and
(iv) any material interest of such
shareholder in such business.
<PAGE> 9
(d) Certain Procedures. The Chairman of the Board, or
his designee, at any meeting of shareholders at which one or more directors are
to be elected may disregard any nomination not made in accordance with this
Section 9, and upon the instructions of the Chairman of the Board, or his
designee, the vote tellers shall disregard all votes cast for such nominees.
In addition, the Chairman of the Board, or his designee, at any annual or
special meeting of shareholders may disregard any shareholder proposals not
made in accordance with this Section 9. The Chairman of the Board, of his
designee, for good cause shown and with proper regard for the orderly conduct
of business at the meeting, may waive in whole or in part the operation of this
Section 9.
(e) Section 14 of the Exchange Act. Notwithstanding
anything to the contrary in this Section 9, any shareholder requesting that a
proposal be included in the Corporation's proxy statement must also meet all of
the requirements of Section 14 of the Securities Exchange Act of 1934 and
Regulation 14A thereunder.
SECTION 10. VOTING TRUST AGREEMENTS.
(a) Any number of shareholders of the Corporation may
create a voting trust for the purpose of conferring on a trustee or trustees
the right to vote or otherwise represent their shares. Any such agreement
shall be in writing, shall not exceed ten years in duration, and shall specify
the terms and conditions of the voting trust.
(b) On the transfer of such shares in trust, voting trust
certificates shall be issued by the trustee or trustees to the transferring
shareholders. Such trustee or trustees shall keep a record of the holders of
the voting trust certificates evidencing a beneficial interest in the voting
trust, giving the names and addresses of all such holders, and the number and
class of shares in respect of which the voting trust certificates held by each
are issued, and shall deposit a copy of such record with the Corporation at its
registered office.
(c) The counterpart of the voting trust agreement and the
copy of such record so deposited with the Corporation shall be subject to the
same right of inspection by shareholders of the Corporation, in person or by
attorney, as are the books and records of the Corporation, and such documents
shall be subject to examination by any holder of record voting trust
certificates either in person or by agent or attorney, at any reasonable time
for any reason.
(d) At any time before the expiration of a voting trust
agreement, as originally fixed, or as extended one or more times under this
Section 10, one or more holders of voting trust certificates may, by agreement
in writing, extend the duration of a voting trust agreement nominating the same
or substitute trustee or trustees, for an additional period not to exceed ten
years. Such extension agreement shall not affect the rights or obligations of
persons not parties to the agreement, and such persons shall be entitled to
remove their shares from the trust upon any such extension and to have their
share certificates promptly reissued to them. The extension agreement shall be
executed in the manner specified in clause (a) above and shall be subject to
all other provisions of this Section 10.
<PAGE> 10
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. Except as may be otherwise
provided by any legal agreement among shareholders, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, the Board of Directors.
In addition to the powers and authority expressly conferred by these Bylaws,
the Board of Directors may exercise all such powers of the Corporation and do
all such lawful acts and things as are not by law, or by any legal agreement
among shareholders, or by the Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the shareholders.
SECTION 2. NUMBER AND TENURE.
(a) Number. Except as otherwise provided in the Articles
of Incorporation, the Board of Directors shall consist of a maximum of eleven
members. The Board of Directors shall have the authority to change the number
of directors by resolution so long as the number of directors does not exceed
eleven.
(b) Election and Term of Office Generally. The Board of
Directors shall be divided into three classes to be known as Class I, Class II,
and Class III, which shall be as nearly equal in number as possible. Except in
case of death, resignation, disqualification, or removal for cause, each
director shall serve for a term ending on the date of the third annual meeting
of shareholders following the annual meeting at which the director was elected;
provided, however, that each initial director in Class I shall hold office
- ------------------
until the first annual meeting of shareholders after his election; each initial
director in Class II shall hold office until the second annual meeting of
shareholders after his election; and each initial director in Class III shall
hold office until the third annual meeting of shareholders after his election.
Despite the expiration of a director's term, he shall continue to serve until
his successor, if there is to be any, has been elected and has qualified. In
the event of any increase or decrease in the authorized number of directors,
the newly created or eliminated directorships resulting from such an increase
or decrease shall be apportioned among the three classes of directors so that
the three classes remain as nearly equal in size as possible; provided,
---------
however, that there shall be no classification of additional directors elected
- --------
by the Board of Directors until the next meeting of shareholders called for the
purposes of electing directors, at which meeting the terms of all such
additional directors shall expire, and such additional directors positions, if
they are to be continued, shall be apportioned among the classes of directors
and nominees therefor shall be submitted to the shareholders for their vote.
SECTION 3. VACANCIES AND REMOVAL.
(a) Vacancies. Any vacancy occurring on the Board of
Directors, including a vacancy resulting from an increase in the number of
directors, may only be filled by the affirmative vote of the remaining
directors, even if the remaining directors constitute less than
<PAGE> 11
a quorum of the Board of Directors. A director elected to fill a vacancy
shall hold office only until the next election of directors by the
shareholders.
(b) Removal. At a meeting of the shareholders called
expressly for the purpose of removing a director, a director may be removed
only for cause if the number of votes cast to remove the director exceeds the
number of votes cast not to remove such director. If any removed director is a
member of any committee of the Board of Directors, he shall cease to be a
member of that committee when he ceases to be a director.
SECTION 4. PLACE OF MEETING. The Board of Directors may
hold its meetings at such place or places within or without the State of
Florida as it may from time to time determine.
SECTION 5. COMPENSATION. Directors may be allowed such
compensation for attendance at regular or special meetings of the Board of
Directors and at any special meeting of standing committees thereof as may from
time to time be determined by resolution of the Board of Directors.
SECTION 6. REGULAR MEETINGS. A regular annual meeting
of the Board of Directors shall be held without other notice than as provided
in these Bylaws immediately after, and at the same place as, the annual meeting
of shareholders. The Board of Directors may provide, by resolution, the time
and place within or without the State of Florida, for the holding of additional
regular meetings without other notice than such resolution.
SECTION 7. SPECIAL MEETINGS. Special meetings of the
Board of Directors may be called by the Chairman of the Board or the Chief
Executive Officer on any notice by first-class mail, overnight courier,
telephone, telecopier, electronic communication, or personal delivery to each
director and shall be called by the Chairman of the Board or the Chief
Executive Officer in like manner and on like notice on the written request of
any two or more directors. Any such special meeting shall be held at such time
and place as shall be stated in the notice of the meeting. The notice need not
describe the purpose of the special meeting.
SECTION 8. NOTICE, WAIVER BY ATTENDANCE. No notice of a
meeting of the Board of Directors need be given to any director who signs a
waiver of notice either before or after the meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting and a
waiver of any and all objections to the place of the meeting, the time of the
meeting, or the manner in which it has been called or convened, except when a
director states, at the beginning of the meeting (or promptly upon arrival at
the meeting), any objection to the transaction of business because the meeting
is not lawfully called or convened.
SECTION 9. QUORUM AND VOTING. At all meetings of the
Board of Directors, the presence of a majority of the directors shall
constitute a quorum for the transaction of business. In the absence of a
quorum, a majority of the directors present at any meeting may adjourn from
time to time until a quorum is present. Notice of the time and place of any
adjourned meeting need only be given by announcement at the meeting at which
adjournment is taken. Except as set forth in the Articles of Incorporation,
the act of a majority of the
<PAGE> 12
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. A director who is present at a meeting when corporate
action is taken is deemed to have assented to the action unless he objects at
the beginning of the meeting (or promptly upon his arrival) to holding such
meeting or transacting specified business at the meeting, or he votes against
or abstains from voting on the action taken.
SECTION 10. MANNER OF ACTING. Notwithstanding any
provision in these Bylaws to the contrary, no contract or other transaction
between the Corporation and any one or more of its directors or between the
Corporation and any other corporation, firm, association or other entity, in
which one or more of its directors are directors or officers or are financially
interested, shall be void or voidable solely: (i) because of such relationship
or interest; (ii) because such director or directors are present at the meeting
of the Board of Directors or committee thereof which authorizes, approves or
ratifies such contracts or transactions; or (iii) because the presence of such
director or directors are counted for the purpose of determining the presences
of a quorum of directors if: (A) the facts of such relationship or interest
are disclosed or known to the Board of Directors or committee, and the Board of
Directors or the committee in good faith authorizes, approves, or ratifies the
contract or transaction by the affirmative vote or written consent of a
majority of disinterested directors or (B) the facts of such relationship or
interest are disclosed or known to the holders of the shares entitled to vote
thereon and the holders of a majority of such shares authorize, approve or
ratify such contract or transaction by vote or written consent with the shares
of the interested director not entitled to vote thereon. An interested
director may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or committee thereof which authorizes, approves or
ratifies such contract or transaction, but shall not be counted in determining
whether the Corporation shall award any contract or engage in any transaction
in which the director is an interest person, which determination may only be
authorized by a majority of disinterested directors or by a solely
disinterested director, even though such directors or director may be less than
a quorum.
SECTION 11. COMMITTEES. In furtherance and not in
limitation of the powers conferred by the Act, the Board of Directors by
resolution adopted by a majority of the full Board of Directors may designate
from among its members one or more other committees each of which, to the
extent provided in such resolution or in the Articles of Incorporation or these
Bylaws, shall have authority to exercise all the powers of the Board of
Directors which may be lawfully delegated and not inconsistent with these
Bylaws or the Act, at any time and when the Board of Directors is not in
session. The committee shall elect a chairman, and a majority of the entire
committee shall constitute a quorum; and the act of a majority of members
present at a meeting at which a quorum is present shall be the act of the
committee provided all members of the committee have had notice of such meeting
or waived such notice.
SECTION 12. EXECUTIVE COMMITTEE. The Board of Directors
by resolution adopted by a majority of the entire Board of Directors may
designate two or more directors to constitute an Executive Committee. The
Executive Committee, when the Board of Directors is not in session, shall have
and exercise all of the authority of the Board of Directors in the management
of the Corporation except as may be limited by the resolution appointing the
Executive Committee or by the Act.
<PAGE> 13
SECTION 13. ACTION WITHOUT A MEETING. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting if written consent
thereto is signed by all members of the Board of Directors or of such
committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board of Directors or committee. Such
consent shall have the same effect as a unanimous vote.
SECTION 14. CONFERENCE CALL MEETINGS. Members of the
Board of Directors, or any committee designated by such Board, may participate
in a meeting of such Board or committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section 14 shall constitute presence in person at such meeting.
SECTION 15. CHAIRMAN OF THE BOARD. The Board of
Directors shall elect at its annual meeting one of its members to serve as
Chairman of the Board. The Chairman shall preside at all meetings of the Board
of Directors and at all meetings of shareholders.
ARTICLE IV
OFFICERS
SECTION 1. GENERALLY. The Board of Directors at its
first meeting after each annual meeting shall elect a Chairman of the Board,
who shall be elected by the Board from its own number, a Chief Executive
Officer ("CEO"), a President, a Chief Financial Officer, one or more Senior
Vice Presidents, a Treasurer, a Secretary and such other officers as it shall
deem necessary. Any person may hold two or more offices.
SECTION 2. COMPENSATION. The compensation of the CEO,
President and other executive officers of the Corporation shall be fixed by the
compensation committee (the "Compensation Committee") of the Board of
Directors. The non-employee members of the Executive Committee shall
constitute the compensation committee of the Corporation and the stock option
committee pursuant to any stock option plan of the Corporation. The
compensation of all non-executive officers shall be fixed by the CEO, and the
CEO shall report annually to the Board of Directors on the compensation of all
non-executive officers.
SECTION 3. TENURE. Each officer of the Corporation
shall hold office for the term for which he is elected or appointed, and until
his successor has been duly elected or appointed and has qualified, or until
his earlier resignation, removal from office or death. Any officer or agent
may be removed by the Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby. In addition, the CEO may
remove any officer or agent of the Corporation, except for the President or
chief financial officer, without the approval of the Board of Directors,
whenever in his judgment the best interests of the Corporation will be served
thereby. Removal shall be without prejudice to the contract rights, if any, of
the person so removed.
<PAGE> 14
SECTION 4. VACANCIES. The Board of Directors may fill
any vacancy in the office of CEO, President or the Chief Financial Officer,
however occurring, for the unexpired portion of the term. The CEO shall have
the power to fill any other office, however occurring, for the unexpired
portion of the term.
SECTION 5. CHIEF EXECUTIVE OFFICER. The CEO shall be
appointed by the Board of Directors and have direct control over the affairs,
property and business of the Corporation, supervise the formation of corporate
policies and long-range plans for the Corporation and shall perform such other
duties as may be assigned to him from time to time by the Board of Directors or
by these Bylaws. The CEO shall have the power to appoint and remove such
employees as the business may require and shall have general supervision over
all officers of the Corporation. The CEO shall have the authority to sign,
execute and acknowledge on behalf of the Corporation, all contracts, deeds,
mortgages, bonds, stock certificates for its shares, leases and all other
instruments necessary or proper to be executed in the course of the
Corporation's regular business, or which, may be authorized by resolution of
the Board of Directors from time to time or by these Bylaws. In the event of
the incapacity or inability to act of the CEO, or upon his request, the
President may act in his place, subject to the authority of the Board of
Directors. The CEO may remove any officer of the Corporation, except for the
President and the Chief Financial Officer.
SECTION 6. PRESIDENT. The President shall be the chief
operating officer of the Corporation. Subject to the direction and control of
the Board of Directors and the CEO, he shall supervise and conduct the day-to-
day operations of the Corporation; and, in general, he shall discharge all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors or the CEO. In the event of the CEO's
incapacity or inability to act, the President shall preside at the meetings of
the shareholders or of the Board of Directors. The President shall have the
authority to sign, execute and acknowledge on behalf of the Corporation, all
contracts, deeds, mortgages, bonds, stock certificates for its shares, leases
and all other instruments necessary or proper to be executed in the course of
the Corporation's regular business, or which, may be authorized by resolution
of the Board of Directors from time to time or by these Bylaws. In the event
of the incapacity or inability to act as the President, or upon his request,
the CEO may act in his place, subject to the authority of the Board of
Directors.
SECTION 7. CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall be the principal accounting and financial officer of the Company.
The Chief Financial Officer shall: (a) have charge of and be responsible for
the maintenance of adequate books of account for the Corporation; (b) have
charge and custody of all funds and securities of the Corporation, and be
responsible therefor and for the receipt and disbursement thereof; and (c)
perform all the duties incident to the office of Chief Financial Officer and
such other duties as from time to time may be assigned to him by the CEO, the
President or the Board of Directors. To the extent authorized by the
Corporation's policies, as such policies are in effect from time to time, the
Chief Financial Officer shall have the authority to sign, execute and
acknowledge on behalf of the Corporation, all contracts, deeds, mortgages,
bonds, stock certificates for its shares, leases and all other instruments
necessary or proper to be executed in the course of the Corporation's
<PAGE> 15
regular business, or which, may be authorized by resolution of the Board of
Directors from time to time or by these Bylaws.
SECTION 8. THE SENIOR VICE PRESIDENTS. The Senior Vice
President (or in the event there be more than one Senior Vice President, each
of the Senior Vice Presidents) shall assist the President in the discharge of
his duties as the President may direct and shall perform such other duties as
from time to time may be assigned to him by the CEO, the President or the Board
of Directors. To the extent authorized by the Corporation's policies, as such
policies are in effect from time to time, the Senior Vice President (or in the
event there be more than one Senior Vice President, the Senior Vice Presidents)
shall have the authority to sign, execute and acknowledge on behalf of the
Corporation, all contracts, deeds, mortgages, bonds, stock certificates for its
shares, leases and all other instruments necessary or proper to be executed in
the course of the Corporation's regular business, or which, may be authorized
by resolution of the Board of Directors from time to time or by these Bylaws.
SECTION 9. TREASURER. The Treasurer shall assist the
Chief Financial Officer in the discharge of his duties as the Chief Financial
Officer may direct and shall perform such other duties as from time to time may
be assigned to him by the CEO, President or Chief Financial Officer.
SECTION 10. SECRETARY. The Secretary shall: (a) attend
and keep the minutes of the shareholders' meetings and of the Board of
Directors' meetings in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions of these
Bylaws and as required by law; (c) be custodian of the corporate records and of
the seal of the Corporation and see that the seal of the Corporation is affixed
to all documents the execution of which on behalf of the Corporation under its
seal is duly authorized; (d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the CEO, the President, the Chief Financial Officer or a Senior Vice
President certificates for shares of the Corporation the issuance of which
shall have been authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the Corporation; and (g) in
general, perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the CEO, President or the
Board of Directors.
SECTION 11. ASSISTANT OFFICERS. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the CEO,
the President, the Chief Financial Officer or a Senior Vice President
certificates for shares of the Corporation the issuance of which shall have
been authorized by resolution of the Board of Directors. The Assistant Vice
Presidents and Assistant Secretaries. in general, shall perform such duties as
shall be assigned by the Senior Vice President or Secretary, respectively, or
by the CEO, President, Chief Financial Officer or the Board of Directors.
<PAGE> 16
ARTICLE V
CAPITAL STOCK
SECTION 1. FORM. The interest of each shareholder shall
be evidenced by a certificate representing shares of stock of the Corporation,
which shall be in such form as the Board of Directors may from time to time
adopt and shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each certificate shall exhibit the name of the
Corporation, the holder's name, the number of shares and class of shares and
series, if any, represented thereby, a statement that the Corporation is
organized under the laws of the State of Florida, and the par value of each
share or a statement that the shares are without par value. Each certificate
shall be signed by the CEO or the President and the Secretary or an Assistant
Secretary and may be sealed with the seal of the Corporation or a facsimile
thereof. In case any officer who signed, or whose facsimile signature has been
placed upon, such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of its issuance.
SECTION 2. RIGHTS OF CORPORATION WITH RESPECT TO
REGISTERED OWNERS. Prior to due presentation for transfer of registration of
its shares, the Corporation may treat the registered owner of the shares (or
the beneficial owner of the shares to the extent of any rights granted by a
nominee certificate on file with the Corporation pursuant to any procedure that
may be established by the Corporation in accordance with the Act) as the person
exclusively entitled to vote the shares, to receive any dividend or other
distribution with respect to the shares, and for all other purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in the shares on the part of any other person, whether or not it has
express or other notice of such a claim or interest, except as otherwise
provided by law.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares
shall be made upon the books of the Corporation kept by the Corporation or by
the transfer agent designated to transfer the shares, only upon direction of
the person named in the certificate or by an attorney lawfully constituted in
writing. Before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to have
been lost, stolen, or destroyed, the provisions of these Bylaws shall have been
complied with.
SECTION 4. DUTY OF CORPORATION TO REGISTER TRANSFER.
Notwithstanding any of the provisions of Section 3 of this Article V, the
Corporation is under a duty to register the transfer of its shares only if:
(a) the share certificate is endorsed by the appropriate person or persons; (b)
reasonable assurance is given that each required endorsement is genuine and
effective; (c) the Corporation has no duty to inquire into adverse claims or
has discharged any such duty; (d) any applicable law relating to the collection
of taxes has been complied with; (e) the transfer is in fact rightful or is to
a bona fide purchaser; and (f) the transfer is in compliance with applicable
provisions of any transfer restrictions of which the Corporation shall have
notice.
<PAGE> 17
SECTION 5. LOST, STOLEN OR DESTROYED CERTIFICATES. Any
person claiming a certificate of stock to be lost, stolen or destroyed shall
make an affidavit or affirmation of the fact in such manner as the Board of
Directors may require and shall, if the Board of Directors so requires, give
the Corporation a bond of indemnity in the form and amount and with one or more
sureties satisfactory to the Board of Directors, whereupon an appropriate new
certificate may be issued in lieu of the one alleged to have been lost, stolen
or destroyed.
SECTION 6. SECTION 607.0902 OF THE ACT. Pursuant to
Section 607.0902(10) of the Act, control shares acquired in a control-share
acquisition with respect to which no acquiring person's statement has been
filed with the Corporation may, at any time during the period ending 60 days
after the last acquisition of control shares by the acquiring person, be
subject to redemption by the Corporation at the fair value thereof pursuant to
procedures adopted by the Corporation in accordance with these Bylaws and the
Act.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day
of December in each year, or on such other date as may be established by the
Board of Directors of the Corporation.
ARTICLE VII
SEAL
The corporate seal shall be in such form as the Board of
Directors may from time to time determine.
ARTICLE VIII
ANNUAL STATEMENTS
No later than one hundred twenty days after the close of each
fiscal year, or within such additional time thereafter as is reasonably
necessary to enable the Corporation to prepare its financial statements if, for
reasons beyond the Corporation's control, it is unable to prepare its financial
statements within the prescribed period, the Corporation shall mail annual
financial statements to each shareholder. Such financial statements shall
contain the content and be in the form required by Section 607.1620 of the Act,
as such provision may be amended from time to time.
ARTICLE IX
INDEMNIFICATION
SECTION 1. INDEMNIFICATION OF DIRECTORS. The
Corporation shall indemnify and hold harmless any person (an "Indemnified
Person") who was or is a party, or is threatened
<PAGE> 18
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
any action or suit by or in the right of the Corporation) because he is or was
a director of the Corporation, against expenses (including, but not limited to,
attorneys' fees and disbursements, court costs and expert witness fees), and
against any judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; provided, however, that in any case, no indemnification shall be
------------------
made for any expenses, judgments, fines and amounts paid in settlement to or on
behalf of any director if a judgment or other final adjudication establishes
that his actions, or omissions to act, were material to the cause of action so
adjudicated and constitute:
(a) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful;
(b) a transaction from which the director derived an improper
personal benefit;
(c) a circumstance under which the liability provisions of
Section 607.0834 of the Act (dealing with unlawful distributions) are
applicable; or
(d) willful misconduct or a conscious disregard for the best
interests of the Corporation in a proceeding by or in the right of the
Corporation to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder.
SECTION 2. INDEMNIFICATION OF OTHERS. The Board of
Directors shall have the power to cause the Corporation to provide to officers,
employees and agents of the Corporation all or any part of the right to
indemnification and other rights of the type provided under this Article IX
(subject to the conditions, limitations and obligations specified therein) upon
a resolution to that effect identifying such officers, employees or agents (by
position or name) and specifying the particular rights provided, which may be
different for each of the persons identified. Each officer, employee or agent
of the Corporation so identified shall be an "Indemnified Person" for the
purposes of the provisions of this Article IX.
SECTION 3. SUBSIDIARIES. The Board of Directors shall
have the power to cause the Corporation to provide to any director, officer,
employee or agent of the Corporation who also is or was a director, officer,
trustee, general partner, employee or agent of a Subsidiary (as defined below),
all or any part of the right to indemnification and other rights of the type
provided under Sections 1, 5 and 11 of this Article IX (subject to the
conditions, limitations and obligations specified therein), with regard to
amounts actually and reasonably incurred by such person because he is or was a
director, officer, trustee, general partner, employee or agent of the
Subsidiary. The Board of Directors shall exercise such power, if at all,
through a resolution identifying the person or persons to be indemnified (by
position or name) and the Subsidiary (by name or other classification), and
specifying the particular rights provided, which may be different for each of
the persons identified. Each person so identified shall be an "Indemnified
<PAGE> 19
Person" for purposes of the provisions of this Article IX. As used in this
Article IX, "Subsidiary" shall mean (a) another corporation, joint venture,
trust, partnership or unincorporated business association more than 20% of the
voting capital stock or other voting equity interest of which was, at or after
the time the circumstances giving rise to such action, suit or proceeding
arose, owned, directly or indirectly, by the Corporation, or (b) a nonprofit
corporation that received its principal financial support from the Corporation
or its Subsidiaries.
SECTION 4. DETERMINATION. Notwithstanding any judgment,
order, settlement, conviction or plea in any action, suit or proceeding of the
kind referred to in Section 1 of this Article IX, an Indemnified Person shall
be entitled to indemnification as provided in such Section 1 unless a
determination that such Indemnified Person is not entitled to such
indemnification shall be made:
(a) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action,
suit or proceeding;
(b) if such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by the
Board of Directors (in which directors who are parties may
participate) consisting solely of two or more directors not at the
time parties to the proceeding;
(c) by independent legal counsel:
(i) selected by the Board of Directors prescribed
in paragraph (a) or the committee prescribed in paragraph (b);
or
(ii) if a quorum of the directors cannot be
obtained for paragraph (a) and the committee cannot be
designated under paragraph (b), selected by majority vote of
the full Board of Directors (in which directors who are
parties may participate); or
(d) by the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit,
or proceeding or, if no such quorum is obtainable, by a majority vote
of shareholders who were not parties to such proceeding.
Notwithstanding any determination pursuant to the preceding sentence,
if such determination shall have been made at a time that the members
of the Board of Directors, so serving when the events upon which such
Indemnified Person's liability has been based occurred, no longer
constitute a majority of the members of the Board of Directors, then
subject to any requirements of the Act, such Indemnified Person shall
nonetheless be entitled to indemnification as set forth in Section 1
of this Article IX, unless the Corporation shall carry the burden of
proving, in an action before any court of competent jurisdiction, that
such Indemnified Person is not entitled to such indemnification.
SECTION 5. ADVANCES. Expenses (including, but not
limited to, attorneys' fees and disbursements, court costs, and expert witness
fees) incurred by the Indemnified Person in
<PAGE> 20
defending any action, suit or proceeding of the kind described in Section 1 of
this Article IX (or in Section 2 or 3 of this Article IX, if the Board of
Directors has specified that advancement of expenses be made available to such
Indemnified Person) shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as set forth herein. The
Corporation shall promptly pay the amount of such expenses to the Indemnified
Person, but in no event later than ten days following the Indemnified Person's
delivery to the Corporation of a written request for an advance pursuant to
this Section 5, together with a reasonable accounting of such expenses;
provided, however, that the Indemnified Person shall furnish the Corporation a
- ------------------
written affirmation of his good faith belief that he is entitled to
indemnification for such amounts under this Article IX and a written
undertaking and agreement to repay to the Corporation any advances made
pursuant to this Section 5 if it shall be determined that the Indemnified
Person is not entitled to be indemnified by the Corporation for such amounts.
The Corporation shall make the advances contemplated by this Section 5
regardless of the Indemnified Person's financial ability to make repayment.
Any advances and undertakings to repay pursuant to this Section 5 shall be
unsecured and interest-free.
SECTION 6. NON-EXCLUSIVITY. Subject to any applicable
limitation imposed by the Act or the Articles of Incorporation, the
indemnification and advancement of expenses provided by or granted pursuant to
this Article IX shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
resolution, or agreement specifically or in general terms approved or ratified
by the affirmative vote of holders of a majority of the shares entitled to be
cast thereon.
SECTION 7. INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of this
Section 7.
SECTION 8. INFORMATION TO SHAREHOLDERS. If any expenses
or other amounts are paid by way of indemnification, otherwise than by court
order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall, not later than
the time of delivery to shareholders of written notice of the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such payment, and, in any event, within fifteen months from the
date of such payment, deliver either personally or by mail to each shareholder
of record at the time entitled to vote for the election of Directors, a
statement specifying the persons paid, the amounts paid, and the nature and
status at the time of such payment of the litigation or threatened litigation.
SECTION 9. SECURITY. The Corporation may designate
certain of its assets as collateral, provide self-insurance or otherwise secure
its obligations under this Article IX, or under any indemnification agreement
or plan of indemnification adopted and entered into in accordance with the
provisions of this Article IX, as the Board of Directors deems appropriate.
<PAGE> 21
SECTION 10. AMENDMENT. Any amendment to this Article IX
that limits or otherwise adversely affects the right of indemnification,
advancement of expenses, or other rights of any Indemnified Person hereunder
shall, as to such Indemnified Person, apply only to claims, actions, suits, or
proceedings based on actions, events or omissions (collectively,
"Post-Amendment Events") occurring after such amendment and after delivery of
notice of such amendment to the Indemnified Person so affected. Any
Indemnified Person shall, as to any claim, action, suit or proceeding based on
actions, events or omissions occurring prior to the date of receipt of such
notice, be entitled to the right of indemnification, advancement of expenses
and other rights under this Article IX to the same extent as if such provisions
had continued as part of these Bylaws without such amendment. This Section 10
cannot be altered, amended or repealed in a manner effective as to any
Indemnified Person (except as to Post-Amendment Events) without the prior
written consent of such Indemnified Person.
SECTION 11. AGREEMENTS. The provisions of this Article
IX shall be deemed to constitute an agreement between the Corporation and each
person entitled to indemnification hereunder. In addition to the rights
provided in this Article IX, the Corporation shall have the power, upon
authorization by the Board of Directors, to enter into an agreement or
agreements providing to any person who is or was a director, officer, employee
or agent of the Corporation indemnification rights substantially similar to
those provided in this Article IX.
SECTION 12. CONTINUING BENEFITS. The indemnification and
advancement of expenses provided by or granted pursuant to this Article IX
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
SECTION 13. SUCCESSORS. For purposes of this Article IX,
the term "Corporation" shall include any corporation, joint venture, trust,
partnership or unincorporated business association that is the successor to all
or substantially all of the business or assets of this Corporation, as a result
of merger, consolidation, sale, liquidation or otherwise, and any such
successor shall be liable to the persons indemnified under this Article IX on
the same terms and conditions and to the same extent as this Corporation.
SECTION 14. SEVERABILITY. Each of the Sections of this
Article IX, and each of the clauses set forth herein, shall be deemed separate
and independent, and should any part of any such Section or clause be declared
invalid or unenforceable by any court of competent jurisdiction, such
invalidity or unenforceability shall in no way render invalid or unenforceable
any other part thereof or any separate Section or clause of this Article IX
that is not declared invalid or unenforceable.
SECTION 15. ADDITIONAL INDEMNIFICATIONS. In addition to
the specific indemnification rights set forth herein, the Corporation shall
indemnify each of its directors and such of its officers as have been appointed
by the Board of Directors to the full extent permitted by action of the Board
of Directors without shareholder approval under the Act or other laws of the
State of Florida as in effect from time to time.
<PAGE> 22
SECTION 16. CHANGES IN THE ACT. The Board of Directors
of the Corporation may amend any Section of this Article IX without shareholder
approval such that each Section of this Article IX will be in conformity with
the Act at all times.
ARTICLE X
NOTICES AND WAIVER OF NOTICE
SECTION 1. NOTICES. Except as otherwise provided in
these Bylaws, whenever under the provisions of these Bylaws notice is required
to be given to any shareholder, director or officer, such notice shall be given
either by personal notice, telephone, telecopier, or electronic communication,
or by overnight courier or mail by depositing the same in the post office or
letter box in a postpaid sealed envelope, addressed to such shareholder,
officer or director at such address as appears on the books of the Corporation,
and such notice shall be deemed to be given at the time when the same shall be
thus sent or mailed.
SECTION 2. WAIVER OF NOTICE. Whenever any notice
whatsoever is required to be given by law, by the Articles of Incorporation or
by these Bylaws, a waiver thereof, in writing, signed by the person or persons
entitled to such notice given before or after the time stated therein, which
shall include a waiver given by telephone, telecopier, or electronic
communication, shall be deemed equivalent thereto. No notice of any meeting
need be given to any person who shall attend such meeting.
ARTICLE XI
MISCELLANEOUS
SECTION 1. EXECUTION OF DOCUMENTS. The Board shall
designate the officers, employees, and agents of the Corporation who shall have
power to execute and deliver deeds, contracts, mortgages, bonds, debentures,
checks, and documents for and in the name of the Corporation, and may authorize
such officers, employees, and agents to delegate such power (including
authority to redelegate) by written instrument to other officers, employees, or
agents of the Corporation. Unless so designated or expressly authorized by
these Bylaws, no officer or agent or employee shall have any power or authority
to bind the Corporation by any contract or engagement or to pledge its credit
or to render it liable pecuniarily for any purpose or any amount.
SECTION 2. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation or otherwise as the Board or the Treasurer, or any other officer of
the Corporation to whom power in this respect shall have been given by the
Board, shall select.
SECTION 3. PROXIES IN RESPECT OF STOCK OR OTHER
SECURITIES OF OTHER CORPORATIONS. The Board shall designate the officers of
the Corporation who shall have authority to appoint from time to time agents of
the Corporation to exercise in the name and on behalf of the Corporation the
powers and rights which the Corporation may have as the holder
<PAGE> 23
of stock or other securities in any other corporation, and to vote or consent
in respect of such stock or securities. Such designated officers may instruct
the agents so appointed as to the manner of exercising such powers and rights,
and such designated officers may execute or cause to be executed in the name
and on behalf of the Corporation and under its corporate seal or otherwise such
written proxies, powers of attorney, or other instruments as they may deem
necessary or proper in order that the Corporation may exercise such powers and
rights.
ARTICLE XII
AMENDMENTS
These Bylaws may be adopted, altered, amended or repealed, and
new Bylaws may be adopted, by the Board of Directors or the shareholders.
Action by the Board of Directors with respect to these Bylaws shall be taken by
an affirmative vote of a majority of all directors then holding office. Action
by the shareholders with respect to these Bylaws shall be taken by the
affirmative vote of 66-2/3% of the votes of the Common Stock then entitled to
vote at an annual or special meeting of the shareholders.
<PAGE> 1
EXHIBIT 3.6
FORM OF
AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PHOENIX INTERNATIONAL LTD., INC.
1. The name of the corporation is Phoenix International Ltd., Inc.
(the "Corporation").
2. On May 24, 1996, the Board of Directors adopted a resolution
recommending the submission of the amendments (the "Amendments") to the Amended
and Restated Articles of Incorporation set forth in paragraphs 3 and 4 herein
to a vote of the shareholders in accordance with Section 607.1003 of the
Florida Business Corporation Act (the "Act").
3. Pursuant to Section 607.1003, the Amended and Restated Articles of
Incorporation are hereby amended as follows: paragraph (v) "Preemptive Rights"
-------------------
of Section A of Article III of the Amended and Restated Articles of
Incorporation is hereby amended to read:
"ARTICLE III
CAPITAL STOCK
A. Common Stock.
(v) Preemptive Rights. No holder of capital stock of the
Corporation shall be entitled to preemptive rights."
<PAGE> 2
4. Pursuant to Section 607.1003, the Amended and Restated
Articles of Incorporation are hereby amended as follows: Article IV of the
Amended and Restated Articles of Incorporation is hereby amended to read as
follows:
"ARTICLE IV
DIRECTORS
The Corporation shall have not more than eleven directors, and the
number of directors shall be set by the Board of Directors as set forth in the
Corporation's Bylaws. The Board of Directors shall be divided into three
classes to be known as Class I, Class II, and Class III, which shall be as
nearly equal in number as possible. Prior to the Initial Public Offering, of
the six directors elected by the holders of the Class A Common Stock, one such
director shall be classified as Class I, one other such director shall be
classified as Class II and the remaining four directors shall be classified as
Class III. Of the five remaining directors elected by the holders of the Class
B Common Stock and Class C Common Stock, three such directors shall be
classified as Class I and the remaining two shall be classified as Class II.
Except in case of death, resignation, disqualification, or removal, each
director shall serve for a term ending on the date of the third annual meeting
of shareholders following the annual meeting at which the director was elected;
provided, however, that each initial director in Class I shall hold office
- ------------------
until the first annual meeting of shareholders after his election; each initial
director in Class II shall hold office until the second annual meeting of
shareholders after his election; and each initial director in Class III shall
hold office until the third annual meeting of shareholders after his election.
Despite the expiration of a director's term, he shall continue to serve until
his successor, if there is to be any, has been elected and has qualified. In
the event of any increase or decrease in the authorized number of directors,
the newly created or eliminated directorships resulting from such an increase
or decrease shall be apportioned among the three classes of directors so that
the three classes remain as nearly equal in size as possible; provided,
---------
however, that there shall be no classification of additional directors elected
- --------
by the Board of Directors until the next meeting of shareholders called for the
purposes of electing directors, at which meeting the terms of all such
additional directors shall expire, and such additional directors positions, if
they are to be continued, shall be apportioned among the classes of directors
and nominees therefor shall be submitted to the shareholders for their vote.
Upon the completion of the Initial Public Offering, the directors shall be
elected by the majority vote of the Class A Stock and the Class B Stock, voting
together as a single class."
<PAGE> 3
5. The Amendments set forth herein required shareholder approval
pursuant to Section 607.1003 of the Act. The following voting groups were
entitled to vote on this Amendment as follows:
<TABLE>
<CAPTION>
Voting Group Designation
------------------------
Number of Shares Number of Shares Number of Shares
Class Entitled to Vote Voted in Favor Voted Against
----- ---------------- -------------- -------------
<S> <C> <C> <C>
Class A Stock
Class B Stock
Class C Stock
Class A, B and C as a
group --------------- --------------- --------------
Totals
</TABLE>
The number of shares cast for this Amendment by the shareholders in
each voting group was sufficient for approval by that voting group. This
Amendment was adopted by the shareholders at the annual meeting of the
shareholders held on June 12, 1996.
IN WITNESS WHEREOF, Phoenix International Ltd., Inc. has caused these
Articles of Amendment to be executed on this ___ day of June, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By:
------------------------------------
Bahram Yusefzadeh
Chief Executive Officer and Director
of Phoenix International Ltd., Inc.
<PAGE> 1
EXHIBIT 4.5
_________, 1996
[PHOENIX INTERNATIONAL LOGO]
[Name of Shareholder]
[Address of Shareholder]
Dear _________:
As we have discussed, your _______ shares (post-split) of Class A Common Stock
(the "Shares") of the Company are subject to selling restrictions under the
securities laws. Following the Company's initial public offering and for so
long as the Shares are subject to resale restrictions, you may make a one-time
request that the Company register the Shares on a Form S-8 registration
statement, provided that you are an employee at such time. You must provide
the Company with 120 days notice, and the Company agrees to make reasonable
efforts to register the Shares. The Company's offer to register the Shares is
conditioned upon an opinion from the Company's legal counsel and financial
advisors that at such time there are no legal restrictions, Company
circumstances or market factors that would cause the timing or number of shares
in such registration to be unlawful or inadvisable at that time. The expenses
(primarily legal and accounting) attributable to the registration of the Shares
will be paid by you.
Additionally, for so long as you remain employed by the Company and the Shares
are subject to resale restrictions, if the Company decides to register its
common stock and intends to include secondary shares in such registration, the
Company will make reasonable efforts to include the Shares in one such
registration upon reasonable notice from you. However, the Company will have
no obligation to register the Shares if the managing underwriters for such
offering object to the inclusion of the Shares in such offering. The expenses
(primarily legal and accounting) attributable to the registration of the Shares
will be paid by you.
Very truly yours,
PHOENIX INTERNATIONAL LTD., INC.
Ralph Reichard
President & Chief Operating Officer
Accepted and Agreed to:
_________________________________
[Name of Shareholder]
cc: Glenn W. Sturm, Esq.
Michael Nunan
900 WINDERLEY PLACE - SUITE 140 - MAITLAND, FL 32751
PHONE 407/667-0033 FAX 407/667-0133
<PAGE> 1
EXHIBIT 10.15
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this
"Amendment") is made by and between PHOENIX INTERNATIONAL LTD., INC., a Florida
corporation (the "Company"), and BAHRAM YUSEFZADEH, an individual resident of
Florida (the "Executive"), as of this 22th day of May, 1996.
W I T N E S S E T H:
WHEREAS, the Company and the Executive are parties to that
certain Employment Agreement, dated December 28, 1995 (the "Employment
Agreement"), pursuant to which the Company employs the Executive as its Chief
Executive Officer; and
WHEREAS, the Company desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements; and
WHEREAS, the Executive desires to continue his employment by
the Company pursuant to the Employment Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. Defined terms not otherwise defined herein shall have
the meanings ascribed to them in the Employment Agreement.
2. Paragraph d of Section 4 of the Employment Agreement
is hereby amended to read as follows:
d. In the event that (i) the Company is not subject to
the mandatory reporting requirements of Section 12 or Section 15 of
the 1934 Act and (ii) the Executive shall no longer be the Chief
Executive Officer of the Company, other than by voluntary resignation,
the Company shall, within 10 days after termination as Chief Executive
Officer, offer to repurchase all of the Company's capital stock owned
by the Executive, at a purchase price equal to the Fair Market Value
of the capital stock, as determined in accordance with the provisions
below. The question of the Fair Market Value of the Company's capital
stock shall be submitted to three impartial and reputable appraisers.
The Executive and the Company shall each select one appraiser, and
such appraisers shall select a third, independent appraiser. The
three appraisers shall thereafter proceed as expeditiously as possible
to determine (by concurrence of a majority of such appraisers) the
Fair Market Value of the capital stock, and the appraisers shall
deliver an appraisal report to the Executive and the Company as soon
as practicable after it is completed. The determination of the
question of the Fair Market Value of the capital stock by such
<PAGE> 2
appraisers shall be final and binding on the Executive and the Company
for purposes of this Agreement. The Company shall pay the reasonable
fees and expenses of such appraisers. For the purposes hereof, "Fair
Market Value" shall mean the relevant percentage of the fair value of
the business of the Company represented by the shares of capital stock
as to which such determination is being made, which shall be
determined on a going concern basis and as between a willing seller
and a willing buyer, taking into account the Company's financial
condition, performance, market share and other relevant criteria, but
not taking into account the absence of a public market for the shares
or that the shares constitute a minority interest in the Company.
3. Paragraph h below is hereby added to Section 4 of the
Employment Agreement:
h. If the Company terminates the Executive without
Cause, the Company shall pay to the Executive in cash: (i) within 15
days of the Termination Date, an amount equal to all Accrued
Compensation and the Pro Rata Bonus; and (ii) at the end of each of
the twelve consecutive 30-day periods following the Termination Date,
an amount equal to one-twelfth of the sum of the Base Amount and the
Bonus Amount.
4. Paragraph a of Section 16 of the Employment Agreement
is hereby amended to read as follows:
a. Rights. Subject to the provisions of this
Section 16(a), upon the termination of the Executive's employment or
in the event that the Executive no longer serves on the Board, for any
reason, the Executive may request registration for sale under the Act
of all or part of the Common Stock then held by him (excluding, for
purposes of this Section 16(a), shares subject to the stock options
held by the Executive as to which the vesting provisions shall not
have lapsed pursuant to this Agreement or otherwise). Any such
request shall specify the number of shares proposed to be registered
and sold and the name of the managing underwriter of the proposed
offering (who must be acceptable to the Company in its reasonable
discretion).
5. Paragraph r of Section 19 of the Employment Agreement
is hereby amended to read as follows:
r. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered
under the Securities Act of 1933.
6. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Amendment shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
<PAGE> 3
7. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
<PAGE> 4
IN WITNESS WHEREOF, the Company and Executive have executed
this First Amendment to the Employment Agreement as of the day and year first
above written.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ James Holly
---------------------------------
Name: James Holly
Title Chairman Compensation
Committee
/s/ BAHRAM YUSEFZADEH
-------------------------------------
BAHRAM YUSEFZADEH
<PAGE> 1
EXHIBIT 10.17
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this
"Amendment") is made by and between PHOENIX INTERNATIONAL LTD., INC., a Florida
corporation (the "Company"), and RALPH REICHARD, an individual resident of
Florida (the "Executive"), as of this 22th day of May, 1996.
W I T N E S S E T H:
WHEREAS, the Company and the Executive are parties to that
certain Employment Agreement, dated December 28, 1995 (the "Employment
Agreement"), pursuant to which the Company employs the Executive as its Chief
Operating Officer and President; and
WHEREAS, the Company desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements; and
WHEREAS, the Executive desires to continue his employment by
the Company pursuant to the Employment Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. Defined terms not otherwise defined herein shall have
the meanings ascribed to them in the Employment Agreement.
2. Paragraph h below is hereby added to Section 4 of the
Employment Agreement:
h. If the Company terminates the Executive without
Cause, the Company shall pay to the Executive in cash: (i) within 15
days of the Termination Date, an amount equal to all Accrued
Compensation and the Pro Rata Bonus; and (ii) at the end of each of
the twelve consecutive 30-day periods following the Termination Date,
an amount equal to one-twelfth of the sum of the Base Amount and the
Bonus Amount.
3. Paragraph p of Section 16 of the Employment Agreement
is hereby amended to read as follows:
p. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered
under the Securities Act of 1933.
<PAGE> 2
3. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Amendment shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
4. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have executed
this First Amendment to the Employment Agreement as of the day and year first
above written.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ James Holly
---------------------------------------
Name: James Holly
Title Chairman, Compensation Committee
/s/ RALPH REICHARD
------------------------------------------
RALPH REICHARD
<PAGE> 1
EXHIBIT 10.18
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
CLAY E. SCARBOROUGH
DATED: May 23, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . 2
4. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Trade Secrets, Non-Competition, Non-Solicitation,
and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Successors; Binding Agreement . . . . . . . . . . . . . . . . . . . . . 7
7. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Settlement of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
15. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
16. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<PAGE> 3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the "Company"), and
CLAY E. SCARBOROUGH, an individual resident of Florida (the "Employee"), as of
this 23rd day of May, 1996.
The Company presently employs the Employee as its Senior Vice President
and Chief Financial Officer. The Chief Executive Officer of the Company
("CEO") recognizes that the Employee's contribution to the growth and success
of the Company is substantial. The CEO desires to provide for the continued
employment of the Employee and to make certain changes in the Employee's
employment arrangements which the CEO has determined will reinforce and
encourage the continued dedication of the Employee to the Company and will
promote the best interests of the Company and its stockholders. The Employee
is willing to continue to serve the Company on the terms and conditions herein
provided.
Certain provisions in this document reflect the agreements of the parties
in the Offer Letter dated February 22, 1996. This agreement will supersede in
its entirety the Offer Letter; provided however that Sections 3, 4, and 5 of
the Offer Letter shall remain in full force and effect. Certain terms used in
this agreement are defined in Section 16.
In consideration of the foregoing, the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree that on the Effective Date:
1. Employment. The Company shall continue to employ the Employee, and the
Employee shall continue to serve the Company, as Senior Vice President and
Chief Financial Officer upon the terms and conditions set forth herein. The
Employee shall have such authority and responsibilities as are consistent with
his position and which may be set forth in this Agreement, in the Bylaws or
assigned by the CEO or the President of the Company (the "President") from time
to time. The Employee shall devote his full business time, attention, skill
and efforts to the performance of his duties hereunder, except during periods
of illness or periods of vacation and leaves of absence consistent with Company
policy. The Employee may devote reasonable periods of time to perform
charitable and other community activities and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein, the Employee's
employment under this Agreement shall be for a continuing term (the "Term") of
twenty-four months, which shall be extended automatically (without further
action of the Company or the Employee) each day for an additional day so that
the remaining term shall continue to be eighteen months; provided, however,
that either party may at any time, by written notice to the other, fix the Term
to a finite term of twenty-four months, without further automatic extension,
commencing with the date of such notice. Notwithstanding the foregoing, the
Term of employment hereunder will end on the date that the Employee attains the
age of 65.
<PAGE> 4
3. Compensation and Benefits.
a. The Company shall pay the Employee a salary at a rate of not less than
$108,000 per annum in accordance with the salary payment practices of the
Company. The CEO shall review the Employee's salary at least annually (on May
1, 1997, for the first review) and may increase the Employee's base salary if
he determines in his sole discretion that an increase is appropriate.
b. The Employee shall participate in a bonus program and, prior to the
Initial Public Offering, shall be eligible to receive annual payments of the
Bonus Amount and, upon completion of the Initial Public Offering, shall be
eligible to receive quarterly payments of the Bonus Amount based upon
achievement of targeted levels of performance and such other criteria as the
CEO shall establish from time to time pursuant to the bonus program.
c. The Employee shall participate in the Plan and be eligible for the
grant of stock options, restricted stock and other awards thereunder.
d. The Employee shall continue to participate in all retirement, welfare,
deferred compensation, life and health insurance, and other benefit plans or
programs of the Company now or hereafter applicable to the Employee or
applicable generally to employees of the Company.
e. The Company shall continue to reimburse the Employee for travel and
other expenses related to the Employee's duties which are incurred and
accounted for in accordance with the historic practices of the Company.
4. Termination.
a. The Employee's employment under this Agreement may be terminated prior
to the end of the Term only as follows:
(i) upon the death of the Employee;
(ii) by the Company due to the Disability of the Employee upon delivery
of a Notice of Termination to the Employee; and
(iii) by the Company for Cause upon delivery of a Notice of Termination
to the Employee.
b. If the Employee's employment with the Company shall be terminated
during the Term (i) by reason of the Employee's death, or (ii) by the Company
for Disability or Cause, the Company shall pay to the Employee (or in the case
of his death, the Employee's estate) within 15 days after the Termination Date,
a lump sum cash payment equal to the
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<PAGE> 5
Accrued Compensation and, if such termination is other than by the Company for
Cause, the Pro Rata Bonus.
c. If the Employee's employment with the Company shall be terminated by
the Company for any reason within eighteen months after a Change in Control or
by the Employee with Adequate Justification, in addition to other rights and
remedies available in law or equity, the Employee shall be entitled to the
following:
(i) the Company shall pay the Employee in cash within 15 days of the
Termination Date an amount equal to all Accrued Compensation and
the Pro Rata Bonus;
(ii) the Company shall pay to the Employee in cash at the end of each
of the eighteen consecutive 30-day periods following the
Termination Date an amount equal to one-twelfth of the sum of the
Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date through the date that is
eighteen months from the Termination Date (the "Continuation
Period"), the Company shall at its expense continue on behalf of
the Employee the life insurance, disability, medical, dental and
hospitalization benefits provided (x) to the Employee at any time
during the 90-day period prior to the Change in Control or at any
time thereafter or (y) to other similarly situated employees who
continue in the employ of the Company during the Continuation
Period. The coverage and benefits (including deductibles and
costs) provided in this Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the Employee than the most
favorable of such coverages and benefits during any of the periods
referred to in clauses (x) and (y) above. The Company's
obligation hereunder with respect to the foregoing benefits shall
be limited to the extent that the Employee obtains any such
benefits pursuant to a subsequent employer's benefit plans, in
which case the Company may reduce the coverage of any benefits it
is required to provide the Employee hereunder as long as the
aggregate coverages and benefits of the combined benefit plans is
no less favorable to the Employee than the coverages and benefits
required to be provided hereunder. This subsection (iii) shall
not be interpreted so as to limit any benefits to which the
Employee may be entitled under any of the Company's employee
benefit plans, programs or practices following the Employee's
termination of employment, including without limitation, retiree
medical and life insurance benefits; and
3
<PAGE> 6
(iv) the restrictions on any outstanding incentive awards (including
stock options) granted to the Employee under the Plan or under any
other incentive plan or arrangement shall lapse and such incentive
award shall become 100% vested, all stock options and stock
appreciation rights granted to the Employee shall become
immediately exercisable and shall become 100% vested, and all
stock options granted to the Employee shall become 100% vested.
d. If the Company terminates the Employee without Cause, the Company shall
pay to the Employee in cash: (i) within 15 days of the Termination Date an
amount equal to all Accrued Compensation and the Pro Rata Bonus, and (ii) at
the end of each of the twelve consecutive 30-day periods following the
Termination Date an amount equal to one-twelfth of the sum of the Base Amount
and the Bonus Amount.
e. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment
except as provided in Section 4(c)(iii).
f. The severance pay and benefits provided for in this Section 4 shall be
in lieu of any other severance or termination pay to which the Employee may be
entitled under any Company severance or termination plan, program, practice or
arrangement. The Employee's entitlement to any other compensation or benefits
shall be determined in accordance with the Company's employee benefit plans and
other applicable programs, policies and practices then in effect.
g. In the event that the Employee is a director of the Company or any of
its affiliates and his employment hereunder is terminated for any reason, the
Employee shall, and does hereby, tender his resignation as a director of the
Company and any of its affiliates effective as of the Termination Date.
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters.
a. The Employee shall not, at any time, either during the Term of his
employment or after the Termination Date, use or disclose any Trade Secrets of
the Company, except in fulfillment of his duties as the Employee during his
employment, for so long as the pertinent information or data remain Trade
Secrets, whether or not the Trade Secrets are in written or tangible form.
b. The Employee agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Company, not to use or disclose any
Confidential Business Information for so long as the pertinent data or
information remains Confidential Business Information.
4
<PAGE> 7
c. Upon termination of employment, the Employee shall leave with the
Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records, its business or customers, including all physical,
electronic, and computer copies thereof, whether or not the Employee prepared
such materials or records himself. Upon such termination, the Employee shall
retain no copies of any such materials, provided, however, the Employee may
remove and retain all personal items and materials.
d. The Employee may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so; provided, however, that the Employee
shall first have notified the Company of the request or order to so disclose
the Trade Secrets or Confidential Business Information in sufficient time to
allow the Company to seek an appropriate protective order.
e. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of eighteen months following
the Termination Date, the Employee shall not (without the prior written consent
of the Company) compete with the Company or any of its affiliates in any way,
including, but not limited to, (i) serving as an officer of, director of,
employee of, or consultant to, (ii) directly or indirectly, forming, or (iii)
directly or indirectly, acquiring more than a 5% investment in, a Competing
Business in the Territory; provided, however, that (A) if the Employee is
terminated without Cause, then the non-compete period under this Section 5(e)
shall be for a period of twelve months following the Termination date or (B) if
the Employee is terminated, for any reason after a Change in Control or resigns
with Adequate Justification, then there shall not be a non-compete period under
this Section 5(e).
f. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of eighteen months following
the Termination Date, the Employee shall not (except on behalf of or with the
prior written consent of the Company) either directly or indirectly, on the
Employee's own behalf or in the service or on behalf of others, (i) solicit,
divert, or appropriate to or for a Competing Business, or (ii) attempt to
solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or a prospective customer of the Company or any of
its affiliates on the Termination Date and is located in the Territory;
provided, however, that (A) if the Employee is terminated without Cause, then
the non-solicit period under this Section 5(f) shall be for a period of twelve
months following the Termination Date or (B) if the Employee is terminated for
any reason after a Change in Control or resigns with Adequate Justification,
then there shall not be a non-solicit period under this Section 5(f).
g. If the Employee is terminated for any reason or if the Employee resigns
without Adequate Justification, then for a period of eighteen months following
the Termination Date, the Employee will not, either directly or indirectly, on
the Employee's own behalf or in
5
<PAGE> 8
the service or on behalf of others, (i) solicit, divert, or hire away, or (ii)
attempt to solicit, divert, or hire away, to any business located in the
Territory, any employee of or consultant to the Company or any of its
affiliates engaged or experienced in the Business, regardless of whether the
employee or consultant is full-time or temporary, the employment or engagement
is pursuant to written agreement, or the employment is for a determined period
or is at will; provided, however, that (A) if the Employee is terminated
without Cause, then the non-solicit period under this Section 5(g) shall be for
a period of twelve months following the Termination Date or (B) if the Employee
is terminated for any reason after a Change in Control or resigns with Adequate
Justification, then there shall not be a non-solicit period under this Section
5(g).
h. The Employee acknowledges and agrees that great loss and irreparable
damage would be suffered by the Company if the Employee should breach or
violate any of the terms or provisions of the covenants and agreements set
forth in this Section 5. The Employee further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages
for any breach of clauses (a) through (g) of this Section 5 will be
insufficient to compensate for any breaches thereof, and that the Employee or
any of the Employee's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Employee the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Employee acknowledges and agrees that: (i) the covenants and
agreements contained in clauses (a) through (g) of this Section 5 are the
essence of this Agreement; (ii) that the Employee has received good, adequate
and valuable consideration for each of these covenants; (iii) each of these
covenants is reasonable and necessary to protect and preserve the interests and
properties of the Company; (iv) the Company is and will be engaged in and
throughout the Territory in the Business; (v) a Competing Business could be
engaged in from any place in the Territory; and (vi) the Company has a
legitimate business interest in restricting the Employee's activities
throughout the Territory. The Employee also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the Company should the Employee
breach any of these covenants and agreements; (ii) each of these covenants and
agreements in clauses (a) through (g) of this Section 5 is separate, distinct
and severable not only from the other covenants and agreements but also from
the remaining provisions of this Agreement; and (iii) the unenforceability of
any covenants or agreements shall not affect the validity or enforceability of
any of the other covenants or agreements or any other provision or provisions
of this Agreement. The Employee acknowledges and agrees that if any of the
provisions of clauses (a) through (g) of this Section 5 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and
6
<PAGE> 9
hereby are reformed to the maximum time, activity, or geographical limitations
permitted by applicable law.
j. The Employee and the Company hereby agree that they will negotiate in
good faith to amend this Agreement from time to time to modify the terms of
this Section 5, the definition of the term "Territory," and the definition of
the term "Business," to reflect changes in the Company's business and affairs
so that the scope of the limitations placed on the Employee's activities by
this Section 5 accomplishes the parties' intent in relation to the then current
facts and circumstances. Any such amendment shall be effective only when
completed in writing and signed by the Employee and the Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure to the benefit of
the Company, its Successors and Assigns and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Employee, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including but not limited to the costs of experts, accountants and
counsel) incurred by the Employee as they become due as a result of (a) the
termination of employment (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination of employment) and (b)
the Employee seeking to obtain or enforce any right or benefit provided by this
Agreement; provided, however, that the circumstances set forth in clauses (a)
and (b) above occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
directed to the attention of the CEO with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim,
7
<PAGE> 10
recoupment, defense or other right which the Company may have against the
Employee or others. The Company may, however, withhold from any benefits
payable under this Agreement all federal, state, city, or other taxes as shall
be required pursuant to any law or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Employee and the Company. No waiver by
any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
11. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida without giving
effect to the conflict of laws principles thereof. Any action brought by any
party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of Florida.
12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the Termination Date but not paid as of the
Termination Date including (i) base salary, (ii) reimbursement for reasonable
and necessary expenses incurred by the Employee on behalf of the Company during
the period ending on the Termination Date, and (iii) bonuses and incentive
compensation (other than the Pro Rata Bonus).
8
<PAGE> 11
b. "Adequate Justification" shall mean the occurrence within eighteen
months after a Change in Control of any of the following events or conditions:
(i) a material failure of the Company to comply with the terms of this
Agreement, (ii) any relocation of the Employee outside a 30-mile radius from
the executive offices occupied by the Employee prior to the Change in Control
that is not approved by members of the Incumbent Board (as defined in Section
16(I)), or (iii) other than as provided for herein, any substantial diminution
in the Employee's authority or the Employee's responsibilities that is not
approved by members of the Incumbent Board.
c. "Base Amount" shall mean the greater of the Employee's annual base
salary (i) at the rate in effect on the Termination Date or (ii) at the highest
rate in effect at any time during the 90-day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company or
any other agreement or arrangement.
d. "Bonus Amount" shall mean the greater of: (i) the most recent annual
bonus paid or payable to the Employee prior to the Termination Date, (ii) the
target bonus under the Employee's compensation plan if the Employee shall
continue to serve as an officer of the Company or (iii) the annual bonus paid
or payable for the full fiscal year ended prior to the fiscal year during which
a Change in Control occurred (or, in each case, such lesser period for which
annual bonuses were paid or payable to the Employee).
e. "Business" shall mean the development, marketing or implementation of
core retail banking software directly or through a software service bureau to
the banking and financial industry, and any other related business which the
Company or any of its affiliates is engaged in as of the Termination Date.
f. "Bylaws" shall mean the Amended and Restated Bylaws of the Company, as
amended, supplemented or otherwise modified from time to time.
g. The termination of the Employee's employment shall be for "Cause" if it
is the result of:
(i) the material commission or omission of an act by the Employee of
a willful or negligent act which causes material harm to the
Company;
(ii) the conviction (in a U.S. court) of the Employee for the
commission or perpetration by the Employee of any felony or any
act of fraud;
(iii) the failure of the Employee to devote his full business time and
9
<PAGE> 12
attention to the business as provided in Section 1; or
(iv) the failure of the Employee to perform his duties hereunder
exercising such care as is customarily required by executives
undertaking similar duties for companies similar to the Company;
provided however, that the employee must perform such duties in a
satisfactory manner to the CEO and President provided, however
that the Employee shall have 30 days to cure such failure after
receiving notice from the Company.
h. "CEO" shall have the meaning set forth in the recitals.
i. A "Change in Control" shall mean the occurrence during the Term of any
of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934 (the "1934 Act"))
immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the 1934 Act)
of 40% or more of the combined voting power of the Company's then
outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (1) an employee benefit plan (or a
trust forming a part thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Subsidiary"), (2) the
Company or any Subsidiary, or (3) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined).
(ii) The individuals who, as of the date of the Initial Public
Offering, are members of the Board of Directors of the Company
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however,
that if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least a majority of the Incumbent Board, such new director shall,
10
<PAGE> 13
for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board of Directors (a "Proxy Contest")
including by reason of any agreement intended to avoid or settle
any Election Contest or Proxy Contest; or
(iii) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the
Company, unless
(1) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly
or indirectly, immediately following such merger,
consolidation or reorganization, at least a majority of
the combined voting power of the outstanding voting
securities of the corporation resulting from such merger
or consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization, and
(2) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least a majority of the
members of the board of directors of the Surviving
Corporation.
(A transaction described in clauses (1) and (2) shall herein
be referred to as a "Non-Control Transaction").
(B) A complete liquidation or dissolution of the Company; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
11
<PAGE> 14
(other than a transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this Agreement to the
contrary, if the Employee's employment is terminated prior to a
Change in Control and the Employee reasonably demonstrates that
such termination (A) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (B) otherwise occurred in connection with, or
in anticipation of, a Change in Control which actually occurs,
then for all purposes of this Agreement, the date of a Change in
Control with respect to the Employee shall mean the date
immediately prior to the date of such termination of the
Employee's employment.
j. "Competing Business" shall mean any business that, in whole or in part,
is the same or substantially the same as the Business.
k. "Confidential Business Information" shall mean any non-public
information of a competitively sensitive or personal nature, other than Trade
Secrets, acquired by the Employee, directly or indirectly, in connection with
the Employee's employment (including his employment with the Company prior to
the date of this Agreement), including (without limitation) oral and written
information concerning the Company or its affiliates relating to financial
position and results of operations (revenues, margins, assets, net income,
etc.), annual and long-range business plans, marketing plans and methods,
account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Employee, or was available to the
Employee on a non-confidential basis prior to its disclosure to the Employee.
l. "Continuation Period" shall have the meaning ascribed to it in Section
4(c)(iii).
m. "Disability" shall mean a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties with the Company for
a period of 180 consecutive days, as determined by an independent physician
selected with the approval of both the Company and the Employee.
n. "Effective Date" shall mean the date set forth in the recitals.
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o. "Initial Public Offering" shall mean the closing of the first public
offering of the Company's common stock registered under the Securities Act of
1933.
p. "Notice of Termination" shall mean a written notice of termination from
the Company or the Employee which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon, and
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Employee's employment under the provision so
indicated.
q. "Plan" shall mean the 1995 Phoenix International Ltd., Inc. Employee
Stock Option Plan adopted by the Board of Directors on October 21, 1995.
r. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days in the
fiscal year through the Termination Date and the denominator of which is 365.
s. "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
t. "Termination Date" shall mean, in the case of the Employee's death, his
date of death, and in all other cases, the date specified in the Notice of
Termination.
u. "Territory" shall mean that area specified on Exhibit A attached
hereto.
v. "Trade Secrets" shall mean any information, including but not limited
to technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, information on customers, or a list of actual
or potential customers or suppliers, which: (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
13
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and the Employee has signed and sealed this Agreement, effective as of the date
first above written.
PHOENIX INTERNATIONAL LTD., INC.
ATTEST:
By: /s/ Ralph Reichard By: /s/ Bahram Yusefzadeh
------------------------------------ -----------------------------------
Name: Ralph Reichard Name: Bahram Yusefzadeh
Title: President and Chief Operating Title: Chairman and Chief Executive
Officer Officer
(CORPORATE SEAL)
EMPLOYEE
/s/ Clay E. Scarborough
--------------------------------------
CLAY E. SCARBOROUGH
14
<PAGE> 17
EXHIBIT A
"TERRITORY"
UNITED STATES
<PAGE> 1
EXHIBIT 10.42
X - CONFIDENTIAL TREATMENT REQUESTED
REMARKETING AGREEMENT AND SUPPORT AUTHORIZATION
THIS REMARKETING AGREEMENT AND SUPPORT AUTHORIZATION (this
"Agreement"), dated as of the 22 day of April, 1996, is by and between Phoenix
International, Inc. ("Phoenix") and Computer Systems Associates (Nigeria)
Limited ("CSA").
NOW, THEREFORE, Phoenix and CSA, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
1.1 "Changes" means corrections, updates, upgrades, additions and
modifications to the Software and Documentation, including translations into
foreign languages used in the Territory, nationalizations for countries
included in the Territory, and any other new or additional works based in whole
or in part on the Software or Documentation.
1.2 "Customer" means an Eligible Prospect that has been approved by
Phoenix and has executed a License Agreement with Phoenix, except that those
Eligible Prospects that Phoenix reserves the right to license and/or support
directly (i.e., Eligible Prospects in South Africa or and all other countries
outside the Territory, Eligible Prospects which operate in the Territory but
which are owned or controlled by banks which have headquarters or principal
operations outside the Territory as contemplated by Section 2.4 hereof, and, in
the event that CSA rights in the Territory become non-exclusive as provided in
Section 4.3, Eligible Prospects in the Territory which are licensed without
CSA's participation) will not be considered a Customer for purposes of this
Agreement unless such Eligible Prospects are licensed as a direct result of
marketing efforts CSA is authorized to pursue hereunder, or unless Phoenix
otherwise agrees to treat such Eligible Prospects as Customers for purposes of
this Agreement.
1.3 "Documentation" means the technical and operating documentation
relating to the Software provided to CSA by Phoenix for CSA to provide to
Customers. The Documentation shall include all Changes provided to CSA or
applicable Customers by Phoenix, or otherwise made or obtained by or for CSA or
any Customers.
1.4 "Eligible Prospect" means (1) a retail bank organized and doing
business exclusively in the Territory or South Africa, or (2) such other banks
located inside or outside the Territory as Phoenix may add for purposes of
CSA's marketing and/or support functions.
1.5 "Installation" means the installation of the Software on the
Customer's computer network.
1.6 "License Agreement" means a license agreement directly between an
Eligible Prospect and Phoenix containing terms and conditions acceptable to
Phoenix. Phoenix reserves the right to require different terms and conditions
for each Eligible Prospect depending on the circumstances. CSA may request
that terms be included in the License Agreement to reflect
<PAGE> 2
CSA's sole authority for establishing and collecting fees and charges
thereunder and providing Support Services for which CSA is responsible.
Phoenix shall not unreasonably refuse to include requested terms. No License
Agreement shall be effective, and no license to use the Software shall be
valid, unless a License Agreement has been signed by Phoenix and the Customer.
1.7 "Software" means the most current version of Phoenix's Retail Banking
System. The Software shall be provided in object code (machine readable) form
only. The Software shall include all Changes provided to CSA or applicable
Customers by Phoenix, or otherwise made or obtained by or for CSA or any
Customers.
1.8 "Support Agreement" means any agreement, commitment or understanding
entered into directly between CSA and a Customer for CSA to provide Support
Services to the Customer in addition to the Support Services described in the
License Agreement entered into by such Customer. CSA agrees to review the
terms of each Support Agreement with Phoenix before entering into such Support
Agreement.
1.9 "Support Services" means the services to be performed by CSA as
described in Exhibit B hereto. The License Agreement and/or Support Agreement
shall require each Customer to obtain basic support from CSA for a minimum of
five (5) years after implementation of the Software.
1.10 "Territory" means, subject to the limitations of Section 17.2 hereof,
Ethiopia, Ghana, Kenya, Nigeria, Zambia and Zimbabwe, as such nations currently
exist or may hereafter be reconfigured. (Note: South Africa is not defined to
be part of the Territory but is referred to separately in applicable parts of
this Agreement.) Phoenix and CSA may in the future decide by mutual agreement
to modify the definition of the Territory to include additional nations, but
each party reserves absolute discretion whether to agree to such a modification
and/or require further terms or conditions in connection with the modification,
and the modification will not be valid unless made in writing and signed as
provided in Section 15 hereof. It is agreed and acknowledged that Phoenix
reserves the right to condition licenses granted inside or outside the
Territory, or make adjustments to the Software or Documentation licensed inside
or outside the Territory, to the extent advisable in Phoenix's judgment to
protect Phoenix's intellectual property rights. Such conditions or adjustments
may include disabling codes with expiration dates of short duration, object
code only installation, limitation of installation to urban areas or specified
regions, exclusion of development tools, compliance with local laws at CSA's or
the Customer's expense, special signature, insurance or indemnity requirements,
special audit requirements, and/or reasonable standards for all in-country use
of the Software and Documentation.
2. LICENSE
2.1 Phoenix hereby grants to CSA, and CSA accepts, subject to the terms
and conditions set forth herein, the right and license to:
<PAGE> 3
(a) Demonstrate and promote the Software to Eligible Prospects
pursuant to the terms herein, provided that the Software and
Documentation may not be provided to any Eligible Prospects (for
evaluation, use, or any other purpose) except pursuant to a License
Agreement directly between the Eligible Prospect and Phoenix having
terms and conditions acceptable to Phoenix; and
(b) Contract to provide Support Services to Customers, to the
extent so provided herein or as otherwise agreed by Phoenix.
2.2 Whenever an Eligible Prospect is interested in licensing the Software,
CSA shall coordinate with Phoenix to permit Phoenix to enter into a License
Agreement directly with the Eligible Prospect. Either the License Agreement or
a Support Agreement shall provide the terms for Support Services to be provided
by CSA to the Customer.
2.3 Phoenix shall provide one copy of the Software and Documentation to
CSA for purposes of permitting CSA to exercise its rights under Section 2.1
hereof.
2.4 CSA shall have the exclusive right to market the Software and provide
Support Services to Customers in all countries in the Territory. The
exclusivity of the License is contingent on CSA meeting the minimum sales
criteria set forth in Section 4.3 below.
As exceptions to such exclusivity, Phoenix reserves the right (either directly
or in collaboration with other distributors, subcontractors or marketing
agents, and without obligation to CSA) to do business with any retail banks
which operate in the Territory but are owned or controlled by banks which have
headquarters or principal operations outside the Territory in those cases where
licensing and support decisions are made outside the Territory based on
marketing activities Phoenix pursues independently. Conversely, in those cases
in which such a bank, even when it is owned or controlled by other banks which
have headquarters or principal operations outside the Territory, decides the
license the Software based on CSA's marketing efforts, then that bank will be a
Customer for purposes of this Agreement.
2.5 CSA shall have the non-exclusive right to market the Software and
provide Support Services to Customers in South Africa.
3. SERVICES; RESTRICTIONS
3.1 Phoenix shall provide training to CSA in the installation, support and
marketing of the Software as set forth in Exhibit C, subject to Section 7.3
hereof.
3.2 Upon completion of CSA's training, CSA shall provide Support Services
to Customers in accordance with the terms of each License Agreement and Support
Agreement, as applicable. Phoenix shall provide remote assistance in the
provision of these services from its offices in Florida to the extent and at
the rates set forth in Exhibit A. In no case shall Phoenix be required to
travel to the Territory to provide services to CSA or Customers.
<PAGE> 4
3.3 In the event CSA requires services form Phoenix which are beyond the
scope of Sections 3.1 and 3.2 hereof, Phoenix will have no obligation to
provide such services unless it agrees to do so and satisfactory provision is
made for associated fees and travel and living expenses.
3.4 Subject to the other provisions of this Agreement, CSA shall perform
all Support Services provided to Customers in accordance with the terms of the
License Agreement and each Support Agreement.
3.5 In addition to the Support Services provided to Customers pursuant to
Section 3.4 hereof, CSA agrees to make itself available, on a non-exclusive
basis, at Phoenix's request, to provide Support Services to other licensed end
users located inside or outside the Territory. Such Support Services shall be
provided by CSA working directly for the specified end users, or as a
subcontractor working for Phoenix, at Phoenix's option. Fees and charges will
be agreed to by Phoenix and CSA on a case-by-case basis, provided that CSA
agrees that its fees and charges will not exceed the fees and charges it
customarily obtains for similar services in other circumstances.
3.6 For so long as this Agreement is in effect or CSA is performing
Support Services, neither CSA, nor any affiliate of CSA, will acquire, develop
or market any product or service that is competitive with the Software or its
applications. However, notwithstanding the preceding sentence, the parties
agree that CSA may market the CSA Product if:
(a) the Customer is a current user of the CSA Product,
(b) the CSA Product is being licensed in combination with the
Software so as to provide the trade finance portion of the CSA
Product's existing functionality, or
(c) the Customer indicates that the cost of the Software exceeds
the upper limits of the Customer's budget, provided that, for the
exception in this item (c) to apply, CSA shall first so advise
Phoenix;
(d) the main business of the Customer is not retail, such as in
the case of merchant banks;
(e) the telecommunications infrastructure or hardware policy
precludes practical or effective implementation of the Software.
Except for the combination of the CSA Product with the Software so as to
provide the trade finance portion of the CSA Product's existing functionality,
the Software and any associated documentation may not be used, combined or
merged, in whole or in part, with the CSA Product, or any other competitive
software product, without Phoenix' consent.
3.7 Except as expressly stated in this Agreement, Phoenix shall have no
obligation to render any services or provide any effort, or to refrain from any
business or activity. Phoenix provides no assurance with regard to the results
or profitability of the promotional activities and services CSA is authorized
to pursue hereunder.
<PAGE> 5
X - CONFIDENTIAL TREATMENT REQUESTED
4. TERM
4.1 Subject to earlier termination as provided herein, this Agreement
shall have an initial term of four (4) years, beginning upon the Effective
Date. Beginning six (6) months before expiration of the initial term, the
parties agree to commence discussion and negotiation of possible terms for
renewal, provided that renewal shall not occur unless both parties agree on
terms for renewal.
4.2 This Agreement may be terminated earlier, at Phoenix's election, if
CSA fails to perform its obligations hereunder in any material respect
(provided that Phoenix notifies CSA of such breach and gives CSA a reasonable
period of time, not to exceed thirty (30) days to cure such breach), or in the
event that CSA fails to pay to Phoenix the following minimum cumulative fees in
U.S. dollars for base license fees, branch license fees, and support fees (as
set forth in Exhibit A hereto):
<TABLE>
<S> <C>
Year One: $ XXXXXXX.XX
Year Two: $ XXXXXXX.XX
Year Three: $ XXXXXXX.XX
Year Four: $ XXXXXXX.XX
</TABLE>
4.3 Phoenix may terminate CSA's exclusive rights hereunder, and convert
CSA's rights to non-exclusive rights, in the event that CSA fails to provide
Phoenix with at least U.S. $XXXXXX in revenues for base license fees, branch
license fees, and support fees (as set forth in Exhibit A hereto)in any
continuous twelve (12) month period.
4.4 Upon termination of this Agreement, CSA shall immediately deliver to
Phoenix, at CSA's own expense, all copies of the Software, Documentation, and
any other materials related to Phoenix in the possession of or previously
delivered to CSA by Phoenix, except that CSA may retain copies of materials
Phoenix agrees CSA may retain in order to continue to provide Support Services
for so long as CSA continues to be authorized by Phoenix (pursuant to this
Agreement or a subsequent agreement) to provide such Support Services.
Following termination of this Agreement, CSA shall continue to be responsible
for providing Support Services to Customers in accordance with each Support
Agreement, unless Phoenix elects (at its option) to take over such Support
Services in some or all cases for the reason that CSA has failed to provide
such Support Services or perform its other obligations hereunder in a
satisfactory manner. If such an exception applies, CSA agrees to assign to
Phoenix or Phoenix's designee some or all of the Support Agreements still in
effect, as requested by Phoenix. CSA agrees that upon the breach by CSA of any
terms or restrictions hereunder associated with the Software, Phoenix shall be
entitled to seek such injunctive and/or other equitable relief as it deems
proper in a court of appropriate jurisdiction. In addition, in those cases in
which Phoenix takes over responsibility for Support Services, CSA nonetheless
agrees, for a minimum period of three (3) years following termination of this
Agreement, if and to the extent so requested by Phoenix, to continue to provide
Support Services for Customers when and as requested by Phoenix, with such
Support Services to be provided directly, or as a subcontractor to Phoenix, or
some combination thereof as Phoenix may request. Fee and payment terms for
such Support Services
<PAGE> 6
provided by CSA shall in any such event be substantially equivalent to the fee
and payment terms to which CSA was entitled immediately prior to termination.
4.5 Termination of the License shall not terminate any License Agreement
in effect between Phoenix and a Customer. CSA agrees that it shall be entitled
to no compensation from Phoenix or any Customer in connection with, or
following, termination of this Agreement, except for fees for Support Services
actually rendered, as provided in Section 4.4 hereof.
4.6 Sections 3.6, 4.4, 4.5, and 5 through 20 hereof shall survive
termination of this Agreement and shall thereafter remain in effect in
accordance with their terms.
5. TITLE; INTELLECTUAL PROPERTY.
5.1 Except as provided in Section 5.3 hereof, all copies of the Software
and Documentation obtained or used by CSA or any Customer shall be produced and
provided to the applicable party solely by Phoenix. CSA may not make any
copies of the Software without the written consent of Phoenix. CSA may copy
the Documentation only as required to perform its duties hereunder, except that
CSA may also make a reasonable number of copies of the Software and
Documentation to be maintained in its custody and control for non-productive
back-up purposes. All copies of the Software and Documentation provided to or
made by or for CSA shall be accounted for upon Phoenix's request.
5.2 The Software and Documentation are protected by U.S., Nigerian, and
other international copyright laws, treaties and conventions, the Software and
Documentation are copyrighted works under U.S. and foreign laws, and the
Software and Documentation are protected as trade secrets and Confidential
Information of Phoenix. Phoenix retains all right, title, and interest in and
to the Software, Documentation, and all intellectual property rights contained
therein, subject only to the limited license granted to CSA in Section 2.1
hereof. Output reports and formats (e.g., ad hoc reports, SQL queries, etc.)
first created by CSA and/or any Customers shall be subject to joint ownership
of Phoenix and either CSA or the Customers, as applicable (except that, to the
extent such output reports derive from or contain any part of the Software or
Documentation, the restrictions applicable to the Software and Documentation
shall apply to any use thereof). CSA shall assist Phoenix, at Phoenix's
request, in perfecting and maintaining Phoenix's rights under copyright law in
each country in the Territory by advising Phoenix of any special registration,
recording or notice requirements.
5.3 Phoenix may authorize CSA and/or Customers, including their respective
employees and agents, to make (alone or in collaboration with Phoenix) or
receive Changes. Phoenix reserves the absolute right to determine when and how
such Changes are produced and used. CSA agrees that all Changes made or
obtained by Phoenix, CSA or any Customer, or their respective employees or
agents acting alone or in collaboration with each other, shall, together with
all intellectual property rights associated therewith, be the exclusive
property of Phoenix. To the extent that such Changes, including all associated
intellectual property rights, are not owned in their entirety by Phoenix
immediately upon their creation, CSA agrees to assign (and hereby automatically
assigns) all right, title and interest therein to Phoenix, without any
requirement of
<PAGE> 7
consideration or further documentation. CSA agrees to take such further action
and execute such further documentation as Phoenix may reasonable request to
give effect to this Section 5.3.
5.4 CSA may not distribute, sell, sublease, assign, give, or transfer in
any way the original or any copies of the Software or Documentation except as
provided in this Agreement. CSA may not modify, reverse engineer, decompile,
or translate the Software or Documentation without the prior written consent of
Phoenix, except with Phoenix's prior written approval (which may be included in
a License Agreement or Support Agreement, as applicable). CSA may not use the
Software or Documentation to process accounts or records, or to generate output
data, for the direct benefit of, or for purposes of rendering services to, any
business entity or organizations, except Customers as expressly authorized in
their applicable License Agreement.
5.5 CSA is authorized to identify the Software according to the Software's
applicable brand name, to identify CSA as an independent business which has
been authorized by Phoenix to market the Software and provide Support Services
to Customers, and to use and display Phoenix's trade name, trademarks, service
marks and logos for purposes of promotion and marketing of the Software
intended for Eligible Prospects. All such action shall be subject to
reasonable advertising and usage guidelines provided by Phoenix. In all other
respects, this Agreement confers no right or license with regard to Phoenix's
trade name, trademarks, service marks, logos, or packaging, or any related
goodwill, all of which shall be the exclusive property of Phoenix. CSA shall
assist Phoenix, at Phoenix's request, in perfecting and maintaining Phoenix's
rights under trademark and similar laws in each country in the Territory by
advising Phoenix of any special registration, recording or notice requirements.
5.6 CSA shall notify Phoenix in the event that it discovers any
infringement of Phoenix's rights in the Software or any violation of the terms
of a License Agreement, and shall cooperate with Phoenix and assist in the
prosecution of Phoenix's claims, provided that Phoenix retains financial
responsibility for costs of assistance and prosecution. Phoenix shall be
entitled to retain any proceeds from such claims, including settlement amounts,
for purposes of funding Phoenix's worldwide intellectual property protection
programs.
6. Confidentiality Obligations.
6.1 CSA acknowledges that the Software and Documentation contain
Confidential Information of Phoenix.
6.2 CSA agrees at all times to maintain the complete confidentiality of
the Software, Documentation, and all other Confidential Information of Phoenix.
6.3 CSA agrees not to permit or authorize access to, or disclosure of, the
Software, Documentation, and all other Confidential Information of Phoenix to
any person or entity other than (i) Eligible Prospects who have entered into
confidentiality agreements approved by Phoenix, to the extent necessary for
such Eligible Prospects to evaluate the Software, (ii) Customers, to the extent
necessary for such Customers to exercise their rights under applicable License
Agreements, and (iii) employees of CSA who have a "need to know" such
information
<PAGE> 8
in order to enable CSA to perform its obligations under this Agreement and
applicable License Agreements and Support Agreements. The Software and
Documentation, and all other Confidential Information of Phoenix may not be
disclosed or provided to any independent contractors or consultants dealing
with CSA, Eligible Prospects, or Customers, unless Phoenix gives its prior
written approval (which may be included in an applicable License Agreement).
CSA may disclose necessary portions of the Software, Documentation, or other
Confidential Information of Phoenix to governmental regulatory authorities if
such disclosure is required for compliance with applicable laws, but CSA shall
notify Phoenix of the applicable legal requirements before such disclosure
occurs and CSA shall use its best efforts to help Phoenix obtain protection as
may be available to preserve the confidentiality of such information following
disclosure.
6.4 Prior to disposal of any media or materials that contain any part of
the Software, Documentation or other Confidential Information of Phoenix, CSA
shall obliterate or otherwise destroy all code, instructions, commentary, or
further evidence of Confidential Information, for example, by erasing,
incinerating, or shredding such materials.
6.5 For purposes of this Agreement, Confidential Information shall mean
any competitively sensitive or secret business, marketing or technical
information of Phoenix. In all cases, Phoenix's Confidential Information shall
include the Software and Documentation, including all Changes. Confidential
Information shall not include, however, information which (i) is generally
known to the public or readily ascertainable from public sources (other than as
a result of a breach of confidentiality by CSA or any person or entity
associated with CSA), (ii) is independently developed without reference to or
reliance on any Confidential Information of Phoenix, as demonstrated by written
records in CSA's possession (which shall be provided to Phoenix at Phoenix's
request), or (iii) is obtained from an independent third party who created or
acquired such information without reference to or reliance on Confidential
Information of Phoenix, as demonstrated by written records in CSA's possession
(which shall be provided to Phoenix at Phoenix's request).
7. FEES AND CHARGES
7.1 CSA shall collect all license fees for the Software under License
Agreements from the Customers.
7.2 CSA shall pay Phoenix the fees set forth in Exhibit A.
7.3 Implementation and training of CSA staff at a location to be
designated by Phoenix are included in this fee except for: Phoenix's and CSA's
travel and living expenses for implementation installation and training
meetings, cost of file conversions, costs of optional products and services,
costs of consulting services requested by CSA or a Customer, shipping charges,
tape cartridge, or diskette costs, or the costs of any hardware required to
utilize the software, all of which shall be subject to separate charge for
which CSA shall be responsible. Phoenix reserves the right to require
prepayment or advance deposit for services or expenses in some instances.
<PAGE> 9
7.4 CSA shall retain records in accordance with sound accounting practices
to support all payments owed to Phoenix. CSA will provide Phoenix, on a
monthly basis for each month in which there is any revenue-generating activity,
a written account of all amounts which may be due to Phoenix hereunder,
accompanied by payment of such amounts.
7.5 Subject to CSA's payment of the amounts owing to Phoenix hereunder,
CSA shall have sole responsibility for establishing and collecting fees, and
shall be entitled to retain, all fees and charges payable by Customers for the
sublicensing of the Software, or any services provided by CSA in connection
therewith.
7.6 CSA shall collect, report and pay to the relevant taxing authority,
and indemnify Phoenix for any liability relating to, all applicable excise,
property, VAT, sales and use, or similar taxes, any withholding requirement in
addition to or in lieu thereof, and any customs, import, export or other
duties, levies, tariffs, taxes, or other similar charges that are imposed by
any jurisdiction outside the United States of America for the transactions
contemplated herein, including the license of the Software by Phoenix.
7.7 Time is of the essence with respect to all payments due from CSA
hereunder. CSA may not suspend or set-off any payment due Phoenix hereunder on
any basis whatsoever. All amounts past due shall accrue interest at the rate
of eighteen percent (18%) per annum.
8. LIMITATIONS.
8.1 PHOENIX SHALL HAVE NO LIABILITY FOR THE SOFTWARE OR ANY SERVICES
PROVIDED HEREUNDER, INCLUDING ANY LIABILITY FOR NEGLIGENCE. PHOENIX MAKES AND
CSA RECEIVES NO WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE IN ANY
PROVISION OF THIS AGREEMENT OR ANY OTHER COMMUNICATION, AND PHOENIX
SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
8.2 The cumulative liability of Phoenix to CSA for all claims relating to
the Software and any services rendered hereunder, in contract, tort or
otherwise, shall not exceed the total amount of all license fees paid by CSA to
Phoenix for the relevant Software within the prior year. This limitation shall
not apply to the indemnification provided in Section 12 below. In no event
shall Phoenix be liable to CSA for any consequential, indirect, special, or
incidental damages, including without limitation lost profits, even if Phoenix
has been advised of the possibility of such potential loss or damage. The
foregoing limitation of liability and exclusion of certain damages shall apply
regardless of the success or effectiveness of other remedies.
9. INDEMNIFICATION BY PHOENIX.
9.1 If a third party claims that the Software infringes any patent,
copyright, trade secret, or similar intellectual property rights of a third
party Phoenix shall (as long as CSA is not in default
<PAGE> 10
under this Agreement or any other agreement with Phoenix) defend CSA against
that claim at Phoenix's expense and pay all damages awarded by a court in a
final judgment, provided that CSA promptly notifies Phoenix in writing of any
such claim, and allows Phoenix to control, and cooperates with Phoenix in, the
defense and disposition of such claim, including any related settlement
negotiations.
9.2 If such a claim is made or appears possible, Phoenix may, at its
option, secure for CSA the right to continue to use the Software, modify or
replace the Software so it is non-infringing, or refund all license fees paid
for the infringing material less a reasonable deduction for prior use. Phoenix
has no obligation hereunder for any claim based on a modified version of the
Software which has not been prepared solely by Phoenix, or for any combination,
operation or use of the Software with any product, data or apparatus not
approved in writing by Phoenix. Phoenix also shall have no obligation
hereunder for any claim based on theories of law that are not substantially
equivalent to laws, treaties and conventions applicable to U.S. patents,
copyrights, trade secrets, and similar intellectual property rights. THIS
SECTION STATES PHOENIX'S ENTIRE OBLIGATION TO CSA WITH RESPECT TO MATTERS OF
TITLE OR ANY CLAIM OF INFRINGEMENT THEREOF.
10. POWER AND AUTHORITY
Each party hereby represents and warrants to the other party hereto that it has
full power and authority to enter into and perform under the terms of this
Agreement, and the person executing this Agreement on behalf of such party has
been properly authorized and empowered to so execute this Agreement.
11. NOTICES
All notices or other communications to be given hereunder shall be in writing
and delivered either by telecopy (confirmation by air mail), or by
international second day courier, courier charges prepaid, and addressed to the
appropriate party as set forth below.
If to CSA:
Computer Systems Associates (Nigeria) Limited
Yinka Folawiyo Plaza
38 Warehouse Road
Apapa, Lagos
Nigeria
Telecopy: 234 1 5874710
<PAGE> 11
If to Phoenix:
Phoenix International
900 Winderly Place
Maitland, Florida 32751
FOR IMMEDIATE ATTENTION -- Deliver to President
Telecopy: 407/667-0133
With a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
400 Colony Square, Suite 2200
Atlanta, Georgia 30361
Attention: Peter C. Quittmeyer, Esq.
Telecopy: 404/817-6050
Notices delivered personally shall be effective upon delivery and notices
delivered by mail shall be effective upon their receipt by the party to whom
they are addressed.
12. ASSIGNMENT
This Agreement may not be assigned by CSA, nor may CSA delegate or subcontract
any obligation incurred hereunder or under any applicable License Agreement or
Support Agreement, except with the prior written consent of Phoenix. Phoenix
may terminate this Agreement in the event that CSA experiences (in one
transaction or any series of transactions) a change of majority ownership or
principal management, unless Phoenix is promptly notified of such change and is
provided satisfactory assurance that CSA will be able to perform its
obligations hereunder to Phoenix's satisfaction. Subject to the foregoing,
this Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto, their successors and assigns.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one
instrument.
14. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the United States of America and the State of Florida. This
Agreement is entered into in the United States of America, all funds shall be
paid to Phoenix in U.S. dollars in the United States of America, and nothing
herein shall be construed to require Phoenix to do business or maintain any
office of business establishment outside the United States of America.
<PAGE> 12
15. ENTIRE AGREEMENT
This Agreement may not be modified except by a writing signed by authorized
representatives of both parties. A waiver by either party of its rights
hereunder shall not be binding unless contained in a writing signed by an
authorized representative of the party waiving its rights. The non-enforcement
or waiver of any provision on one occasion shall not constitute a waiver of
such provision on any other occasions unless expressly so agreed in writing.
It is agreed that no usage of trade or other regular practice or method of
dealing between the parties hereto shall be used to modify, interpret,
supplement or alter in any manner the terms of this Agreement. The English
Language form of this Agreement shall be controlling for purposes of
interpretation and enforcement.
16. HEADINGS
The headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation hereof.
17. COMPLIANCE WITH LAWS
17.1 CSA shall, at its own expense, comply with all laws relating to the
marketing, distribution or licensing of the Software, and shall procure all
licenses and pay all fees and other charges required thereby.
17.2 Notwithstanding anything in this Agreement to the contrary, it is
acknowledged and agreed that neither Phoenix nor CSA may ship, export or
re-export the Software or Documentation, or any other information, process,
product or service obtained directly or indirectly from Phoenix, to any country
or entity which is the subject of any prohibition imposed by the U.S. Export
Administration Act of 1979, U.S. Executive Orders, the U.S. Department of
Commerce, and the North Atlantic Treaty Organization. Without limiting the
foregoing, CSA is advised that U.S. export laws currently prohibit the use of
the Software, Documentation, or any other information, process, product or
service provided by Phoenix, by or for any military or police entity or any
apartheid enforcing entity of the Republic of South Africa or Namibia. CSA
understand that, if such a prohibition applies and an export license cannot be
obtained with reasonable effort, the disclosure or delivery of the Software and
Documentation may not occur. To assure compliance, CSA agrees to notify
Phoenix of each Eligible Prospect as soon as possible so that Phoenix can
evaluate whether prohibitions may apply or export licenses may be available.
If unusual costs are involved in obtaining export licenses, Phoenix may require
CSA to accept responsibility for some or all of those costs.
17.3 CSA hereby agrees that CSA and its directors, officers, employees, and
agents will comply with the Foreign Corrupt Practices Act of 1977, as amended
(the "Act") with respect to the subject matter of this Agreement. In this
regard, neither CSA nor any of its directors, officers, employees, or agents
will make or offer to make any payment or gift directly or indirectly to any
employee, officer, or representative of any governmental entity or
<PAGE> 13
instrumentality or to any foreign political party, any official of a foreign
political party, or candidate, where such payment would constitute a bribe,
kickback, or illegal payment under U.S. or applicable foreign laws.
18. INDEPENDENT CONTRACTOR.
Each party hereto shall be and remain an independent contractor; nothing herein
shall be deemed to constitute the parties as partners, and neither party shall
have any authority to act, or attempt to act, or represent itself, directly or
by implication, as an agent of the other or in any manner assume or create, or
attempt to assume or create, any obligation on behalf of or in the name of the
other, nor shall either by deemed the agent or employee of the other.
19. ARBITRATION.
In the event a claim, controversy or dispute between Phoenix and CSA arises out
of or in connection with this Agreement or the transactions and business
contemplated hereby, including the validity, construction or enforcement
thereof, either party may demand that such matter be submitted to final and
binding arbitration before a single arbitrator selected by the parties in
accordance with the then-existing rules of the Internal Chamber of Commerce.
The situs of all arbitration proceedings shall be Atlanta, Georgia, unless
Phoenix and CSA agree in writing to another situs. All arbitration proceedings
and records shall be in English. Issuance of an arbitration demand shall
suspend the effect of any default entailed by such claim, controversy or
dispute and any judicial or administrative proceedings instituted in connection
therewith, for the duration of the arbitration proceedings. If Phoenix and CSA
cannot agree on the identity of a single arbitrator within five (5) days of
receipt of the arbitration demand, each of them shall appoint one (1)
arbitrator and the party-appointed arbitrators shall appoint a third arbitrator
within five (5) days of their appointment. The arbitrator or arbitrators shall
determine whether a default has occurred, and shall deliver its or their
decision within ninety (90) days of the date of receipt of the arbitration
demand, specifying such remedy (including money damages) as shall (a) fully
implement the intent and purposes of this Agreement and (b) indemnify and hold
harmless the non-breaching party from all losses, costs and expenses (including
costs of arbitration and reasonable attorneys' fees) resulting from the
default. Termination or limitation of Phoenix's rights in the Software, the
Documentation, or any associated intellectual property rights may not be
awarded under any circumstances. The right to demand arbitration and to
receive damages and obtain other available remedies as provided hereunder shall
be the exclusive remedy in the event an arbitration demand is made, except that
Phoenix shall be entitled to obtain equitable relief, such as injunctive
relief, from any court of competent jurisdiction in order to protect its rights
in the Software, the Documentation, or any associated intellectual property
rights while such proceeding is pending or in support of any award made
pursuant to such arbitration. Phoenix and CSA hereby consent to the
enforcement in the courts of each country in the Territory and the United
States of any arbitral judgment or award rendered pursuant to this Section.
<PAGE> 14
20. INSPECTION.
Phoenix shall have the right to enter the premises of CSA at any time upon
reasonable request during regular business hours in a non-disruptive manner,
for the purpose of inspecting the location and use of the Software and
Documentation and the standard procedures of CSA regarding retention,
safekeeping, and disposal of all media and materials pertaining thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
<TABLE>
<S> <C>
PHOENIX INTERNATIONAL, INC. COMPUTER SYSTEMS ASSOCIATES
(NIGERIA) LIMITED
By: /s/Ralph Reichard By: /s/Simeon C. Agu
---------------------------------------- ----------------------------------------
Title: President and COO Title: Managing Director/CEO
------------------------------------- -------------------------------------
Date: April 22, 1996 Date: April 16, 1996
-------------------------------------- --------------------------------------
</TABLE>
<PAGE> 15
EXHIBIT A
X - CONFIDENTIAL TREATMENT REQUESTED
LICENSE FEES
All amounts due hereunder shall be paid in U.S. Dollars via wire transfer to
the bank account in the United States as designated by Phoenix from time to
time.
<TABLE>
<S> <C> <C>
A. Base License Fee $XXXXXXXXXXXXXXXXXXXX
B. Branch License Fees
for Customer Branches
1-5 Branches XXXXXXXXXXXXXXXXXXXX
6-25 Branches XXXXXXXXXXXXXXXXXXXX
>25 Branches XXXXXXXXXXXXXXXXXXXX
C. Support Fee XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for Software
received and all Branch License fees for branches installed
</TABLE>
D. Services will be provided on a time and materials basis as follows:
1. Programming assistance for regulatory compliance - $XXXXX per
8 hour programmer day.
2. Programming requested by Customer - $XXXXX per 8 hour
programmer day.
3. Data conversion processing services - $XXXXXX for up to 200
hours of data conversion per Customer. Each additional hour
in excess of 200 shall be $XXX per hour.
4. Implementation support - $XXX per support representative hour,
2 hours minimum.
Payment of Fees: Fees for all services requested hereunder shall be payable in
advance, based on Phoenix's estimate of work required for each project. Upon
completion of a particular project, the prepaid amount will be reconciled with
the amount of time actually required to complete such project, and Phoenix
shall refund to CSA, or CSA shall pay to Phoenix, the difference, as the case
may be.
<PAGE> 16
EXHIBIT B
SUPPORT SERVICES
Upon completion of training, CSA will be responsible for the following
support of Customers under License Agreements:
1. All data mapping activities.
2. Providing data tapes and data maps to Phoenix so that Phoenix
can program and run the programs necessary to convert Customer
data.
3. Balancing the conversion data and working with Customers to
reconcile any issues related to the conversation data.
4. Managing the conversion of Customer data.
5. Writing required interfaces for the Software, or providing the
specifications to Phoenix so that Phoenix may create the
necessary Software interfaces.
6. Creating and maintaining regulatory reports to enable the
Software to comply with country specific regulatory
requirements, using an SQL reporting tool.
7. Providing telephonic and on site support for Customers in
accordance with License Agreements and any customer support
agreements entered into between CSA and Customer.
8. Installing and configuring the Software on Customer computer
networks, assisting Customers with configuring their hardware
and software networks in accordance with the License
Agreements and insuring proper authorized use of the Software
by Customers.
<PAGE> 17
EXHIBIT C
X - CONFIDENTIAL TREATMENT REQUESTED
TRAINING
Phoenix will provide CSA with the following training at no cost subject to the
terms in Section 6.3 of the Agreement:
1. Trainer Training. Phoenix shall provide training to enable
CSA personnel to train Customers in the use of the Software. Such training
shall be conducted at Phoenix's Maitland Florida office for up to X CSA
personnel and will consist of XXXXXXXXXXX, a XXXXXXXXXXXXXXX on System
Administrator and a XXXXXXXXXXXXXXXXX on system operations.
2. Installation Training. Phoenix shall provide training to
enable CSA personnel to install the Software for the Customers. Such training
shall be conducted at Phoenix's Maitland, Florida office for up to XXXX CSA
personnel and shall consist of a XXXXXXXX course. Additionally, Phoenix will
allow these CSA personnel (under Phoenix supervision) to participate in an
implementation of the Software for one of Phoenix's customers.
3. Sales Training. Phoenix shall provide training in sales and
marketing techniques in preparation of CSA's marketing of the Software. Such
training shall be conducted at a mutually agreed location for a reasonable
number of CSA's sales staff.
4. Additional Training. CSA may request, and Phoenix shall use
its best efforts to provide, additional training or training for additional
personnel at the request of CSA. Such training shall be conducted at Phoenix's
Maitland, Florida office and shall be subject to Phoenix's then current
training fees.
<PAGE> 1
EXHIBIT 10.43
AMENDMENT TO THE
PHOENIX INTERNATIONAL LTD., INC.
1995 STOCK OPTION PLAN, DATED MARCH 18, 1995
WHEREAS, the Board of Directors and the shareholders of Phoenix
International Ltd., Inc., a Florida corporation (the "Company"), adopted the
Phoenix International Ltd., Inc. 1995 Stock Option Plan (the "March Plan") on
March 18, 1995; and
WHEREAS, on May 24, 1996, the Board of Directors approved the
following amendments to the March Plan and recommended that such amendments be
approved by the shareholders;
NOW, THEREFORE, the March Plan is hereby amended as follows:
1. Defined Terms. Initially capitalized terms used in this
Amendment, which are not otherwise defined by this Amendment, are used with the
same meaning ascribed to such terms in the March Plan.
2. Amendment.
a. Section 3(a) of the March Plan is amended to read as
follows:
3. Scope of the Plan.
(a) The aggregate number of shares of
Stock which may be purchased
pursuant to options granted under
this Plan shall be 520,000 shares of
Common Stock which is hereby made
available and is reserved for
delivery on account of the exercise
of Awards and payment of benefits in
connection with Awards. Such
authorized number of shares takes
into account the Company's 132%
stock dividend effective May 6,
1996. Such shares may be treasury
shares or newly issued shares, as
may be determined from time to time
by the Board or the Committee.
b. Section 3(b) of the March Plan is amended to read as
follows:
3. Scope of the Plan.
(b) If and to the extent an Award shall
expire or terminate for any reason
without having been exercised in
full (including
<PAGE> 2
a cancellation and regrant of an option
pursuant to Section 15), or shall be
forfeited, without, in either case, the
Grantee having enjoyed the benefits of stock
ownership, the shares of Stock associated
with such Award shall no longer be subject to
grant under this Plan.
c. The March Plan is hereby amended to add Section 27 to
read as follows:
27. No Future Grants. Notwithstanding anything
to the contrary contained herein, the
Committee shall not grant any Awards under
the Plan after May 24, 1996.
3. Effectiveness. This Amendment shall not become effective
unless and until such provisions are approved by at least a majority vote of
the holders of the outstanding capital stock of the Company present, or
represented, and entitled to vote on such matter at a meeting of shareholders
duly called and convened within one year following the date hereof.
4. Approval. Except as hereinabove amended and modified, the
March Plan is approved, ratified and affirmed without further modification or
amendment.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed as of May 24, 1996, in accordance with the authority provided by the
Board of Directors.
PHOENIX INTERNATIONAL LTD., INC.
By /s/
--------------------------------
Name: Bahram Yusefzadeh
Title: Chief Executive Officer
<PAGE> 1
EXHIBIT 10.44
AMENDMENT TO THE
PHOENIX INTERNATIONAL LTD., INC.
1995 STOCK OPTION PLAN, DATED OCTOBER 21, 1995
WHEREAS, the Board of Directors of Phoenix International Ltd., Inc., a
Florida corporation (the "Company"), adopted the Phoenix International Ltd.,
Inc. 1995 Stock Option Plan (the "October Plan") on October 21, 1995, and
recommended that it be approved by the shareholders; and
WHEREAS, the shareholders adopted the October Plan pursuant to written
consents dated on or before December 31, 1995; and
WHEREAS, the purpose of the October Plan is to advance the interests
of the Company, its subsidiaries and its shareholders by affording certain
employees of the Company and its subsidiaries and other key persons an
opportunity to acquire or increase their proprietary interests in the Company;
and
WHEREAS, on May 24, 1996, the Board of Directors approved the
following amendments to the October Plan and recommended that such amendments
be approved by the shareholders;
NOW, THEREFORE, the October Plan is hereby amended as follows:
1. Defined Terms. Initially capitalized terms used in this
Amendment, which are not otherwise defined by this Amendment, are used with the
same meaning ascribed to such terms in the October Plan.
2. Amendment.
a. The first paragraph of Section 4.1 of the October
Plan is amended to read as follows:
4.1 Limitations. Subject to any antidilution
adjustment pursuant to the provisions of Section 4.2 hereof,
the maximum number of shares of Stock that may be issued
hereunder shall be 250,000. Any or all shares of Stock
subject to the Plan may be issued in any combination of
Incentive Stock Options, non-Incentive Stock Options or
Restricted Stock, and the amount of Stock subject to the Plan
may be increased from time to time in accordance with Article
VIII, provided that the total number of shares of Stock
issuable pursuant to Incentive Stock Options may not be
increased to more that 250,000 (other than pursuant to
antidilution
<PAGE> 2
adjustments) without shareholder approval. Shares subject to
an Option or issued as an Award may be either authorized and
unissued shares or shares issued and later acquired by the
Company. The shares covered by any unexercised portion of an
Option that has terminated for any reason (except as set forth
in the following paragraph), or any forfeited portion of an
Award, may again be optioned or awarded under the Plan, and
such shares shall not be considered as having been optioned or
issued in computing the number of shares of Stock remaining
available for option or award hereunder.
b. Section 11 of the October Plan is amended to add the
definition of "Initial Public Offering" set forth below:
"Initial Public Offering" shall mean the closing of
an underwritten initial public offering of the Common Stock
registered under the Securities Act of 1933.
c. Section 11.28 of the October Plan is amended to read
as follows:
11.28 "Stock" shall mean the Common Stock, par
value $0.01 per share, of the Company, as adjusted pursuant to
Section 4.2 hereof.
d. Section 11.29 of the October Plan is amended to read
as follows:
11.29 "Stock Option Agreement" shall mean an
agreement between the Company and an Optionee under which the
Optionee may purchase Stock hereunder, a sample form of which
is attached hereto as Exhibit A (which form may be varied by
the Committee in granting an Option).
3. Effectiveness. This Amendment shall not become effective
unless and until such provisions are approved by at least a majority vote of
the holders of the outstanding capital stock of the Company present, or
represented, and entitled to vote on such matter at a meeting of shareholders
duly called and convened within one year following the date hereof.
4. Approval. Except as hereinabove amended and modified, the
October Plan is approved, ratified and affirmed without further modification or
amendment.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed as of May 24, 1996, in accordance with the authority provided by the
Board of Directors.
PHOENIX INTERNATIONAL LTD., INC.
By /s/
------------------------------
Name: Bahram Yusefzadeh
Title: Chief Executive Officer
<PAGE> 1
EXHBIT 10.45
FORM OF STOCK OPTION
AGREEMENT
PHOENIX INTERNATIONAL LTD., INC.
STOCK OPTION AGREEMENT
DATED: ___________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Incorporation of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
2. Grant of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
3. Exercise Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
4. Exercise Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
5. Restrictions on Transferability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
6. Notice of Exercise of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
7. Adjustment in Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
8. Termination of Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
9. Disabled Optionee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
10. Death of Optionee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
11. Date of Grant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
12. Compliance with Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
13. Restriction on Disposition of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
14. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
</TABLE>
Schedules
Schedule A to Stock Option Agreement between Phoenix
International Ltd., Inc. and Optionee -- Additional Terms
Schedule B to Stock Option Agreement between Phoenix
International Ltd., Inc. and Optionee -- Notice of Exercise
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of
this _____ day of ________________________, by and between Phoenix
International Ltd., Inc., a Florida corporation (the "Company"), and
_________________ (the "Optionee").
WHEREAS, on October 21, 1995, the Board of Directors adopted a stock
option plan known as the "Phoenix International Ltd., Inc. 1995 Employee Stock
Option Plan" (the "Plan"), and the shareholders adopted the Plan by written
consents dated on or before December 31, 1995; and
WHEREAS, the Committee has granted the Optionee a stock option to
purchase the number of shares of the Company's common stock as set forth below,
and in consideration of the granting of that stock option the Optionee intends
to remain in the employ of the Company; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.
1. Incorporation of Plan. This option is granted pursuant to the
provisions of the Plan, and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan
has been delivered to the Optionee, and the Optionee acknowledges receipt of
the Plan.
2. Grant of Option. Subject to the terms of this Agreement, the
Company hereby evidences its grant to the Optionee, not in lieu of salary or
other compensation, of the right and option (the "Option") to purchase all or
any part of the number of shares of the Company's Common Stock, par value $0.01
per share (the "Stock"), set forth on Schedule A attached hereto and
incorporated herein by reference. The Option shall be exercisable in the
amounts and at the time specified on Schedule A. The Option shall expire and
shall not be exercisable on the date specified on Schedule A or on such earlier
date as determined pursuant to Section 8, 9, or 10 hereof. Schedule A states
whether the Option is intended to be an Incentive Stock Option.
3. Exercise Price. The price per share to be paid by the
Optionee for the shares subject to this Option (the "Exercise Price") shall be
as specified on Schedule A. If the Option is an Incentive Stock Option, the
Exercise Price shall be an amount not less than the Fair Market Value of a
share of Stock as of the Date of Grant (as defined in Section 11 below).
<PAGE> 4
4. Exercise Terms. The Optionee must exercise the Option for at
least the lesser of (i) 100 shares or (ii) the number of shares of Purchasable
Stock as to which the Option remains unexercised. In the event this Option
expires and is not exercised with respect to all or any part of the shares
subject to this Option, such shares shall no longer be subject to this Option.
5. Restrictions on Transferability. No Option shall be
transferable by an Optionee other than by will or the laws of descent and
distribution or, in the case of non-Incentive Stock Options, pursuant to a
Qualified Domestic Relations Order. In addition, no Option shall be
transferable by an Optionee who is a Section 16 Insider prior to shareholder
approval of the Plan. During the lifetime of an Optionee, Options shall be
exercisable only by such Optionee (or by such Optionee's guardian or legal
representative, should one be appointed).
6. Notice of Exercise of Option. This Option may be exercised by
the Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice
of Exercise attached hereto as Schedule B) signed by the Optionee, or by such
administrators, executors or personal representatives. The Optionee, or such
administrator, executor or personal representative, shall deliver or mail the
notice to the Company as specified in Section 14 hereof to the attention of the
President or such other officer as the Company may designate. Any such notice
shall:
(a) specify the number of shares of Stock which the Optionee or
the Optionee's administrators, executors or personal representatives,
as the case may be, then elects to purchase hereunder;
(b) contain such information as may be reasonably required
pursuant to Section 12 hereof;
(c) prior to the Initial Public Offering, be accompanied by an
executed, counterpart signature page to the Amended and Restated
Stockholders Agreement, dated August 31, 1995 (the "Stockholders
Agreement"), by and among the Company and the stockholders named
therein, as amended, supplemented, or otherwise modified from time to
time; and
(d) be accompanied by: (i) a certified or cashier's check payable
to the Company in payment of the total Exercise Price applicable to
such shares as provided herein; (ii) shares of Stock owned by the
Optionee and duly endorsed or accompanied by stock transfer powers
having a Fair Market Value equal to the total Exercise Price
applicable to such shares purchased hereunder; or (iii) a certified or
cashier's check accompanied by the number of shares of Stock whose
Fair Market Value when added to the amount of the check equals the
total Exercise Price applicable to such shares purchased hereunder.
Upon receipt of any such notice and accompanying payment, and subject to the
terms hereof, the Company agrees to issue to the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be,
stock certificates for the number of shares specified in such notice registered
in the name of the person exercising this Option.
<PAGE> 5
7. Adjustment in Option. The number of Shares subject to this
Option, the Exercise Price and other matters are subject to adjustment during
the term of this Option in accordance with Section 5.2 of the Plan.
8. Termination of Employment. Except as otherwise specified in
Schedule A:
(a) In the event of the termination of the Optionee's
employment with the Company or any of its Subsidiaries, other than a
termination that is for retirement, disability or death, the Optionee may
exercise this Option at any time within 30 days after such termination to the
extent of the number of shares which were Purchasable hereunder at the date of
such termination.
(b) In the event of the retirement of the Optionee at the
normal retirement date as prescribed from time to time by the Company or any
Subsidiary, the Optionee shall continue to have the right to exercise any
Options for shares which were Purchasable at the date of the Optionee's
retirement. However, if the Options are Incentive Stock Options, the Optionee
may exercise this Option at any time within three months after the retirement
date to the extent of the number of shares which were Purchasable hereunder at
the retirement date. Thereafter, such Incentive Stock Options will become void
and unexercisable. This Option does not confer upon the Optionee any right
with respect to continuance of employment by the Company or by any of its
Subsidiaries. This Option shall not be affected by any change of employment so
long as the Optionee continues to be an employee of the Company or one of its
Subsidiaries.
9. Disabled Optionee. In the event of termination of employment
because of the Optionee's becoming a Disabled Optionee, the Optionee (or his or
her personal representative) may exercise this Option at any time within twelve
months after such termination to the extent of the number of shares which were
Purchasable hereunder at the date of such termination.
10. Death of Optionee. Except as otherwise specified in Schedule
A, in the event of the Optionee's death while employed by the Company or any of
its Subsidiaries, the appropriate persons described in Section 6 hereof or
persons to whom all or a portion of this Option is transferred in accordance
with Section 5 hereof shall continue to have the right to exercise any Options
until the expiration date of the Options. If the Optionee was an employee of
the Company at the time of death, this Option may be so exercised to the extent
of the number of shares that were Purchasable hereunder at the date of death.
If the Optionee's employment terminated prior to his or her death, this Option
may be exercised only to the extent of the number of shares covered by this
Option which were Purchasable hereunder at the date of such termination.
11. Date of Grant. This Option was granted by the Board of
Directors of the Company on the date set forth in Schedule A (the "Date of
Grant").
12. Compliance with Regulatory Matters. The Optionee acknowledges
that the issuance of capital stock of the Company is subject to limitations
imposed by federal and state law. The Optionee hereby agrees that the Company
shall not be obligated to issue any shares of Stock upon exercise of this
Option that would cause the Company to violate law or any rule,
<PAGE> 6
regulation, order or consent decree of any regulatory authority (including
without limitation the Securities and Exchange Commission) having jurisdiction
over the affairs of the Company. The Optionee agrees that he or she will
provide the Company with such information as is reasonably requested by the
Company or its counsel to determine whether the issuance of Stock complies with
the provisions described by this Section 12.
13. Restriction on Disposition of Shares. Unless permitted by the
Company, the shares purchased pursuant to the exercise of an Incentive Stock
Option shall not be transferred by the Optionee except pursuant to the
Optionee's will or the laws of descent and distribution until such date which
is the later of (a) two years after the grant of such Incentive Stock Option or
(b) one year after the transfer of the shares to the Optionee pursuant to the
exercise of such Incentive Stock Option.
14. Miscellaneous.
(a) This Agreement shall be binding upon the parties
hereto and their representatives, successors and assigns.
(b) This Agreement is executed and delivered in, and
shall be governed by the laws of, the State of Florida.
(c) Any requests or notices to be given hereunder shall
be deemed given, and any elections or exercises to be made or accomplished
shall be deemed made or accomplished, upon actual delivery thereof to the
designated recipient, or three days after deposit thereof in the United States
mail, registered, return receipt requested and postage prepaid. Such requests,
notices, elections or exercises shall be addressed, if to the Optionee, at the
address set forth below and, if to the Company, to the executive offices of the
Company at 900 Winderley Place, Suite 140, Maitland, Florida 32751.
(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.
(e) THE OPTIONEE ACKNOWLEDGES THAT THIS OPTION AND ALL
SHARES OF STOCK ACQUIRED PURSUANT TO THE EXERCISE OF THIS OPTION ARE DEEMED TO
BE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED PURSUANT TO THE
SECURITIES ACT OF 1933, AND, THEREFORE, RESALE OF SUCH SHARES MUST BE MADE
PURSUANT TO THE REGISTRATION PROVISIONS OF SUCH ACT OR AN EXEMPTION THEREFROM.
<PAGE> 7
IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Stock Option Agreement to be executed on behalf of the Company and the
Company's seal to be affixed hereto and attested by the Secretary or an
Assistant Secretary of the Company, and the Optionee has executed this Stock
Option Agreement under seal, all as of the day and year first above written.
COMPANY:
PHOENIX INTERNATIONAL LTD., INC.
Attest:
By:
- --------------------------- -----------------------------------
Secretary Name:
------------------------------
Title:
-----------------------------
[SEAL]
OPTIONEE:
-------------------------------------
Name:
--------------------------------
Address:
-----------------------------
-------------------------------------
-------------------------------------
<PAGE> 8
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
[NAME OF OPTIONEE]
Dated ________________
1. Number of Shares Subject to Option: ________________ Shares.
2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.
3. Option Exercise Price: $ ________ per Share.
4. Date of Grant: ________________________
5. Option Vesting Schedule:
Check one:
( ) Options are exercisable with respect to all shares on
or after the date hereof.
( ) Options are exercisable with respect to the number of
shares indicated below on or after the date indicated
next to the number of shares:
No. of Shares Vesting Date
6. Option Exercise Period:
Check One:
( ) All options expire and are void unless exercised on
or before ________________________.
( ) Options expire and are void unless exercised on or
before the date indicated next to the number of shares:
No. of Shares Expiration Date
<PAGE> 9
7. Effect of Termination of Employment of Optionee (if different from
that set forth in Sections 8 and 10 of the Stock Option Agreement):
The Option granted hereby shall immediately vest and become
Purchasable hereunder in the event of (i) a Change in Control or (ii)
the death of the Optionee if the Optionee was an employee of the
Company at the time of death.
<PAGE> 10
SCHEDULE B
TO
STOCK OPTION AGREEMENT
BETWEEN
PHOENIX INTERNATIONAL LTD., INC.
AND
[NAME OF OPTIONEE]
Dated ________________
NOTICE OF EXERCISE
The undersigned hereby notifies Phoenix International Ltd.,
Inc. (the "Company") of this election to exercise the undersigned's stock
option to purchase ________________ shares of the Company's Class E Common
Stock, $2.50 par value per share (the "Common Stock"), pursuant to the Stock
Option Agreement (the "Agreement") between the undersigned and the Company
dated ________________. Accompanying this Notice is:
(i) a certified or a cashier's check in the amount of
$________________ payable to the Company, and/or
(ii) _______________ shares of the Common Stock presently
owned by the undersigned and duly endorsed or accompanied by
stock transfer powers having an aggregate Fair Market Value
(as defined in the Plan) as of the date hereof of
$__________________.
Such amounts being equal, in the aggregate, to the Exercise Price multiplied by
the number of shares being purchased hereby (in each instance subject to
appropriate adjustment pursuant to Section 7 of the Agreement).
IN WITNESS WHEREOF, the undersigned has set his hand and seal,
this ________ day of ________________, ______.
OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]
------------------------------------
Name:
Position (if other than Optionee):
<PAGE> 1
EXHIBIT 10.46
1996 DIRECTOR STOCK OPTION PLAN
OF
PHOENIX INTERNATIONAL LTD., INC.
ADOPTED: MAY 24, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Total Aggregate Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Rule 16b-3 Plan and Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Type of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Automatic Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. Exercise Price, Vesting Schedule and Term of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9. Termination of Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Assignability of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
12. Purchase for Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
13. Amendments, Modifications, Suspension or Discontinuance of this Plan. . . . . . . . . . . . . . . . . . . . 6
14. Governmental Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
16. Effective Date and Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
1996 DIRECTOR STOCK OPTION PLAN
OF
PHOENIX INTERNATIONAL LTD., INC.
1. PURPOSE. The 1996 Director Stock Option Plan of PHOENIX
INTERNATIONAL LTD., INC. (the "Company") is intended as an incentive to retain,
as directors of the Company, persons of training, experience and ability, to
encourage the sense of proprietorship of such persons and to stimulate the
active interest of such persons in the development and financial success of the
Company.
2. DEFINITIONS. As used herein, the following terms shall have
the meanings indicated:
(a) "Anniversary Day" shall mean for any Eligible Person
the anniversary of the date such Eligible Person was elected or appointed to
the Board.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) "Committee Member" shall mean a Director who is a
non-employee member of any committee of the Board.
(e) "Common Stock" shall mean the Common Stock, $0.01 par
value per share, of the Company.
(f) "Date of Grant" shall mean the date on which an
Option is granted to an Eligible Person pursuant to Section 6(c) hereof.
(g) "Director" shall mean a member of the Board.
(h) "Eligible Person(s)" shall mean those persons who are
Directors of the Company.
(i) "ERISA" shall mean the Employee Retirement Income
Security Act, as amended.
(j) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(k) "Fair Market Value" of a Share on any date of
reference shall be the Closing Price on the business day preceding such date;
provided, however, that the Fair Market Value of any Shares placed under a
grant prior to the initial public offering of the Common Stock shall be the
initial public offering price of the Common Stock as set forth in the Company's
Registration Statement on Form S-1 as declared effective by the Securities and
<PAGE> 4
Exchange Commission. For this purpose, the "Closing Price" of the Shares on
any business day shall be: (i) if the Shares are listed or admitted for
trading on any United States national securities exchange, the last reported
sale price of Shares on such exchange, as reported in any newspaper of general
circulation; (ii) if Shares are quoted on NASDAQ, or any similar system of
automated dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of
Shares on such system; (iii) if neither clause (i) nor (ii) is applicable, the
mean between the high bid and low asked quotations for Shares as reported by
the National Quotation Bureau, Incorporated if at least two securities dealers
have inserted both bid and asked quotations for Shares on at least five of the
ten preceding days; or (iv) in lieu of the above, if actual transactions in the
Shares are reported on a consolidated transaction reporting system, the last
sale price of the Shares for such day and on such system.
(l) "Nonqualified Stock Option" shall mean a stock option
that is not an incentive stock option, as defined in Section 422 of the Code.
(m) "Option" shall mean any option granted under this
Plan.
(n) "Option Agreement" shall mean an option agreement
between the Company and an Optionee.
(o) "Optionee" shall mean a person to whom an Option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death or disability of such person.
(p) "Plan" shall mean this 1996 Director Stock Option
Plan of Phoenix International Ltd., Inc.
(q) "Share(s)" shall mean a share or shares of the Common
Stock.
(r) "Subsidiary" shall mean any corporation (other than
the Company) in any unbroken chain of corporations beginning with the Company
if, at the time of the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock possession 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chains.
3. TOTAL AGGREGATE SHARES. Subject to adjustments provided in
Section 11 hereof, a total of 99,000 Shares shall be subject to the Plan. The
Shares subject to the Plan shall consist of unissued Shares or previously
issued Shares reacquired and held by the Company, or any Subsidiary, and such
number of Shares shall be and hereby is reserved for sale for such purpose.
Any of such Shares that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan, the Company
shall at all times reserve a sufficient number of Shares to meet the
requirements of the Plan. Should any Option expire or be canceled prior to its
exercise in full, the Shares theretofore subject to such Option may again be
the subject of any Option under the Plan.
<PAGE> 5
4. RULE 16B-3 PLAN AND SHAREHOLDER APPROVAL. The Company intends
for this Plan to comply with the requirements of Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to the Exchange Act. Accordingly,
this Plan will be subject to approval by shareholders of the Company owning a
majority of the issued and outstanding shares of Common Stock present or
represented and entitled to vote at a meeting duly held in accordance with
applicable law.
5. TYPE OF OPTIONS. An Option granted hereunder shall be a
Nonqualified Stock Option.
6. AUTOMATIC GRANT OF OPTION.
(a) Options shall be granted only to Eligible Persons.
Each Option shall be evidenced by an Option Agreement, which shall contain
terms that are not inconsistent with this Plan or applicable laws.
(b) The Options granted to Directors under this Plan
shall be in addition to regular director's fees, if any, or other benefits, if
any, with respect to the Director's position with the Company or its
Subsidiaries. Neither the Plan nor any Options granted under the Plan shall
confer upon any person any right to continue to serve as a Director.
(c) Options shall automatically be granted to each
Eligible Person as follows:
(i) on the date an Eligible Person is elected or
appointed as a Director following May 24,
1996 and during the existence of the Plan,
such Eligible Person shall automatically be
granted an Option to acquire 2,000 shares of
Common Stock for his service as a Director;
(ii ) on each Anniversary Day for an Eligible
Person during the existence of the Plan, such
Eligible Person shall automatically be
granted an Option to acquire 2,000 shares of
Common Stock for his service as a Director;
and
(iii) on the date an Eligible Person is elected or
reelected to serve as a Committee Member
during the existence of the Plan, such
Eligible Person shall be granted an option to
acquire 1,000 shares of Common Stock for his
service as a Committee Member on each
committee that he serves.
(d) Except for the automatic grants of Options under
Section 6(c), no Options shall otherwise be granted hereunder, and the Board
shall not have any discretion with respect to the grant of Options within the
meaning of Rule 16b-3 promulgated under the Exchange Act, or any successor
rule.
<PAGE> 6
7. EXERCISE PRICE, VESTING SCHEDULE AND TERM OF OPTION.
(a) The exercise price of each Share placed under an
Option pursuant to this Plan shall be the Fair Market Value of such Share on
the Date of Grant.
(b) An Option may not be exercised prior to the date it
is vested, and each grant shall vest immediately on the Date of Grant.
(c) Each Option granted under this Plan shall have a term
of five years from the Date of Grant of such Option.
8. EXERCISE OF OPTION.
(a) After the six-month anniversary of the Date of Grant
of an Option, such Option may be exercised at any time and from time to time
during the term of such Option, in whole or in part.
(b) Options may be exercised: (i) during the Optionee's
lifetime, solely by the Optionee; (ii) if an Option has been assigned pursuant
to Section 10 hereof, by the successor Optionee; or (iii) after Optionee's
death, by the personal representative of the Optionee's estate or the person or
persons entitled thereto under his will or under the laws of descent and
distribution.
(c) An Option shall be deemed exercised when: (i) the
Company has received written notice of such exercise delivered to the Company
in accordance with the notice provisions of the applicable Options agreement;
(ii) full payment of the aggregate exercise price of the Shares as to which the
Option is exercised has been tendered to the Company; and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for
the Optionee's payment to the Company of the amount, if any, that the Company
determines to be necessary for the Company to withhold in accordance with the
applicable federal or state income tax withholding requirements.
(d) The exercise price of any Shares purchased shall be
paid (i) solely in cash by certified check, cashier's check, money order or
personal check (if approved by the Board) or (ii) at the option of the Optionee
in Common Stock theretofore owned by such Optionee (or by a combination of the
above); provided, however, that if the Optionee acquired such stock to be
------------------
surrendered directly or indirectly from the Company, he shall have owned such
stock for six months prior to using such stock to exercise an Option; provided,
---------
further, however, that such exercise transaction shall not result in a
- -----------------
violation of Section 16 of the Exchange Act. For purposes of determining the
amount, if any, of the exercise price satisfied by payment in Common Stock,
such Common Stock shall be valued at its Fair Market Value on the date of
exercise. Any Common Stock delivered in satisfaction of all or a portion of
the exercise price shall be appropriately endorsed for transfer and assignment
to the Company.
(e) The Optionee shall not be, nor have any of the rights
or privileges of, a shareholder of the Company with respect to any Shares
purchasable upon the exercise of any
<PAGE> 7
part of an Option unless and until certificates representing such Shares shall
have been issued by the Company to the Optionee.
9. TERMINATION OF OPTION PERIOD. The unexercised portion of an
Option shall automatically and without notice terminate and become null and
void and be forfeited upon the earliest to occur of the following:
(i) if the Optionee's position as a Director of the
Company terminates, other than by reason of such Optionee's death or
disability, 180 days after the date that the Optionee's position as a
Director of the Company terminates;
(ii) one year after the death of Optionee;
(iii) one year after the date on which the Optionee's
position as Director is terminated by reason of a mental or physical
disability determined by a medical doctor satisfactory to the Company;
or
(iv) five years after the Date of Grant of such Option.
10. ASSIGNABILITY OF OPTIONS. No Option shall be assignable or
otherwise transferable, except to members of the Optionee's immediate family or
by will, or the laws of descent and distribution, and no Option shall be
transferrable by an Optionee in violation of Section 16 of the Exchange Act.
11. ADJUSTMENTS.
(a) If at any time there shall be an increase or decrease
in the number of issued and outstanding Shares, through the declaration of a
stock dividend or through any recapitalization resulting in a stock split,
combination or exchange of Shares, then appropriate proportional adjustment
shall be made in the number of Shares (and, with respect to Options, the
exercise price per Share): (i) subject to outstanding Options; (ii) reserved
under the Plan; and (iii) granted as subsequent Options.
(b) In the event of a merger, consolidation or other
reorganization of the Company under the terms of which the Company is not the
surviving corporation, but the surviving corporation elects to assume an
Option, each Optionee shall be entitled to receive, upon the exercise of such
Option, with respect to each Share: (i) the number of shares of stock of the
surviving corporation (or equity interest in any other entity); and (ii) any
other notes, evidences of indebtedness or other property, that the Optionee
would have received in connection with such merger, consolidation or other
reorganization had he exercised the Option with respect to such Shares
immediately prior to such merger, consolidation or other reorganization.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible
<PAGE> 8
into such shares or other securities, shall not affect and no adjustment by
reason thereof shall be made with respect to, the number of or exercise price
of Shares then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate: (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issuance by the Company of debt
securities or preferred stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v)
any sale, transfer or assignment of all or any part of the assets or business
of the Company; or (vi) any other corporate act or proceeding, whether of a
similar character or otherwise.
12. PURCHASE FOR INVESTMENT. As a condition of any issuance of a
stock certificate for Shares, the Board may obtain such agreements or
undertakings, if any, as it may deem necessary or advisable to assure
compliance with any provision of this Plan or any law or regulation, including,
but not limited to, the following:
(a) a representation and warranty by the Optionee to the
Company, at the time his Option is exercised, that he is acquiring the Shares
to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(b) a representation, warranty or agreement to be bound
by any legends that are, in the opinion of the Board, necessary or appropriate
to comply with the provisions of any securities law deemed by the Board to be
applicable to the issuance of the Shares and are endorsed upon the certificates
representing the Shares.
13. AMENDMENTS, MODIFICATIONS, SUSPENSION OR DISCONTINUANCE OF
THIS PLAN. For the purpose of complying with changes in the Code or ERISA, the
Board may amend, modify, suspend or terminate the Plan at any time. For the
purpose of meeting or addressing any other changes in legal requirements or any
other purpose, the Board may amend, modify, suspend or terminate the Plan only
once every six months. Subject to changes in law or other legal requirements,
including any change in the provisions of Rule 16b-3 that would permit
otherwise, the Plan may not be amended without the consent of the holders of a
majority of the shares of Common Stock then outstanding or the vote of the
shareholders of the Company as provided in Section 4 hereof, to (i) increase
materially the aggregate number of shares of Common Stock that may be issued
under the Plan (except for adjustments pursuant to Section 11 of the Plan);
(ii) increase materially the benefits accruing to Optionees under the Plan; or
(iii) modify materially the requirements as to eligibility for participation in
the Plan.
14. GOVERNMENTAL REGULATION. This Plan and the granting of
Options and the exercise of Options hereunder, and the obligation of the
Company to sell and deliver shares under such Options, shall be subject to all
applicable laws, rules, and regulations and to such approvals by any
governmental agencies or national securities exchanges as may be required.
<PAGE> 9
15. MISCELLANEOUS.
(a) If any provision of this Plan is held invalid for any
reason, such holding shall not affect the remaining provisions hereof, but
instead this Plan shall be construed and enforced as if such provision had
never been included in this Plan.
(b) This Plan shall be governed by the laws of the State
of Florida.
(c) Headings contained in this Plan are for convenience
only and shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine or neuter
gender shall be a reference to such other gender as is appropriate.
16. EFFECTIVE DATE AND TERMINATION DATE. The effective date of
this Plan is May 24, 1996, the date on which the Board adopted this Plan, but
is subject to the approval of the holders of a majority of the Common Stock
present either in person or by proxy and entitled to vote at a duly held
meeting of the shareholders of the Company at which a quorum is present
representing a majority of all outstanding voting Common Stock either in person
or by proxy. In the event that such shareholder approval is not obtained, all
options granted pursuant to the Plan shall be null and void. This Plan shall
terminate on the tenth anniversary of the effective date.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.47
FORM OF
PHOENIX INTERNATIONAL LTD., INC.
DIRECTOR'S
INDEMNIFICATION AGREEMENT
Dated as of __________________, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Limitations on Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Continuation of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Notification and Defense of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Advancement and Repayment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Agreement to Serve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9. Vested Rights; Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
11. Witness Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
12. Security For Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
13. Non-Exclusivity, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
14. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
15. No Duplication of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
16. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
17. Governing Law; Successors; Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
19. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
DIRECTOR'S
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made and entered into as of May ____, 1996, by and
between PHOENIX INTERNATIONAL LTD., INC., a Florida corporation (the
"Corporation"), and _____________________________ (the "Director").
WHEREAS, the Director is a member of the Board of Directors of the
Corporation and in such capacity is performing a valuable service to the
Corporation; and
WHEREAS, the Corporation's Amended and Restated Bylaws (the "Bylaws")
provide for the indemnification of the directors of the Corporation as allowed
by Section 607.0850 of the Florida Business Corporation Act, as amended (the
"State Statute"); and
WHEREAS, the Bylaws and State Statute specifically contemplate that
contracts may be entered into between the Corporation and the members of its
Board of Directors with respect to indemnification of such directors; and
WHEREAS, in order to provide to the Director assurances with respect
to the protection provided against liabilities that he may incur in the
performance of his duties to the Corporation, and to thereby induce the
Director to continue to serve as a member of its Board of Directors, the
Corporation has determined and agreed to enter into this Agreement with the
Director;
NOW, THEREFORE, in consideration of the premises and the Director's
continued service as a director after the date hereof, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. INDEMNIFICATION. The Corporation hereby agrees to hold
harmless and indemnify the Director to the full extent that the State Statute,
or any amendment thereof or other statutory provision adopted after the date
hereof, authorizes, including, but not limited to, holding harmless and
indemnifying the Director against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the Director in connection with any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (including an action by or in the right of the Corporation),
to which the Director is, was, or at any time becomes a party, or is threatened
to be made a party, by reason of the fact that the Director is, was, or at any
time becomes a director, officer, employee or agent of the Corporation or any
subsidiary of the Corporation, or is or was serving or at any time serves at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise.
The indemnification hereunder shall be broader than that provided for in the
Bylaws, and in addition to any rights granted thereunder.
<PAGE> 4
2. LIMITATIONS ON INDEMNITY. Indemnification or advancement of
expenses shall not be made to or on behalf of the Director:
(a) If a judgment or other final adjudication establishes that his
actions, or omissions to act, were material to the cause of action so
adjudicated and constitute:
(i) a violation of the criminal law, unless the
Director had reasonable cause to believe his
conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
(ii) a transaction from which the Director derived an
improper personal benefit;
(iii) a circumstance under which the liability
provisions of Section 607.0834 of the State
Statute are applicable to the Director; or
(iv) willful misconduct or a conscious disregard for
the best interests of the Corporation in a
proceeding by or in the right of the Corporation
to procure a judgment in its favor or in a
proceeding by or in the right of a shareholder.
(b) With respect to any suit in which final judgment is rendered
against the Director for an accounting of profits made from the purchase or
sale by the Director of securities of the Corporation, pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended,
or similar provisions of any federal, state, or local statutory law, or on
account of any payment by the Director to the Corporation in respect of any
claim for such an accounting.
(c) If a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
3. CONTRIBUTION. If the indemnification provided for in Section
1 hereof is unavailable and may not be paid to the Director for any reason
other than those set forth in Section 2 (a) or (b) hereof, then in respect of
any threatened, pending, or completed action, suit, or proceeding in which the
Corporation is jointly liable with the Director (or would be if joined in such
action, suit or proceeding), the Corporation shall contribute to the amount of
expenses, judgments, fines, and settlements paid or payable by the Director in
such proportion as is appropriate to reflect (a) the relative benefits received
by the Corporation on the one hand and the Director on the other hand from the
transaction from which such action, suit, or proceeding arose, and (b) the
relative fault of the Corporation on the one hand and of the Director on the
other hand in connection with the events which resulted in such expenses,
judgments, fines, or settlement amounts, as well as any other relevant
equitable considerations. The relative fault of the Corporation on the one
hand and of the Director on the other hand shall be determined by reference to,
among other things, the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent the circumstances resulting
in such expenses, judgments, fines, or settlement amounts. The Corporation
agrees that it would not be just and
<PAGE> 5
equitable if contribution pursuant to this Section 3 were determined by pro
rata allocation or any other method of allocation that does not take account of
the foregoing equitable considerations.
4. CONTINUATION OF OBLIGATIONS. All agreements and obligations
of the Corporation contained herein shall continue during the period the
Director is a director, officer, employee, or agent of the Corporation (or is
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise) and shall continue thereafter for so long as the Director shall be
subject to any possible claim or threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, or investigative, by reason of
the fact that the Director was a director of the Corporation or serving in any
other capacity referred to herein.
5. NOTIFICATION AND DEFENSE OF CLAIM.
(a) Promptly after receipt by the Director of notice of the
commencement of any action, suit, or proceeding, the Director will, if a claim
in respect thereof is to be made against the Corporation under this Agreement,
notify the Corporation of the commencement thereof, but the omission to so
notify the Corporation will not relieve the Corporation from any liability
which it may have to the Director otherwise than under this Agreement.
(b) With respect to any such action, suit, or proceeding as to
which the Director so notifies the Corporation:
(i) the Corporation will be entitled to participate
therein at its own expense; and
(ii) subject to Section 6 hereof, and if the Director
shall have provided his written affirmation of his
good faith belief that his conduct did not
constitute behavior of the kind described in
Section 2(a) hereof and that he is entitled to
indemnification hereunder, the Corporation may
assume the defense thereof. After notice from the
Corporation to the Director of its election so to
assume such defense, the Corporation will not be
liable to the Director under this Agreement for
any legal or other expenses subsequently incurred
by the Director in connection with the defense
thereof, other than reasonable costs of
investigation or as otherwise provided below. The
Director shall have the right to employ his
separate counsel in such action, suit, or
proceeding, but the fees and expenses of such
counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be
at the expense of the Director unless (i) the
employment of counsel by the Director has been
authorized by the Corporation, (ii) counsel
designated by the Corporation to conduct such
defense shall not be reasonably satisfactory to
the Director, or (iii) the Corporation shall not
in fact have employed counsel to assume the
defense of such action, in each of which cases the
fees and expenses of such counsel shall be at the
expense of the Corporation. For the purposes of
clause (iii) above,
<PAGE> 6
the Director shall be entitled to determine that
counsel designated by the Corporation is not
reasonably satisfactory if, among other reasons,
the Director shall have been advised by qualified
counsel that, because of actual or potential
conflicts of interest in the matter between the
Director, other officers or directors similarly
indemnified by the Corporation, and/or the
Corporation, representation of the Director by
counsel designated by the Corporation is likely to
materially and adversely affect the Director's
interest or would not be permissible under
applicable canons of legal ethics.
(c) The Corporation shall not be liable to indemnify the Director
under this Agreement for any amounts paid in settlement of any action or claim
effected without the Corporation's written consent. The Corporation shall not
settle any action or claim in any manner which would impose any penalty or
limitation on the Director without the Director's written consent. Neither the
Corporation nor the Director will unreasonably withhold consent to any proposed
settlement.
6. ADVANCEMENT AND REPAYMENT OF EXPENSES. Upon request therefor
accompanied by reasonably itemized evidence of expenses incurred, and by the
Director's written affirmation of his good faith belief that his conduct met
the standard applicable to indemnification pursuant to Section 1 hereof and did
not constitute behavior of the kind described in Section 2(a) hereof, and that
he is entitled to indemnification hereunder, the Corporation shall advance to
the Director the reasonable expenses (including attorneys' fees and costs of
investigation and defense (including the fees of expert witnesses, other
professional advisors, and private investigators)) incurred by him in defending
any civil or criminal suit, action, or proceeding for which the Director is
entitled (assuming an applicable standard of conduct is met) to indemnification
pursuant to this Agreement. The Director agrees to reimburse the Corporation
for all reasonable expenses paid by the Corporation, whether pursuant to this
Section or Section 5 hereof, in defending any action, suit, or proceeding
against the Director in the event and to the extent that it shall ultimately be
determined that the Director is not entitled to be indemnified by the
Corporation for such expenses under this Agreement. Any advances and the
Director's agreement to repay shall be unsecured and interest-free.
7. AGREEMENT TO SERVE. The Director hereby agrees to continue to
serve as a director of the Corporation faithfully and to the best of his
ability so long as he is duly elected and qualified in accordance with the
provisions of the Bylaws or until such time as he tenders his resignation in
writing.
8. ENFORCEMENT.
(a) The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce the Director to continue to serve as a director of the
Corporation and acknowledges that the Director will in the future be relying
upon this Agreement in continuing to serve in such capacity.
<PAGE> 7
(b) In the event the Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, the Corporation shall reimburse the Director for all of the
Director's reasonable fees and expenses in bringing and pursuing such action.
9. VESTED RIGHTS; SPECIFIC PERFORMANCE. No amendment to the
Articles of Incorporation or Bylaws of the Corporation or any other corporate
action shall in any way limit the Director's rights under this Agreement. In
any proceeding brought by or on behalf of the Director to specifically enforce
the provisions of this Agreement, the Corporation hereby waives the claim or
defense therein that the plaintiff or claimant has an adequate remedy at law,
and the Corporation shall not urge in any such proceeding the claim or defense
that such remedy at law exists. The provisions of this Section 9, however,
shall not prevent the Director from seeking a remedy at law in connection with
any breach of this Agreement.
10. LIABILITY INSURANCE. Contemporaneously with the initial
public offering of the Corporation's common stock, the Corporation shall
maintain an insurance policy or policies providing Directors' or Officers'
liability insurance, and the Director shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage provided under such policy or policies in effect for any other
Director of the Corporation. Copies of all correspondence between the
Corporation and the company or companies providing such insurance shall be
promptly delivered to the Director by the Corporation.
11. WITNESS FEES. Nothing in this Agreement shall limit the
Corporation's power to pay or reimburse expenses incurred by the Director in
connection with his appearance as a witness in a proceeding or action at a time
when he has not been made a named defendant or respondent in such proceeding or
action.
12. SECURITY FOR INDEMNIFICATION OBLIGATIONS. The Corporation may
at any time and in any manner, at the discretion of the Board of Directors,
secure the Corporation's obligations to indemnify or advance expenses to the
Director pursuant to this Agreement.
13. NON-EXCLUSIVITY, ETC. The rights of the Director hereunder
shall be in addition to any other rights with respect to indemnification,
advancement of expenses or otherwise that the Director may have under the
Bylaws or the State Statute or otherwise.
14. SUBROGATION. In the event of payment under this Agreement,
the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Director, who shall execute all papers required and
shall do everything that may be necessary to enable the Corporation effectively
to bring suit to enforce such rights.
15. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Agreement to make any payment to the Director hereunder to
the extent the Director has otherwise actually received payment (under any
insurance policy, Bylaw or otherwise) of the amounts otherwise payable
hereunder.
<PAGE> 8
16. SEPARABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable in whole or in
part for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof.
17. GOVERNING LAW; SUCCESSORS; AMENDMENT AND TERMINATION.
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Florida.
(b) This Agreement shall be binding upon the Director and the
Corporation and its successors and assigns (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of the Director, his heirs,
personal representatives, and assigns and to the benefit of the Corporation and
its successors and assigns.
(c) No amendment, modification, termination, or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto.
18. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
19. NOTICES. All notices, requests and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given and received when delivered in person, when delivered by
overnight delivery service, or three business days after being mailed by
registered or certified mail, postage prepaid, return receipt requested, to the
following addresses (or to such other address as one party may from time to
time designate in writing to the other party hereto):
If to the Corporation: Phoenix International Ltd., Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751
Attn: President
With a copy to: Nelson Mullins Riley & Scarborough, L.L.P
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
Attn: Glenn W. Sturm, Esq.
If to the Director:
------------------------------------------
------------------------------------------
------------------------------------------
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PHOENIX INTERNATIONAL LTD., INC.
By:
---------------------------------
Name:
Title:
DIRECTOR
--------------------------------------
Name:
<PAGE> 1
[BARNETT
BANK EXHIBIT 10.48
LOGO]
PROMISSORY NOTE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$750,000.00 05-14-1996 11-14-1996 00700079395 A100 00 0100
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only
and do not limit the applicability of this document to any particular loan or item.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BORROWER: PHOENIX INTERNATIONAL LTD., INC. LENDER: BARNETT BANK OF CENTRAL FLORIDA, N.A.
900 WINDERLEY PLACE, SUITE 140 707 MENDHAM BLVD.
MAITLAND, FL 32751 SUITE 9973
ORLANDO, FL 32825-3252
===================================================================================================================================
</TABLE>
PRINCIPAL AMOUNT: $750,000.00 DATE OF NOTE: MAY 14, 1996
PROMISE TO PAY. PHOENIX INTERNATIONAL LTD., INC., JOINTLY AND SEVERALLY IF
MORE THAN ONE ("BORROWER"), PROMISES TO PAY TO BARNETT BANK OF CENTRAL FLORIDA,
N.A. ("LENDER"), OR ORDER, IN LAWFULLY OBTAINED MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF SEVEN HUNDRED FIFTY THOUSAND & 00/100 DOLLARS
($750,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST ON THE
UNPAID BALANCE OF PRINCIPAL ADVANCED FROM THE DATE(S) OF DISBURSEMENT UNTIL
PAID IN FULL AS SET FORTH HEREIN. THE PRINCIPAL AMOUNT OF THIS NOTE MAY BE
ADVANCED, PAID AND READVANCED IN FULL OR PART DURING THE TERM OF THIS NOTE
PROVIDED NO EVENT OF DEFAULT OR DEMAND FOR PAYMENT EXISTS HEREUNDER.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF ALL OUTSTANDING
PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON NOVEMBER 14, 1996. IN ADDITION,
BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED UNPAID INTEREST BEGINNING
JUNE 14, 1996, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE ON THE SAME DAY OF
EACH MONTH AFTER THAT. Interest on this Note is computed on a 365/360 simple
interest basis; that is, by applying the ratio of the annual interest rate over
a year of 360 days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding. Borrower
will pay Lender at Lender's address shown above or at such other place as
Lender may designate in writing. Payments shall be allocated between
principal, interest, costs, fees, if any, in the discretion of Lender. Any
payment to be debited from Borrower's designated account will be debited on the
scheduled due date; however, if the scheduled due date is on a weekend or
holiday, the payment will be debited on the next non-weekend/holiday day.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Barnett Banks, Inc.
prime rate (the "Index"). This is the rate Barnett Banks, Inc. announces from
time to time as its prime rate. The interest rate will be adjusted to reflect
a change in the Index on the same day as the Index changes. The interest rate
to be applied to the unpaid balance of this Note will be at a per annum rate of
1.750 percentage points over the Index. Lender will tell Borrower the current
Index rate upon Borrower's request. NOTICE: Under no circumstances will the
effective rate of interest on this Note be more than the maximum rate allowed
by applicable law. Upon demand for payment of this Note, the interest rate on
this Note to be applied to the unpaid balance of principal, unpaid accrued
interest, costs and fees, to be applicable until paid in full, will be the
highest interest rate permitted by applicable law.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than
it is due. Early payments will not, unless agreed to by Lender in writing,
relieve Borrower or Borrower's obligation to continue to make payments of
accrued unpaid interest. Rather, they will reduce the principal balance due.
LOAN FEE. A non-refundable, non-prorated loan fee of 1.500% of the original
principal amount may be charged at Lender's discretion each annual anniversary
from Date of Note and thereafter. The loan fee may be modified from time to
time by Lender without prior or concurrent notice to Borrower.
LATE CHARGE. If a payment is 10 days of more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $100.00,
whichever is greater.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due; (b) Borrower breaks any written
promise Borrower has made to Lender, or Borrower fails to perform promptly at
the time and strictly in the manner provided in this Note or in any written
agreement related to this Note, or in any other written agreement or loan
Borrower has with Lender, contingent or absolute, due or to become due, now or
hereafter existing; (c) A breach of any term or condition of any security
agreement, pledge agreement, mortgage loan agreement or any other agreement
related to or securing this Note regardless if said document is executed by
Borrower, any guarantor or a third-party not liable for this Note, upon which a
cure period, if any, contained in said agreement has expired; (d) suspension,
liquidation, sale or transfer of Borrower's business or assets; (e) Any
representation, warranty, statement or report made or furnished to Lender by
Borrower or on Borrower's behalf is false, or misleading in any material
respect; (f) Borrower becomes insolvent, a receiver is appointed for any part
of Borrower's property, Borrower makes an assignment for the benefit of
creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws; (g) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with
Lender; (h) Failure of Borrower to furnish Lender within thirty (30) days after
written request by Lender, current financial statements, including income tax
returns, in form satisfactory to Lender or to permit inspection of any of
Borrower's books or records; (i) The issuance of any tax levy or lien against
Borrower or Borrower's failure to pay, withhold, collect or remit any tax when
assessed or due; (j) The filing of formal charges under any federal or state
law against Borrower or Borrower's assets which forfeiture is a potential
penalty; (k) Any of the events described in this default section occurs with
respect to any guarantor of this Note; (l) Lender in good faith deems itself
insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest, costs and fees
immediately due, without notice, and then Borrower will pay that amount. Upon
default, or if this Note is not paid at final maturity, Lender, at its option,
may add any unpaid accrued interest, costs and fees to principal and such sum
will bear interest therefrom until paid, at the rate provided in this Note but
in no event at an effective total interest rate on this Note greater than the
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender the
amount of these costs and expenses, which includes, subject to any limits under
applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including reasonable attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF FLORIDA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge, withdraw or setoff all sums owing on this Note
against any and all the accounts set forth below in the Accounts section without
prior demand or notice to Borrower.
ACCOUNTS. Borrower grants to Lender a contractual possessory security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender
all of Borrower's right, title and interest in and to, Borrower's deposits,
accounts (whether checking, savings, or some other account), or
<PAGE> 2
Page 2
05-14-1996 PROMISSORY NOTE
Loan No 00700079395 (Continued)
===============================================================================
securities now or hereafter in the possession of or on deposit with Lender or
with any Barnett Banks, Inc. affiliate or subsidiary including without
limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA, Keogh, and trust
accounts.
GARNISHMENT. Borrower consents to the issuance of a continuing writ of
garnishment or attachment against Borrower's disposable earnings, in accordance
with Section 222.11, Florida Statutes, in order to satisfy, in whole or part,
any money judgment entered in favor of Lender.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note, as well as directions for payment from Borrower's accounts,
may be requested orally or in writing by Borrower or by an Authorized person.
Lender may, but need not, require that all oral requests be confirmed in
writing. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good faith
deems itself insecure under this Note or any other agreement between Lender and
Borrower.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Borrower does not agree or intend to pay, and
Lender does not agree or intend to contract for, charge, collect, take, reserve
or receive (collectively referred to herein as "charge or collect"), any amount
in the nature of interest or in the nature of a fee for this loan, which would
in any way or event (including demand, prepayment, or acceleration) cause
Lender to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of
Florida (as applicable). Any such excess interest or unauthorized fee shall,
instead of anything stated to the contrary, be applied first to reduce the
principal balance of this loan, and when the principal has been paid in full,
be refunded to Borrower. Lender may delay or forego enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, protest and notice of dishonor and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. Upon any change in the terms
of this Note, and unless otherwise expressly stated in writing, no party who
signs this Note, whether as maker, guarantor, accommodation maker or endorser,
shall be released from liability. All rights, powers, privileges and immunities
herein granted to Lender shall extend to its successors and assigns and any
other legal holder of this Note. All rights, powers, privileges and immunities
of Borrower hereunder may not in any way be assigned, transferred or sold.
Lender at any time is authorized to correct patent errors herein. All such
parties agree that Lender may renew, modify, substitute, consolidate or extend
(repeatedly and for any length of time) this loan, or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to, acknowledgment or agreement by
anyone. All such parties also agree that Lender may modify this loan without
the consent of or notice to anyone other than the party with whom the
modification is made. This Note constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Note and
supersedes all prior understandings and correspondence, oral or written, with
respect to the subject matter hereof. No alteration of or amendment to this
Note shall be effective unless given in writing and signed by Lender. Borrower
acknowledges that this Note evidences a loan made primarily for business,
commercial or agricultural purposes and not primarily for personal, family or
household purposes. When this Note becomes due, by default, demand or
maturity, Lender may, at its option, demand, sue for, collect, or make any
compromise or settlement it deems desirable with reference to any collateral
pledged or granted for this Note. Lender shall not be bound to take any steps
necessary to preserve any rights in any such collateral against prior parties.
Lender shall have no duty with respect to collection or protection of any such
collateral or of any income of any such on the collateral as to the
preservation of any rights pertaining to any such collateral beyond safe
custody. Borrower authorizes Lender to exchange Lender's deposit, credit and
borrowing information about Borrower with third parties. Borrower agrees to
indemnify and hold Lender harmless against liability for the payment for
documentary stamp and intangible taxes (including interest and penalties) (if
applicable), which may be determined to be payable with respect to this
transaction. If this Note is renewed, modified, extended, substituted or
consolidated, although Lender is under no duty to do so, Lender may, without
Borrower's or any guarantor's consent: (a) advance the maximum amount of
principal then available the day prior to said occurrence, (b) deposit said
amount in Borrower's account with Lender the day prior to said occurrence, (c)
withdraw said amount from Borrower's account with Lender the day after said
occurrence, and (d) apply said amount to the principal amount then outstanding.
Said procedures are intended to minimize Borrower's documentary stamp tax
and/or intangible tax liabilities (if applicable) although Borrower will be
fully responsible for accrued interest on the amount of principal advanced for
said procedure. If this Note represents a renewal, modification, extension,
substitution or consolidation of a Note owed to Lender, then Borrower
acknowledges and agrees that there are no claims, setoffs, avoidances,
counterclaims or defenses or rights to claims, setoffs, avoidances,
counterclaims or defenses to enforcement of this Note.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Phoenix International Ltd., Inc.
By: /s/
------------------------------------
Bahram Yesefzadeh, Chairman
================================================================================
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off.,
Ver. 3.20b(c) 1996 CFI ProServices, Inc. All rights reserved. [FL-D20 E3.20
P3.20 0728754.LN C25.OVL]
<PAGE> 1
[BARNETT BANK EXHIBIT 10.49
LOGO]
BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$750,000.00 05-14-1996 11-14-1996 00700079395 A100 00 0100
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
<S> <C> <C>
BORROWER: PHOENIX INTERNATIONAL LTD., INC. LENDER: BARNETT BANK OF CENTRAL FLORIDA, N.A.
900 WINDERLY PLACE, SUITE 140 707 MENDHAM BLVD.
MAITLAND, FL 32751 SUITE 9973
ORLANDO, FL 32825-3252
===================================================================================================================================
</TABLE>
THIS BUSINESS LOAN AGREEMENT BETWEEN PHOENIX INTERNATIONAL LTD., INC.
("BORROWER") AND BARNETT BANK OF CENTRAL FLORIDA, N.A. ("LENDER") IS MADE AND
EXECUTED ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR
COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR
LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED
ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND
FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL
ACCOMMODATIONS FROM LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT
INDIVIDUALLY AS THE "LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER
UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN,
LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS,
AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR EXTENDING OF ANY
LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE JUDGMENT AND
DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS TO THIS AGREEMENT.
TERM. This Agreement shall be effective as of MAY 14, 1996, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS: The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Business Loan Agreement from time to time.
BORROWER. The word "Borrower" means Phoenix International Ltd., Inc.
CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan,
whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted
the form of a security interest, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor's lien, equipment
trust, conditional sale, trust receipt, lien, charge, lien or title
retention contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time and the regulations
and published interpretations thereof.
EVENT OF DEFAULT. The words "Event of Default" mean and include
without limitation any of the Events of Default set forth below in the
section titled "EVENTS OF DEFAULT."
GAAP. The word "GAAP" means generally accepted accounting principles
consistently applied.
GRANTOR. The word "Grantor" means and includes without limitation each
and all of the persons or entities granting a Security Interest
in any Collateral for the Indebtedness, including without limitation
all Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations,
debts and liabilities of Borrower to Lender, or any one or more of
them, as well as all claims by Lender against Borrower, or any one or
more of them; whether now existing, contemporaneously with or hereafter
incurred or created and any renewals, modifications, extensions,
substitutions or consolidations thereof, voluntary or involuntary
incurred, secured or unsecured, absolute or contingent, liquidated or
unliquidated; determined or undetermined, whether Borrower may be
liable individually or jointly with others, or primarily or
secondarily, or as guarantor, surety, or otherwise; whether recovery
upon the indebtedness may be or hereafter may become barred by any
statute of limitations; and whether such indebtedness may be or
hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means BARNETT BANK OF CENTRAL FLORIDA, N.A.,
its successors and assigns.
LOAN. The word "Loan" or "Loans" means and includes any and all
loans, advances, interest, costs, fees, documentary stamp tax and/or
intangible taxes, debts, overdraft indebtedness, leases, drafts,
letters of credit, credit cards, and business services from Lender to
Borrower, whether now existing, contemporaneously with, or
hereafter incurred or created and any renewals, modification,
extensions, substitutions or consolidations thereof, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
NOTE. The word "Note" means Borrower's promissory note or notes, if
any, evidencing Borrower's Loan obligations in favor of Lender, as
well as any renewal, extension, modification, consolidation,
substitute, replacement or refinancing note or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and
security interests securing Indebtedness owed by Borrower to
Lender; (b) liens for taxes, assessments, or similar charges either not
yet due or being contested in good faith; (c) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in
the ordinary course of business and securing obligations which are not
yet delinquent; (d) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (e) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower's assets.
<PAGE> 2
05-14-1996 BUSINESS LOAN AGREEMENT Page 2
Loan No 00700079395 (Continued)
===============================================================================
Related Documents. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the indebtedness.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract,
or otherwise, evidencing, governing, representing, or creating a
Security Interest.
Security Interest. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the form
of a lien, charge, mortgage, deed or trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or
consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or
otherwise.
SARA. The word "SARA" means the Superfund Amendments and
Reauthorization Act of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory
to Lender the following documents for the Loan: (a) the Note, (b)
Security Agreements granting to Lender security interests in the
Collateral, (c) Financing Statements perfecting Lender's Security
Interests; (d) evidence of insurance as required below; and (e) any
other documents required under this Agreement or by Lender or its
counsel, including without limitation any guaranties described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents, and such other authorizations and other
documents and instruments as Lender or its counsel, in their sole
discretion, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
No Event of Default. There shall not exist at the time of any advance
a condition which would constitute an Event of Default under this
Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the state of
the Borrower's incorporation and is validly existing and in good
standing in all states in which Borrower is doing business. Borrower
has the full power and authority to own its properties and to transact
the businesses in which it is presently engaged or presently proposes
to engage. Borrower also is duly qualified as a foreign corporation
and is in good standing in all states in which the failure to so
qualify would have a material adverse effect on its businesses or
financial condition.
Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly authorized
by all necessary action by Borrower; do not require the consent or
approval of any other person, regulatory authority or governmental
body; and do not conflict with, result in a violation of, or constitute
a default under (a) any provision of its articles of incorporation or
organization, or bylaws, or any agreement or other instrument binding
upon Borrower or (b) any law, governmental regulation, court decree, or
order applicable to Borrower.
Financial Information. Each financial statement of Borrower and each
information, exhibit or report supplied to Lender by Borrower, its
agents or accountants truly and completely disclosed Borrower's
financial condition as of the date of the statement in accordance with
GAAP, and there has been no material adverse change in Borrower's
financial or business condition or operations subsequent to the date of
the most recent financial statement supplied to Lender and none are
imminent or threatened. Borrower has no material contingent
obligations except as disclosed in such financial statements. Borrower
acknowledges and agrees that Lender is relying on all such financial
information in entering into, continuing, renewing or extending any
Loan.
Legal Effect. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered
will constitute, legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled
in Borrower's legal name, and Borrower has not used, or filed a
financing statement under, any other name for at least the last five
(5) years. Additionally, Borrower and Borrower's real and personal
properties comply fully with all laws, ordinances, statutes, codes and
requirements of the Americans with Disabilities Act of 1990.
Hazardous Substances. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as
used in this Agreement, shall have the same meanings as set forth in
the "CERCLA," "SARA," the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 49 U.S.C. Section 6901, et seq., or other applicable state or
Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (a) During the period
of Borrower's ownership, lease or use of any real or personal
properties and the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under, or
about any of the properties. (b) Borrower has no knowledge of, or
reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened
release of any hazardous waste or substance by any prior owners or
occupants of any of the properties or the Collateral, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower, nor any tenant,
contractor, agent or other authorized user of any of the properties or
the Collateral shall use, generate, manufacture, store, treat, dispose
of, or release any hazardous waste or substance on, under, or about any
of the properties or the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state, and local
laws, regulations, and ordinances, including without limitation those
laws, regulations and ordinances described above. Borrower authorizes
Lender and its agents to enter upon the properties to make such
inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and
for Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investing the Collateral and the
properties for hazardous wastes and substances. Borrower hereby (a)
releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under
<PAGE> 3
05-14-1996 BUSINESS LOAN AGREEMENT Page 3
Loan No 00700079395 (Continued)
===============================================================================
any such laws, and (b) agrees to fully and promptly pay, perform,
discharge and defend, indemnify and hold harmless Lender against any and
all claims, orders, demands, causes of action, proceedings, judgments,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties or the
Collateral, whether or not the same was or should have been known to
Borrower. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the indebtedness and
the termination or expiration of this Agreement and shall not be affected
by Lender's acquisition of any interest in any of the properties, whether
by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events, if
any, that have been disclosed to and acknowledged by Lender in writing.
TAXES. To the best of Borrower's knowledge, all tax returns and
reports of Borrower that are or were required to be filed, have been filed,
and all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves
have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security Agreements,
or permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
PERMITS. Borrower possesses and will continue to possess all permits,
licenses, copyrights, trademarks, trade names, patents and rights thereto
to conduct its business and its business does not conflict or violate any
valid rights of others with respect to the foregoing.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes and will not purchase or carry
margin stock (within the meaning of Regulations G,T and U of the Board of
Governors of the Federal Reserve System).
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which
Borrower may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event
nor Prohibited Transaction (as defined in ERISA) has occurred with respect
to any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, and (iii) no steps have been taken to terminate
any such plan.
LOCATION OF BORROWER'S OFFICES AND RECORDS. The chief place of
business of Borrower and the office or offices where Borrower keeps its
records concerning the Collateral is located at 900 Winderley Place, Suite
140, Maitland, FL 32751.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in extending Loan Advances to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force and
effect until such time as Borrower's indebtedness shall be paid in full, or
until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
AFFIRMATIVE COVENANTS Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
DEPOSIT ACCOUNTS. Maintain its primary banking accounts with Lender.
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all litigation and
claims and all threatened litigation and claims affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
UPDATES. Promptly inform Lender in writing of details of all litigation,
legal or administrative proceedings, investigation or other action of
similar nature, pending or threatened against Borrower, at any time during
the term of this Agreement, which in part or in whole may or will render
any of the above representations and warranties no longer true, accurate
and correct in each and every respect. Borrower will bring such details to
Lender's attention, in writing, within thirty (30) days from the date
Borrower acquires knowledge of same.
FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement, statement of cash flow
and notes to statements for the year ended, audited by a certified public
accountant satisfactory to Lender, and, as soon as available, but in no
event later than thirty (30) days after the end of each month, Borrower's
balance sheet and profit and loss statement for the period ended, prepared
and certified as correct to the best knowledge and belief by Borrower's
chief financial officer or other officer or person acceptable to Lender.
All financial reports required to be provided under this Agreement shall be
prepared in accordance with GAAP and certified by Borrower as being true
and correct. Provide to Lender annually for each individual Borrower and
Guarantor, if any, signed and dated personal financial statements on
Lender's forms and, immediately after filing, the personal income tax
return filed for the past calendar year. Simultaneously with the financial
information required herein of Borrower, the same information of all
corporate or partnership guarantors, if any, prepared in accordance with
GAAP.
Promptly after the furnishing thereof, provide Lender with copies of any
statement or report furnished to any other party pursuant to the terms of
any indenture, loan, credit, or similar agreement and not otherwise
required to be furnished to Lender pursuant to any other section of this
Agreement.
Promptly after the sending or filing thereof, provide Lender with
copies of all proxy statements, financial statements and reports which
Borrower sends to its stockholders, and copies of all regular, periodic,
special reports, and all registration statements which Borrower files with
the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or with any national securities exchange.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
<PAGE> 4
05-14-1996 BUSINESS LOAN AGREEMENT Page 4
Loan No 00700079395 (Continued)
===============================================================================
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and ratios:
FIXED CHARGE RATIO. Maintain a ratio of Adjusted Net Income to Fixed
Charges of not less than:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
As of 3/31/96 (measured quarterly) 1.25 to 1.00
</TABLE>
For purposes of this Agreement and to the extent the following terms are
utilized in this Agreement, the term "Tangible Net Worth" shall mean Borrower's
total assets excluding all intangible assets determined in accordance with GAAP
(i.e., goodwill, trademarks, patents, copyrights, organizational expenses, and
similar intangible items, but including leaseholds and leasehold improvements at
book value) of Borrower less total Debt. The term "Debt" shall be determined in
accordance with GAAP. The term "Subordinated Debt" shall mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement to
indebtedness owed by Borrower to Lender in form and substance acceptable to
Lender. The term "Working Capital" shall mean Borrower's current assets at
lower of cost or current market value less amounts due from any officer,
director, shareholder or any entity related by common control or ownership,
excluding prepaid expenses, less Borrower's current liabilities. The term
"Liquid Assets" shall mean Borrower's cash on hand, marketable securities, bank
deposits and Borrower's receivables. The term "Adjusted Net Income" means net
income after taxes plus depreciation, amortization, lease expense, and interest
expense. The term "Fixed Charges" mean interest expense plus lease expense,
current maturities of long-term debt and current maturities of capital leases.
The term "Cash Flow" shall mean net income after taxes, and exclusive of
extraordinary gains and income, plus depreciation and amortization. The term
"Senior Debt" shall mean Debt less Subordinated Debt. The term "Capital Funds"
shall mean Tangible Net Worth plus Subordinated Debt. Except as provided above,
all computations made to determine compliance with the requirements contained in
this paragraph shall be made in accordance with GAAP and certified by Borrower
as being true and correct.
INSURANCE. Maintain fire and other risk insurance, business interruption,
theft, public liability insurance, and such other insurance in such amounts and
covering such risks as are usually covered by businesses engaged in the same or
in similar business and similarly situated with respect to Borrower's
properties and operations, in form, coverages and with insurance companies
reasonably acceptable to Lender. Borrower, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of insurance
in form satisfactory to Lender, including stipulations that coverages will not
be cancelled or diminished without at least thirty (30) days' prior written
notice to Lender. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such loss payable or other endorsements as Lender may
require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the properties
insured; (e) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, on Lender's forms, and in the amount
and by the guarantor named below:
<TABLE>
<CAPTION>
Guarantor Amount
--------- ------
<S> <C>
Bahram Yusefzadeh Unlimited
</TABLE>
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any other
party and notify Lender immediately in writing of any default in connection with
any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business operations,
unless specifically consented to the contrary by Lender in writing.
TAXES, CHARGES and LIENS. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes
governmental charges, levies and liens, of every kind and nature, imposed upon
Borrower or its properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's properties, income, or profits. Provided
however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (a) the legality of
the same shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with respect to
such contested assessment, tax, charge, levy, lien, or claim in accordance with
generally accepted accounting practices. Borrower, upon demand of Lender, will
furnish to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate governmental
official to deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against Borrower's
properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions set
forth in this Agreement and in the Related Documents in a timely manner, and
promptly notify Lender if Borrower learns of the occurrence of any event which
constitutes an Event of Default under this Agreement or under any of the Related
Documents.
OPERATIONS. Substantially maintain its present executive and management
personnel; conduct its business affairs in a reasonable and prudent manner and
in compliance with all applicable federal, state and municipal laws, ordinances,
rules and regulations respecting its properties, charters, businesses and
operations, including without limitation, compliance with the Americans With
Disabilities Act and with all minimum funding standards and other requirements
of ERISA and other laws applicable to Borrower's employee benefit plans, and
continue to engage in an efficient and economical manner in a business of the
same general type as now conducted by it, provided, however, that nothing
contained in this Agreement shall prevent Borrower from discontinuing any part
of Borrower's business, if in Borrower's opinion, this discontinuance is in the
best interests of Borrower and not disadvantageous to Lender.
MAINTENANCE. Maintain, keep and preserve Borrower's buildings and properties
and every part thereof in good repair, working order, and condition and from
time to time make all needful and proper repairs, renewals, replacements,
additions, betterments and improvements thereto, so that at all times the
efficiency thereof shall be fully preserved and maintained, ordinary wear and
tear excepted.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts and records and
to make copies and memoranda of Borrower's books, accounts and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense, and discuss the affairs, finances and
accounts of Borrower with Lender.
<PAGE> 5
05-14-1996 BUSINESS LOAN AGREEMENT Page 5
Loan No 00700079395 (Continued)
===============================================================================
COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide
Lender UPON LENDER'S REQUEST a compliance certificate executed by
Borrower's chief financial officer, or other officer or person acceptable
to Lender, certifying that the representations and warranties set forth in
this Agreement are true and correct as of the date of the certificate and
further certifying that, as of the date of the certificate, no default or
Event of Default has occurred, or has occurred and is continuing under
this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part
or on the part of any third party, on property owned and/or occupied by
Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure the
Loans and to perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business, and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in or encumber any of Borrower's assets,
or (c) sell with recourse any of Borrower's accounts, except to Lender and
except for Borrower's accounts as allowed as a permitted lien.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, wind up, liquidate, merge, reorganize,
transfer, acquire or consolidate with any other entity, change ownership,
dissolve, transfer or sell or acquire Collateral or assets out of the
ordinary course of business, or (c) pay, declare, set aside, or allocate
any dividends in cash or other property, on Borrower's stock (however, if
Borrower is a Subchapter S corporation, Borrower may make distributions to
each shareholder which is necessary to pay for any personal income tax
liability incurred by that shareholder as a direct result of profits
generated by the Subchapter S corporation) or purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital
structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) assume, endorse, be liable for or incur any
agreement or obligation as surety or guarantor.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
any other loan with Lender; or (e) Lender in good faith deems itself insecure
even though no Event of Default shall have occurred.
ACCOUNTANTS' MANAGEMENT LETTER. Borrower shall furnish Lender with a copy of
the Accountants' Management Letter concurrent with the submission of their
financial statements reference above.
ADDITIONAL AGING REPORTS. Unless otherwise waived or modified in writing by
Lender, in addition to such other information, statements and reports, Borrower
shall from time to time hereafter but not less than monthly execute and deliver
to Lender no later than the 30th day of each month during the term of this
Agreement a detailed aging of Borrower's accounts payable by total, a summary
aging of accounts payable by account creditor and a reconciliation statement.
RIGHT OF SETOFF. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge, withdraw or setoff all sums owing on this Agreement
against any and all the accounts set forth below in the Accounts section without
prior demand or notice to Borrower.
ACCOUNTS. Borrower grants to Lender a contractual possessory security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
of Borrower's right, title and interest in and to, Borrower's deposits, accounts
(whether checking, savings, or some other account), or securities now or
hereafter in the possession of or on deposit with Lender or with any Barnett
Banks, Inc. affiliate or subsidiary including without limitation all accounts
held jointly with someone else and all accounts Borrower may open in the future,
excluding however all IRA, Keogh, and trust accounts.
EVENTS OF DEFAULT. If any of the following events shall occur each shall
constitute an Event of Default under this Agreement:
DEFAULT ON INDEBTEDNESS. An event of default as defined in any Loan or
Note or demand for full payment of any Loan or Note.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.
FALSE STATEMENTS. Any warranty, representation, or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, insolvency, appointment of a receiver for any part of
Borrower's property, any assignment for the benefit of creditors, any type
of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
CREDIT PROCEEDINGS. Commencement of foreclosure proceedings, whether by
judicial proceeding, self-help, repossession or any other method by any
creditor of Borrower, any creditor of any grantor of collateral for the
Loan. This includes a garnishment, attachment, or levy on or of any of
Borrower's deposit accounts with Lender.
<PAGE> 6
05-14-1996 BUSINESS LOAN AGREEMENT Page 6
Loan No 00700079395 (Continued)
===============================================================================
FORFEITURE. The filing of formal charges under any federal or state law
against any Borrower which forfeiture is the penalty. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
proceeding, and if Borrower gives Lender written notice of the proceeding
and furnishes reserves or a surety bond for the proceeding satisfactory to
Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor dies
or becomes incompetent.
INSECURITY. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OR DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall
be automatic and not optional. In addition, Lender shall have all the rights
and remedies provided in the Related Documents or available at law, in equity,
or otherwise. Except as may be prohibited by applicable law, all of Lender's
rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement and supersedes all prior understandings
and correspondence, oral or written, with respect to the subject matter
hereof. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment.
APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to intepret or define the provisions
of this Agreement.
CONTINUING AGREEMENT. This Agreement is a continuing agreement and shall
continue in effect notwithstanding that from time to time, no indebtedness
may exist.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loans and will
have all the rights granted under the participation agreement or agreements
governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation interest
and unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interests may enforce
its interests irrespective of any personal claims or defenses that Borrower
may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
out-of-pocket expenses, including reasonable attorneys' fees, incurred in
connection with the preparation, execution, enforcement and collection of
this Agreement or in connection with the Loans made pursuant to this
Agreement. Lender may pay someone else to help collect the Loans and to
enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, Lender's reasonable attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including reasonable attorneys' fees for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Borrower also will pay
any court costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States registered or certified mail, first class, postage
prepaid, return receipt requested, addressed to the party to whom the
notice is to be given at the address shown above; notification by facsimile
is specifically not allowed. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Borrower, notice to any Borrower will constitute notice to all Borrowers.
For notice purposes, Borrower agrees to keep Lender informed at all times
of Borrower's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
TIME. Time is of the essence in the performance of this Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, or between Lender and
any Grantor, shall constitute a waiver of any of Lender's rights or
of any obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
<PAGE> 7
05-14-1996 BUSINESS LOAN AGREEMENT Page 7
Loan No 00700079395 (Continued)
===============================================================================
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MAY
14, 1996.
BORROWER:
Phoenix International Ltd., Inc.
By: /s/ Bahram Yusefzadeh
------------------------------------
Bahram Yusefzadeh, Chairman 5/14/96
--------
LENDER:
BARNETT BANK OF CENTRAL FLORIDA, N.A.
By: /s/ [Signature Illegible]
------------------------------------
Authorized Officer
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.20b(c) 1996 CFI ProServices, Inc.
All rights reserved. [FL-C40 E3.20 F3.20 P3.20 0728754.LN C25.OVL]
<PAGE> 1
[BARNETT BANK EXHIBIT 10.50
LOGO]
COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$750,000.00 05-14-1996 11-14-1996 00700079395 A100 00 0100
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
<S> <C> <C>
BORROWER: PHOENIX INTERNATIONAL LTD., INC. LENDER: BARNETT BANK OF CENTRAL FLORIDA, N.A.
900 WINDERLEY PLACE, SUITE 140 707 MENDHAM BLVD.
MAITLAND, FL 32751 SUITE 9973
ORLANDO, FL 32825-3252
===================================================================================================================================
</TABLE>
THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN PHOENIX
INTERNATIONAL LTD., INC. (REFERRED TO BELOW AS "GRANTOR"); AND BARNETT BANK OF
CENTRAL FLORIDA, N.A. (REFERRED TO BELOW AS "LENDER"). FOR VALUABLE
CONSIDERATION, GRANTOR GRANTS TO LENDER A SECURITY INTEREST IN THE COLLATERAL
TO SECURE THE INDEBTEDNESS AND AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED
IN THIS AGREEMENT WITH RESPECT TO THE COLLATERAL, IN ADDITION TO ALL OTHER
RIGHTS WHICH LENDER MAY HAVE BY LAW.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Commercial Security
Agreement, as this Commercial Security Agreement may be amended
or modified form time to time, together with all exhibits and schedules
attached to this Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described
property of Grantor, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever located:
ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL
INTANGIBLES
In addition, the word "Collateral" includes all the following, whether
now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located:
(a) All attachments, accessions, accessories, tools, parts,
supplies, increases, and additions to and all replacements of and
substitutions for any property described above.
(b) All products and produce of any of the property described
in this Collateral section.
(c) All accounts, contract rights, general intangibles,
instruments, rents, monies, revenues, profits, payments, and all
other rights, arising out of a sale, lease, trade, exchange or
other disposition of any of the property described in this
Collateral section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, condemnation or other disposition of any of the
property described in this Collateral section.
(e) All proceeds, refunds or rebates from the cancellation of
any insurance policies or any of the property described in this
Collateral section or from any warranty, service, disability or
credit insurance product or policy for Grantor, for the benefit of
Grantor or for any of the property described in this Collateral
section.
(f) All records and data relating to any of the property
described in this Collateral section, whether in the form of a
writing, photograph, microfilm, microfiche, or electronic media,
together with all of Grantor's right, title, and interest in and
to all computer software required to utilize, create, maintain,
and process any such records or data on electronic media.
ACCOUNTS. The word "accounts" means all accounts, instruments,
documents, chattel paper, reimbursements and obligations in any
form owing to Grantor arising out of the sale or lease of goods or the
rendition of services by Grantor whether or not earned by performance;
all credit insurance, guaranties, letters of credit, advices of credit,
and other security for any of the foregoing; all merchandise returned
to or reclaimed by Grantor; and Grantor's books relating to any of the
foregoing. For purposes of this Agreement, Grantor's grant of accounts
to Lender as Collateral includes an assignment of all accounts to
Lender.
EQUIPMENT. The word "equipment" means all equipment, fixtures,
machinery, machine tools, office equipment, furniture,
furnishings, motors, motor vehicles, tools, dies, parts, jigs, goods,
and all improvements thereto, and all supplies used or to be used in
connection therewith, including, without limitation, each of the items
of equipment set forth on any schedule of equipment that is either now
or in the future delivered by Grantor to Lender.
GENERAL INTANGIBLES. The words "general intangibles" means all general
intangibles, choices in action, causes of action, and all other
personal property of every kind and nature (other than goods and
accounts) including, without limitation, patents, trademarks, trade
names, service marks, copyrights, and applications for any of the
above; and goodwill, trade secrets, licenses, franchises, rights under
agreements, deposit accounts, tax refunds, tax refund claims, moneys
due from pension funds, governmental reimbursements and Grantor's
books relating to any of the foregoing.
INVENTORY. The word "inventory" means any and all goods, wares,
merchandise, and other tangible personal property, including
raw materials, work in process, supplies and components, and finished
goods, packing and shipping materials, and all documents of title,
whether negotiable or nonnegotiable, representing any of the foregoing.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the
section titled "Events of Default."
GRANTOR. The word "Grantor" means Phoenix International Ltd., Inc., its
successors and assigns
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
by the Note, including all principal and interest, together
with all other indebtedness and costs and expenses for which Grantor is
responsible under this Agreement or under any of the Related Documents.
In addition, the word "Indebtedness" includes all other obligations,
debts and liabilities, plus interest thereon, of Grantor, or any one or
more of them to Lender as well as all claims by Lender against Grantor
or any one or more of them whether existing now or later whether they
are
<PAGE> 2
05-14-1996 COMMERCIAL SECURITY AGREEMENT Page 2
Loan No 00700079395 (Continued)
===============================================================================
voluntary or involuntary, due or not due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be obligated as
guarantor, surety, accommodation party or otherwise; whether recovery
upon such indebtedness may be or hereafter may become barred by any
statute of limitations; and whether such indebtedness may be or
hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means BARNETT BANK OF CENTRAL FLORIDA, N.A., its
successors and assigns.
NOTE. The word "Note" means the note or credit agreement dated May 14,
1996, in the principal amount of $750,000,00 from Grantor to Lender,
together with all renewals of, extensions of, modifications of, refinancings
of, consolidations of and substitutions for the note or credit agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the indebtedness.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Except as disclosed in writing delivered to Lender, (a) no entity has merged
into Grantor or been consolidated, with Grantor, and Grantor's business
structure and entity has not changed; (b) no entity has sold substantially
all of its assets to Grantor or sold assets to Grantor outside the ordinary
course of such seller's business at anytime in the past; and (c) Grantor has
not changed its name or identity or used any new trade name or merged or
consolidated with any other entity.
All assessments and taxes, whether real, personal or otherwise, due or
payable by, or imposed, levied or assessed against Grantor or any of its
property have been paid in full before delinquency or before the expiration
of any extension period; and Grantor has made due and timely payment or
deposit of all federal, state, and local taxes, assessments, or
contributions required of it by law, except only for items that Grantor is
currently contesting diligently and in good faith and that have been fully
disclosed in writing to Lender.
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby makes, constitutes and appoints
Lender as its irrevocable true and lawful attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue the security
interest granted in this Agreement. Any person dealing with Grantor shall
be entitled to rely conclusively on any written or oral statement of Lender
that this power of attorney is in effect. Lender may at any time, and
without further authorization from Grantor, file a carbon, photographic or
other reproduction of any financing statement or of this Agreement for use
as a financing statement. Grantor will reimburse Lender for all expenses
for the perfection and the continuation of the perfection of Lender's
security interest in the Collateral. Grantor promptly will notify Lender
of any change in Grantor's name including any change to the assumed business
names of Grantor. THIS IS A CONTINUING SECURITY AGREEMENT AND WILL
CONTINUE IN EFFECT EVEN THOUGH ALL OR ANY PART OF THE INDEBTEDNESS IS PAID
IN FULL AND EVEN THOUGH FOR A PERIOD OF TIME GRANTOR MAY NOT BE INDEBTED TO
LENDER.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, contract rights, chattel paper, or general intangibles, the
Collateral is enforceable in accordance with its terms, is genuine, and
complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated
as they appear to be on the Collateral. At the time any account becomes
subject to a security interest in favor of Lender, the account shall be a
good and valid account representing an undisputed, bona fide indebtedness
incurred by the account debtor, for merchandise held subject to delivery
instructions or theretofore shipped or delivered pursuant to a contract of
sale, or for services theretofore performed by Grantor with or for the
account debtor; there shall be no setoffs or counterclaims against any such
account; no agreement under which any deductions or discounts may be claimed
shall have been made with the account debtor except those disclosed to
Lender in writing.
AGING REPORTS. Unless otherwise waived or modified in writing by Lender,
Grantor shall from time to time hereafter but not less often than monthly
execute and deliver to Lender no later than the 30th day of each month end
during the term of this Agreement a detailed aging of accounts by total, a
summary aging of accounts by account debtor, and a reconciliation statement.
Grantor will keep or will cause to be kept, accurate and complete records
of the accounts and will deliver such records and other financial information
to Lender as are requested, and that Lender or its designee shall have the
right at any time upon request to call Grantor's place(s) of business at
intervals solely determined by Lender, and without hindrance or delay,
inspect, audit, make test verifications, send verification of an account to
any account debtor and otherwise check and make copies of books, records,
journals, orders, receipts, correspondence and other data related to the
accounts or the processing or collection thereof.
If any account shall be evidenced by a promissory note, trade acceptance or
any other instrument for the payment of money, Grantor upon Lender's request,
will promptly deliver same to Lender, properly endorsed to Lender's order.
Regardless of the form of such endorsement, Grantor hereby waives
presentment, demand, notice of dishonor, protest and notice of protest and
all other notices to which Grantor might be entitled.
INVENTORY REPORTS. To the extent the collateral consists of inventory,
unless otherwise waived or modified in writing by Lender, Grantor shall from
time to time but not less than monthly execute and deliver to Lender no later
than the 30th day of each month end during the term of this Agreement an
inventory report, acceptable to Lender specifying Grantor's cost and the
resale price of Grantor's raw materials, work in process, and finished goods
and such other information as Lender may reasonably request.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such
other locations as are acceptable to Lender. Except in the ordinary course
of its business, including the sale of inventory, Grantor shall not remove
the Collateral from its existing locations without the prior written consent
of Lender. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action which would
require application for certificates of title for the vehicles outside the
State of Florida, without the prior written consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, consign or otherwise transfer or dispose of the
Collateral. While Grantor is not in default under this Agreement, Grantor
may sell inventory, but only in the ordinary course of its business and only
to buyers who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a transfer in
partial or total satisfaction of a debt or any bulk sale. Grantor shall not
pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in
right to the security interests granted under this Agreement. Unless waived
by Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
<PAGE> 3
05-14-1996 COMMERCIAL SECURITY AGREEMENT Page 3
Loan No 00700079395 (Continued)
===============================================================================
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons. Upon Lender's request, if
Grantor now or hereafter has any vehicle or equipment for which a certificate of
title has been or will be issued, Grantor shall immediately deliver to Lender,
properly endorsed, each certificate of title for such vehicle or equipment for
the lien of Lender to be recorded.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good operating condition and make all necessary repairs to
preserve the Collateral's value. Grantor will not commit or permit damage to or
destruction of the Collateral or any part of the Collateral. Lender and its
designated representatives and agents shall have the right at all reasonable
times to examine, inspect, test, and audit the Collateral wherever located.
NOTICE. At least thirty (30) days prior to the occurrence of any of the
following events, Grantor will deliver to Lender written notice of such
impending events: (i) any addition, deletion or a change in Grantor's place(s)
of business and/or the location(s) of the Collateral; or (ii) any addition,
deletion or change in Grantor's name, any doing business as name, trade name,
fictitious name, identity or legal structure.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments
and liens upon it and the Collateral, its use or operation, upon this Agreement,
upon any promissory note or notes evidencing the indebtedness, or upon any of
the other Related Documents. Grantor may withhold any such payment or may elect
to contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral
is subjected to a lien which is not discharged with fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, reasonable attorneys' fees or
other charges that could accrue as a result of foreclosure or sale. Grantor
will, in the event of appropriation or taking of all or any part of the
Collateral, give Lender prompt written notice thereof. Lender shall be entitled
to receive directly, and Grantor shall promptly pay over to Lender, any awards
or other amounts payable with respect to such condemnation, requisition or other
taking and in its sole discretion may apply the proceeds as it deems best
without regard if an Event of Default has or has not occurred.
ACCOUNTING SYSTEM. Grantor at all times hereafter shall maintain a consistent
system of accounting, with ledger and account cards and/or computer tapes,
disks, printouts, and records that contain information pertaining to the
Collateral that may from time to time be requested by Lender. Grantor shall
not modify or change its method of accounting or enter into any agreement
hereafter with any third-party accounting firm and/or service bureau for the
preparation and and/or storage of Debtor's accounting records without said
accounting firm's and/or service bureau's agreeing to provide to Lender
information regarding the Collateral and Grantor's financial condition.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law,
ordinance or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.
COLLATERAL VALUE. If Lender deems the value of the Collateral to be threatened
by any out of the ordinary loss, dissipation, destruction, damage or other
cause, or if the Collateral is decreasing in value, thereupon, or at anytime
thereafter, Grantor upon demand by Lender agrees to forthwith deposit with
Lender, additional collateral to the satisfaction of Lender.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conversation
and Recovery Act, 49 U.S.C. Section 6901, et seq., or other applicable state
or Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. Except as disclosed to and acknowledged by Lender in
writing, Grantor represents and warrants that: (a) During the period of
Grantor's ownership of Grantor's properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any
hazardous waste or substance by any person on, under, or about any of the
properties. (b) Grantor has no knowledge of, or reason to believe that there
has been (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste of substance by any prior
owners or occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (c)
Neither Grantor nor any tenant, contractor, agent or other authorized user of
any of the properties shall use, generate, manufacture, store, treat, dispose
of, or release any hazardous waste or substance on, under, or about any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. Grantor authorizes Lender and its agents to enter upon the properties
to make such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be for Lender's purposes only and
shall not be construed to create any responsibility or liability on the part of
Lender to Grantor or to any other person. The representations and warranties
contained herein are based on Grantor's due diligence in investigating the
Collateral and the properties for hazardous waste. Grantor hereby (a)
releases and waives any future claims against Lender for indemnity or
contribution in the event Grantor becomes liable for cleanup or other costs
under any such laws, and (b) agrees to fully and promptly pay, perform,
discharge and defend, indemnify and hold harmless Lender against any and all
claims, orders, demands, causes of action, proceedings, judgments, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of this
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to Grantor's ownership
or interest in the properties, whether or not the same was or should have been
known to Grantor. The provisions of this section of this Agreement, including
the obligation to indemnify, shall survive the payment of the Indebtedness and
the satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the properties, whether by foreclosure or
otherwise.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Grantor shall comply in all respects with
all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Grantor, any environmental
activity where damage may result to the environment, unless such environmental
activity is pursuant to the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a copy
of any notice, summons, lien, citation, directive, letter, or other
communication from any governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Grantor's part in connection
with any environmental activity whether or not there is damage to the
environment and/or other natural resources.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage of
the kinds and in amounts customarily insured against by businesses in the same
or similar business, together with such other insurance as Lender may require
with respect to the Collateral, in form, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably acceptable
to Lender. Grantor, upon request of Lender, will deliver to Lender from time
to time the policies or certificates of insurance in form satisfactory to
Lender, including stipulations that coverages will not be cancelled or
diminished without at least
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thirty (30) days' prior written notice to Lender and not including any
disclaimer of the insurer's liability for failure to give such a notice.
In connection with all policies covering assets in which Lender holds or
is offered a security interest, Grantor will provide Lender with such
lender loss payable or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated
to) obtain such insurance as Lender deems appropriate, including if it
so chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss
if Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed
Collateral, Lender shall, upon satisfactory proof of expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to
pay all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed with six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:
(a) the name of the insurer; (b) the risks insured; (c) the amount of
the policy; (d) the property insured; (e) the then current value on the
basis of which insurance has been obtained and the manner of determining
that value; and (f) the expiration date of the policy. In addition,
Grantor shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to Lender
determine, as applicable, the cash value or replacement cost of the
Collateral.
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of
the tangible personal property and beneficial use of all the Collateral and may
use it in any lawful manner not inconsistent with this Agreement or the Related
Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Lender is
required by law to perfect Lender's security interest in such Collateral. If
Lender at any time has possession of any Collateral, whether before or after an
Event of Default, Lender shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve any
rights in the Collateral against prior parties, nor to protect, preserve or
maintain any security interest given to secure the Collateral.
LENDER'S DUTY OF CARE. Lender shall have not duty of care with respect
to the Collateral except that Lender shall exercise reasonable care with
respect to the Collateral in Lender's custody. Lender shall be deemed to have
exercised reasonable care if such property is accorded treatment substantially
equal to that which Lender accords its own property or if Lender takes such
action with respect to the Collateral as Grantor shall request or agree to in
writing, provided that no failure to comply with any such request nor any
omission to do any such act requested by Grantor shall be deemed a failure to
exercise reasonable care. Lender's failure to take steps to preserve rights
against any parties or property shall not be deemed to be failure to exercise
reasonable care with respect to the Collateral in Lender's custody.
WAIVERS. Grantor waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guaranties at any time held by Lender on which Grantor may in any way be liable.
ASSIGNMENT AND PLEDGE OF ADDITIONAL RIGHTS. Grantor, in order to further secure
the prompt and punctual payment and satisfaction of the Indebtedness in favor of
Lender in principal, interest, costs, expenses, attorneys' fees and other fees
and charges, hereby assigns, pledges and grants to Lender a security interest in
the following additional rights (the "Rights"):
OPTIONS AND AGREEMENTS TO SELL. Any and all of Grantor's present and
future options or agreements to sell the, or any part or parts thereof,
including without limitation Grantor's rights to exercise and/or enforce
such options or agreements.
SALE PROCEEDS. Any and all of Grantor's present and future rights,
title and interest in and to any and all cash, cash equivalent, property
and other proceeds derived or to be derived from the sale, transfer,
assignment and/or other distribution of the, whether in cash, farm
products, or otherwise, and whether from or through any federal or
state government agency or program or otherwise, including without
limitation all rights to payments by or through the Commodity Credit
Corporation or the ASCS; all rights to payments for participation in the
Agricultural Conservation Program, the Cropland Adjustment Program, the
Cropland Conversion Program, the National Wool Act of 1954, the Wheat,
Feed Grain and Cotton Programs of the Agricultural Adjustment Act of
1938, and any other such programs of the United States Department of
Agriculture; and all payments in kind, including without limitation PIK
certificates and commodities redeemed or acquired by PIK certificates,
warehouse receipts, chemicals and fertilizers, documents, letters of
entitlement, and deficiency, conservation reserve, and diversion and
storage payments, together with, Grantor's rights to receive such
proceeds and Grantor's rights to enforce collection and payment thereof.
INSURANCE PROCEEDS. Any and all of Grantor's present and future rights,
title and interest in and to any unearned insurance premiums and
proceeds of insurance affecting all or any part of the, including the
right to receive such unearned insurance premiums and insurance proceeds
directly from the insurer and, where applicable, to enforce any rights
that Grantor may have to collect such amounts.
CONDEMNATION PROCEEDS. Any and all of Grantor's present and future
rights, title and interest in and to the proceeds of any award or claim
for direct or consequential damages relating to any condemnation,
expropriation, or any part of the by any governmental authority,
including the right to receive such condemnation proceeds directly from
such a governmental authority and, where applicable, to enforce any
rights that Grantor may have to collect such condemnation proceeds.
DAMAGES. Any and all of Grantor's rights, title and interest and other
claims or demands that Grantor now has or may hereafter acquire against
anyone with respect to any damage to all or any part of the.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy of (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. An event of default as defined in the Note or
demand for payment in full of the Note.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any
other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or in any other agreement
between Lender and Grantor.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement is
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false or misleading in any material respect, either now or at the time
made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including
failure of any collateral documents to create a valid and perfected
security interest or lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor's property, any assignment for the
benefit of creditors, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Grantor.
CREDITOR PROCEEDINGS. Commencement of foreclosure, whether by judicial
proceeding, self-help, repossession or any other method, by any
creditor of Grantor or by any governmental agency against the
Collateral or any other collateral securing the Indebtedness. This
includes a garnishment of any of Grantor's deposit accounts with
Lender.
FORFEITURE. The filing of formal charges under any federal or state
law against Grantor or the Collateral which forfeiture is a
potential penalty. However, this Event of Default shall not apply if
there is a good faith dispute by Grantor as to the validity or
reasonableness of the claim which is the basis of the proceeding and if
Grantor gives Lender written notice of the proceeding and deposits with
Lender monies or a surety bond for the proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indeptedness or such
Guarantor dies or becomes incompetent.
INSECURITY. Lender, in good faith, believes that a material adverse
change occurred in the business, operations, financial condition,
Collateral, property or prospects of Grantor.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Florida Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following rights
and remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to
pay, immediately due and payable, without presentment, demand, protest,
or notice, all of which are expressly waived by Grantor.
PROCESSING OF COLLATERAL. Grantor hereby agrees that Lender or its
designate may do whatever Lender in its sole discretion deems
to be commercially reasonable to prepare any Collateral for disposition
and to dispose of any Collateral, including without limitation
operating any of Lender's manufacturing or other processes relating to
the Collateral. Lender may transfer Collateral into its name or that
of a nominee and receive the dividends, royalties or income thereof.
Lender shall have no duty as to the collection or protection of the
Collateral or any income therefrom, nor as to the preservation of
rights against prior parties, nor as to the preservation of any right
pertaining thereto.
Lender may dispose of the Collateral in its then-existing condition or,
at its election, may take such measures as it deems necessary
or advisable to refurbish, repair, improve, process, finish, operate
demonstrate, and prepare for sale the collateral and may store, ship,
reclaim, recover, protect, advertise for sale or lease, and insure the
Collateral. If any Collateral consists of documents, Lender may
proceed either as to the documents or as to the goods represented
thereby. Lender may pay, purchase, contest, or compromise any
encumbrance, charge, or lien that, in the opinion of Lender, appears to
be prior or superior to its lien and pay all expenses incurred in
connection therewith.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender
all or any portion of the Collateral and any and all certificates
of title and other documents relating to the Collateral. Lender may
require Grantor to assemble the Collateral and make it available to
Lender at a place to be designated by Lender. Lender also
shall have full power to enter upon the property of Grantor to take
possession of and remove the Collateral and Lender may remain on such
premises and use the premises for the purpose of collecting, preparing,
and disposing of the Collateral, without any liability for rent or
occupancy charges. If the Collateral contains other goods not covered
by this Agreement at the time of repossession, Grantor agrees Lender
may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds
thereof in its own name or that of Grantor. Lender may sell the
Collateral at public auction or private sale. Unless the Collateral
threatens to decline speedily in value or is of a type customarily sold
on a recognized market, Lender will give Grantor reasonable notice of
the time after which any private sale or any other intended disposition
of the Collateral is to be made. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before the
time of the sale or disposition. Lender may adjourn any public or
private sale from time to time to a reasonably specified time and place
by announcement at the time and place of sale previously fixed, without
further notice by publication or otherwise of the time and place of
such adjourned sale, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. All expenses
relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for
sale and selling the Collateral, shall become a part of the
indebtedness secured by this Agreement and shall be payable on demand,
with interest at the Note rate from date of expenditure until repaid.
APPOINT RECIEVER. To the extent permitted by applicable law, Lender
shall have the following rights and remedies regarding the
appointment of a receiver: (a) Lender may have a receiver appointed as
a matter of right, (b) the receiver may be an employee of Lender and
may serve without bond, and (c) all fees of the receiver and his or her
attorney shall become the right upon any public sale(s), and, to the
extent permitted by law, upon any such private sale(s), to purchase the
whole or any part of the indebtedness secured by this Agreement and
shall be payable on demand, with interest at the Note rate from date of
expenditure until repaid. Collateral so sold, free of any right or
equity of redemption of Grantor.
DISPOSITION OF COLLATERAL. Without demand of performance or other
demand, advertisement or notice of any kind (except the
notice(s) specified herein regarding the time and place of public sale
or disposition or time after which a private sale or dispostion is to
occur) to Grantor (which all and each demands, advertisements and/or
notices are hereby expressly waived), Lender may forthwith collect,
recieve, appropriate and realize upon the Collateral, in full or in any
part thereof, may abandon, not claim or not take possession of any
Collateral, and/or may forthwith sell, lease, assign, give an option or
options to purchase or sell or otherwise dispose of and deliver the
Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale(s) at Lender's offices or elsewhere
at such price(s) as Lender may determine, for cash or on credit or for
future delivery without assumption of any credit risk.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any Collateral
into its own name or that of its nominee and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the
Indebtedness or apply it to payment of the Indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust sue for, foreclose, or realize on the Collateral for
cash, credit or otherwise as Lender may determine, whether or not Indebtedness
or Collateral is then due. For these purposes, Lender may, on behalf of and in
the name of Grantor, receive, open and dispose of mail addressed to Grantor;
change any address to which mail and payments are to be sent; endorse and/or
sign the name of Grantor on notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment shipment or storage of any
Collateral; grant credit extnsions of time or payment or performance or
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any other indulgences to anyone with respect to any account; accept the
return of the goods represented by any account; or do anything else
which Grantor would be legally permitted to do. To facilitate
collection, Lender may notify account debtors and obligors on any
Collateral to make payments directly to Lender.
Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of the
Collateral or in any way relating to the rights of Lender hereunder,
including attorneys' fees and legal expenses, to the payment in whole or
in part of the Indebtedness, in such order as Lender may elect, and only
after applying such net proceeds and after the payment by Lender of any
other amount required by any provision of law, need Lender account for
the surplus, if any to Grantor.
OBTAIN DEFICIENCY. Granter shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled even if the
transaction described in this subsection is a sale of accounts or
chattel paper. If Lender chooses to sell any or all of the Collateral,
Lender may obtain judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement.
WAIVER. To the extent permitted by applicable law, Grantor waives all
claims, damages and demands against Lender arising out of the
repossession, retention, sale or disposition of the Collateral.
LICENSE. Lender is hereby granted a license or other right to use,
without charge, Grantor's patents, copyrights, trade secrets, technical
processes, rights of use of any name, trade names, trademarks, labels,
and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral, and Grantor's rights under all
licenses and all franchise agreements shall inure to Lender's benefit.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, as may be amended from time to time. In addition,
Lender shall have and may exercise any or all other rights and remedies
it may have available at law, in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any right or remedy
concurrently or in any sequence shall not exclude pursuit of any other
right or remedy concurrently or in any sequence, and an election to make
expenditures or to take action to perform an obligation of Grantor under
this Agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement and supersedes all prior
understandings and correspondence, oral or written, with respect to the
subject matter hereof. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including reasonable attorneys' fees and
Lender's legal expenses, incurred in connection with the preparation,
execution, protection, enforcement and collection of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender's reasonable attorneys' fees and legal expenses
whether or not there is a lawsuit, including reasonable attorneys' fees
and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Grantor also shall pay
all court costs and such additional fees as may be directed by the
court.
CAPTION HEADINGS. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret
or define the provisions of this Agreement
EXTENSIONS AND COMPROMISES. With respect to any Collateral or the
Indebtedness, Grantor assents to all extensions or postponements
to the time of payment thereof or any other indulgence in
connection therewith, to each substitution, exchange or release
of Collateral, to the release of any party primarily or secondarily
liable, to the acceptance of partial payment thereon or to the
settlement or compromise thereof, all in such manner and such time or
times as Lender may deem advisable. No forbearance in exercising any
right or remedy on any one or more occasions shall operate as a
waiver thereof on any future occasion; and no single or partial
exercise of any right or remedy shall preclude any other exercise
thereof or the exercise of any other right or remedy.
NOTICES. All notices required to be given under this Agreement shall
be given in writing and shall be effective when actually delivered
or when deposited with a nationally recognized overnight courier or
deposited in the United States registered or certified mail, first
class, postage prepaid, return receipt requested, addressed to the party
to whom the notice is to be given at the address shown above;
notification by facsimile is specifically not allowed. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. To the extent permitted
by applicable law, if there is more than one Grantor, notice to any
Grantor will constitute notice to all Grantors. For notice purposes,
Grantor agrees to keep Lender informed at all times of Grantor's
current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and
lawful attorney-in-fact, irrevocably, with full power of substitution to
do the following: (a) to demand, collect, receive, receipt for, sue and
recover all sums of money or other property which may now or hereafter
become due, owing or payable from the Collateral; (b) to execute, sign,
and endorse any and all claims, instruments, receipts, checks, drafts or
warrants issued in payment for the Collateral; (c) to settle or
compromise any and all clams arising under the Collateral, and, in the
place and stead of Grantor, to execute and deliver its release and
settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either
in its own name or in the name of Grantor, or otherwise, which in the
discretion of Lender may seem to be necessary or advisable. This
power is given as security for the Indebtedness, and the authority
hereby conferred is and shall be irrevocable and shall remain in full
force and effect until renounced by Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible,
any such offending provision shall be deemed to be modified to be within
the limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid
and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on
transfer of the Collateral, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns.
TIME. Time is of the essence of all requirements of Grantor herein.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by
<PAGE> 7
05-14-1996 COMMERCIAL SECURITY AGREEMENT Page 7
Loan No 00700079395 (Continued)
===============================================================================
Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Grantor, shall constitute a waiver of any of
Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of
Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 14,
1996.
GRANTOR:
Phoenix International Ltd., Inc.
By: /s/ Bahram Yusefzadeh
------------------------------ 5/14/96
Bahram Yusefzadeh, Chairman ---------
===============================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.20b (c) 1996 CFI ProServices, Inc.
All rights reserved. [FL-E40 E3.20 F3.20 P3.20 0728754.LN C25.OVL]
<PAGE> 1
EXHIBIT 10.51
CONTINUING UNLIMITED COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
A100 00 0100
- ----------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
<S> <C> <C>
Borrower: Phoenix International Ltd., Inc. Lender: BARNETT BANK OF CENTRAL FLORIDA, N.A.
900 Winderley Place, Suite 140 707 Mendham Blvd.
Maitland, FL 32751 Suite 9973
ORLANDO, FL 32825-3252
Guarantor: Bahram Yusefzadeh
900 Winderly Place, Suite 140
Maitland, FL 32751
===================================================================================================================================
</TABLE>
AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.
CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, and for
the purpose(s) of inducing BARNETT BANK OF CENTRAL FLORIDA, N.A. ("Lender") to
extend, make, renew, modify and/or continue to extend, make, renew or modify
the Indebtedness (as that term is defined below), Bahram Yusefzadeh
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Lender or its order, in lawfully obtained legal tender of the United States of
America, the Indebtedness of Phoenix International Ltd., Inc. ("Borrower") to
Lender of the terms and conditions set forth in this Guaranty. Under this
Guaranty, the liability of Guarantor is unlimited and the obligations of
Guarantor are continuing.
DEFINITIONS. The following words shall have the following meanings when
used in this Guaranty:
BORROWER: The word "Borrower" means Phoenix International Ltd., Inc..
GUARANTOR: The word "Guarantor" means Bahram Yusefzadeh.
GUARANTY: The word "Guaranty" means this Guaranty made by Guarantor
for the benefit of Lender dated May 14, 1996.
INDEBTEDNESS. The word "Indebtedness" means and includes any and all of
Borrower's liabilities, obligations, debts, and indebtedness to
Lender, as well now existing, or hereinafter incurred or created and
any renewals, modifications, extensions, substitutions or
consolidations thereof, including, without limitation, all loans,
advances, interest, costs, documentary stamp and/or intangible taxes,
debts, overdraft indebtedness, letters of credit, credit card
indebtedness, lease obligations, business services, other obligations,
and liabilities of Borrower, secured or unsecured, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or, surety; whether direct or
indirect; whether guaranteed or secured; whether recovery on the
Indebtedness may be or may become barred or unenforceable against
Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity,
ultra vires, or otherwise.
LENDER. The word "Lender" means BARNETT BANK OF CENTRAL FLORIDA, N.A.,
its successors and assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security
agreements, mortgages, deeds of trust, and all other instruments,
agreements and documents, whether now or hereafter existing, executed
in connection with the Indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor intends
to guarantee at all times the performance and prompt payment when due, whether
at maturity or earlier by reason of acceleration or otherwise, of all
indebtedness.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any written notice of revocation shall
have been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantor's written notice of revocation must be delivered to Lender at the
address of Lender listed above or such other place as Lender may designate in
writing. This Guaranty may be revoked only with respect to indebtedness
incurred or contracted by Borrower, or acquired by Lender thirty (30) days
or more after the date on which written notice of revocation is actually
received by Lender. No notice of revocation hereof shall be effective as to
any Indebtedness: (a) existing at the date of receipt of such notice; (b)
incurred or contracted by Borrower, or acquired by Lender, within thirty (30)
days after receipt of such notice; (c) now existing or hereafter created
pursuant to or evidenced by a loan agreement or commitment under which
Borrower is or may become obligated to Lender; or (d) renewals, extensions,
consolidations, substitutions, and refinancings of the foregoing. Any
revocation of this Guaranty by less than all guarantors of the Indebtedness
shall not affect the liability hereunder of the remaining guarantors as to any
present or future transactions or Indebtedness. The death of any guarantor of
the Indebtedness shall not operate as a revocation of liability hereunder of the
estate of any such guarantor as to transactions entered into or Indebtedness
created subsequent to such death until actual receipt by Lender of written
notice of the death of such guarantor. Guarantor waives notice of revocation
given by any other guarantor of the Indebtedness. Any payment by Guarantor
with respect to the Indebtedness guaranteed shall not reduce the maximum
obligation hereunder, unless written notice to that effect be actually received
by Lender at or prior to the time of such payment. This Guaranty shall bind
the estate of Guarantor as to Indebtedness created both before and after the
death or incapacity of Guarantor, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation received by Lender from any one or more Guarantors
shall not affect the liability of any remaining Guarantors under this Guaranty.
It is anticipated that fluctuations may occur in the aggregate amount of
Indebtedness covered by this Guaranty, and it is specifically acknowledged and
agreed by Guarantor that reductions in the amount of Indebtedness, even to
zero dollars ($0.00), prior to written revocation of this Guaranty by Guarantor
shall not constitute a termination of this Guaranty. This Guaranty is binding
upon Guarantor and Guarantor's heirs, successors and assigns so long as any of
the guaranteed Indebtedness remains unpaid and even though the Indebtedness
guaranteed may from time to time be zero dollars ($0.00). This Guaranty and
Guarantor's obligations hereunder remains fully enforceable irrespective of any
claim, defense, or counterclaim which Borrower may assert on the Indebtedness,
including but not limited to failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction,
and usury, same of which Guarantor hereby waives along with any standing by
Guarantor to assert any said claim, defense or counterclaim. In the event that
any bankruptcy, insolvency, receivership, or similar proceeding is instituted
by or against Guarantor in the event that Guarantor becomes insolvent, makes an
assignment for the benefit of creditors, or attempts to effect a composition
with creditors, or in the event of the death of Guarantor, then, at Lender's
election, without notice or demand, the obligations of Guarantor created
hereunder shall become due, payable, and enforceable against Guarantor, whether
or not any Indebtedness is then due and payable.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or
<PAGE> 2
05-14-1996 CONTINUING UNLIMITED COMMERCIAL GUARANTY Page 2
Loan No 00700079395 (Continued)
===============================================================================
DEMAND AND WITHOUT LESSENING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM
TIME TO TIME: (A) PRIOR TO REVOCATION AS SET FORTH ABOVE, TO MAKE ONE OR MORE
ADDITIONAL SECURED OR UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER
GOODS TO BORROWER, OR OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO
ALTER, SUPPLEMENT, COMPROMISE, MODIFY, RENEW, EXTEND, TERMINATE, ACCELERATE,
WAIVE OR OTHERWISE CHANGE ONE OR MORE TIMES THE TIME FOR PAYMENT OR OTHER TERMS,
CONDITIONS OR PROVISIONS OF THE INDEBTEDNESS OR ANY PART OF THE INDEBTEDNESS,
INCLUDING INCREASES AND DECREASES OF THE RATE OF INTEREST ON THE INDEBTEDNESS;
EXTENSIONS AND MODIFICATIONS MAY BE REPEATED AND MAY BE FOR LONGER THAN THE
ORIGINAL TERM; (C) TO TAKE AND HOLD SECURITY FOR THE PAYMENT OF THIS GUARANTY OR
THE INDEBTEDNESS, AND RELEASE, SURRENDER, DEAL WITH, ABSTAIN FROM TAKING, TAKE,
SUBSTITUTE, EXCHANGE, ENFORCE, WAIVE, FAIL OR DECIDE NOT TO PERFECT, AND RELEASE
ANY SUCH SECURITY, WITH OR WITHOUT THE SUBSTITUTION OF NEW COLLATERAL AND
WITHOUT APPLICATION OF ANY SECURITY PROCEEDS TO THE INDEBTEDNESS; (D) TO
RELEASE, SUBSTITUTE, ADD, AGREE NOT TO SUE, OR DEAL WITH ANY ONE OR MORE OF
BORROWER'S SURETIES, ENDORSERS, OR OTHER GUARANTORS ON ANY TERMS OR IN ANY
MANNER LENDER MAY CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT APPLICATION OF
PAYMENTS AND CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO APPLY SUCH
SECURITY AND DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING WITHOUT
LIMITATION, ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE CONTROLLING
SECURITY AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION MAY DETERMINE;
(G) TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR ANY PART OF THE
INDEBTEDNESS; (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN WHOLE OR IN PART; (I)
TO NOT RESORT TO, ENFORCE OR EXHAUST ANY OF LENDER'S REMEDIES AGAINST BORROWER
OR ANY OTHER PARTY WHO MAY BE LIABLE FOR PAYMENT OF THE INDEBTEDNESS OR NOT
RESORT TO, MARSHALL, ENFORCE, FINALIZE, OR EXHAUST, IN PART OR IN WHOLE, ANY OF
ITS REMEDIES AGAINST ANY COLLATERAL GIVEN OR HELD AS SECURITY FOR THIS GUARANTY
OR THE INDEBTEDNESS; OR (J) TO ACCEPT PARTIAL PAYMENTS OF ACCOUNT OF THE
INDEBTEDNESS.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has not and will not, without the prior written consent of
Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets, or any interest
therein; (d) Guarantor has, to its own satisfaction, independently investigated
(and relies exclusively on): (i) Borrower's credit history; (ii) Borrower's
payment history with Lender, if any; (iii) Borrower's past, current and
projected financial condition; and (iv) the sufficiency of collateral if any,
supporting Borrower's indebtedness; (e) upon Lender's request, Guarantor will
provide to Lender financial and credit information in form acceptable to Lender,
and all such financial information provided to Lender is true and correct in all
material respects and fairly presents the financial condition of Guarantor as of
the dates thereof, and no material adverse change has occurred in the financial
condition of Guarantor since the date of the financial statements; and (f)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition. Guarantor
agrees to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect Guarantor's risks under this
Guaranty, and Guarantor further agrees that, absent a request for information,
Lender shall have no obligation to disclose to Guarantor any information or
documents acquired by Lender in the course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment, enforce or exhaust
any remedy or to proceed directly or at once against any person, including
Borrower or any other guarantor; (d) to proceed directly against, enforce or
exhaust any collateral held by Lender from Borrower, any other guarantor, or
any other person; (e) to pursue any other remedy within Lender's power; (f) to
commit any act or omission of any kind, or at any time, with respect to any
matter whatsoever; or (g) to proceed directly against, enforce or exhaust any
remedies against Borrower, any other guarantor, or any other person.
Additionally, Guarantor hereby waives any right to assert against Lender any
defense (legal or equitable), setoff, counterclaim, and/or claim of any kind or
value (a) that Guarantor may now or have against Borrower in any way or manner
or (b) arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, and/or enforceability of Lender's lien on any
collateral or security for the indebtedness or any guaranty or agreement of any
other guarantor.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessations of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (d) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of enforcement of this Guaranty. This
provision shall survive termination of this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
RIGHT OF SETOFF. Guarantor authorizes Lender, to the extent permitted by
applicable law, to charge, withdraw or setoff all sums owing on the indebtedness
against any and all the accounts set forth below in the Accounts section without
prior demand or notice to Guarantor.
ACCOUNTS. Guarantor grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers pledges, and transfers to
Lender all of Guarantor's right, title and interest in and to, Guarantor's
deposits, accounts (whether checking, savings, or some other account), or
securities now or hereafter in the possession of or on deposit with Lender or
with any Barnett Banks, Inc. affiliate or subsidiary including without
limitation all accounts held jointly with someone else and all accounts
Guarantor may open in the future, excluding however all IRA, Keogh, and trust
accounts.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal
<PAGE> 3
05-14-1996 CONTINUING UNLIMITED COMMERCIAL GUARANTY Page 3
Loan No 00700079395 (Continued)
===============================================================================
Lender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
FINANCIAL INFORMATION. If Guarantor is an individual, Guarantor shall provide
to Lender annually, signed and dated personal financial statements on Lender's
forms and, immediately after filing, Guarantor's personal income tax return
filed for the past calendar year. If Guarantor is a non-individual,
notwithstanding anything else contained in any document executed in conjunction
with the indebtedness, at a minimum Guarantor shall provide to Lender
annually, or more often if requested by Lender, Guarantor's balance sheet and
income statement, statement of cash flow and notes to statements certified as
correct to the best knowledge and belief by Guarantor's chief financial officer
or other officer or person acceptable to Lender.
GARNISHMENT. Guarantor consents to the issuance of a continuing writ of
garnishment or attachment against Guarantor's disposable earnings, in
accordance with Section 222.11, Florida Statutes, in order to satisfy, in whole
or in part, any money judgment entered in favor of Lender.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Guaranty and supersedes all prior understandings
and correspondence, oral or written, with respect to the subject matter
hereof. No alteration of or amendment to this Guaranty shall be effective
unless given in writing and signed by the party or parties sought to be
charged or bound by the alteration or amendment.
APPLICABLE LAW. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Florida.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including reasonable attorneys' fees and
Lender's legal expenses, incurred in connection with the Indebtedness, this
Guaranty, or the enforcement of this Guaranty. Lender may pay someone else
to help enforce this Guaranty, and Guarantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including reasonable attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. Guarantor also shall pay all court costs and such
additional fees as may be directed by the court.
NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, notification by
telefacsimilie is specifically not allowed, and, except for revocation
notices by Guarantor, shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier, or when deposited
in the United States mail, first class postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above or to
such other addresses as either party may designate to the other in writing.
All revocation notices by Guarantor shall be in writing and shall be
effective only upon delivery to Lender as provided above in the section
titled "DURATION OF GUARANTY." If there is more than one Guarantor, notice
to any Guarantor will constitute notice to all Guarantors. For notice
purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and construction
so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the
words "Borrower" and "Guarantor" respectively shall mean all and any one or
more of them. The "Guarantor," "Borrower," and "Lender" include the heirs,
successors, assigns, and transferees of each of them. Caption headings in
this Guaranty are for convenience purposes only and are not to be used to
interpret or define the provisions of this Guaranty. If a court of
competent jurisdiction finds any provisions of this Guaranty to be invalid
or unenforceable as to any person or circumstance, such finding shall not
render that provision invalid or unenforceable as to any other persons or
circumstances, and all provisions of this Guaranty in all other respects
shall remain valid and enforceable. If any one or more of Borrower or
Guarantor are corporations or partnerships, it is not necessary for Lender
to inquire into the powers of Borrower or Guarantor or of the officers,
directors, partners, or agents acting or purporting to act on their behalf,
and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this Guaranty.
TIME. Time is of the essence of all requirements of Guarantor herein.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Guaranty shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Guaranty. No prior waiver by Lender, nor
any course of dealing between Lender and Guarantor, shall constitute a
waiver of any of Lender's rights or of any of Guarantor's obligations as to
any future transactions. Whenever the consent of Lender is required under
this Guaranty, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MAY 14, 1996.
GUARANTOR:
x /s/ Bahram Yusefzadeh
- ----------------------------
Bahram Yusefzadeh
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.20b(c) 1996 CFI ProServices, Inc.
All rights reserved. [FL-E20 E3.20 F3.20 P3.20 0728754.LN C25.OVL]
<PAGE> 1
EXHIBIT 10.52
[BARNETT BANK LOGO] BARNETT BANK OF CENTRAL FLORIDA, N.A.
390 N. Orange Avenue Suite 700-CB
Catherine L. Sterba Post Office Box 3200
Vice President Orlando, Florida 32802-3200
(407) 420-2733 Fax (407) 420-2886
May 1, 1996
Mr. Bahram Yusefzadeh
Chairman & CEO
Phoenix International, Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751
Dear Bahram:
The following is an outline of what Barnett Bank would like to propose to
Phoenix International:
WORKING CAPITAL
---------------
Borrower: Phoenix International, Inc.
Amount: Up to $750,000
Purpose: Finance of receivables
Interest Rate: BBI Prime + 1.75%, ADOC
Fee: 1.5%
Repayment: Interest monthly, principal on demand.
Expiration: Six month maturity with a review at 6 months. Demand,
with an annual review no later than 6/30 of each year.
Collateral: Unsecured with blanket lien on all assets as an
abundance of caution.
Guarantor: Mr. Bahram Yusefzadeh shall jointly and severally
quarantee full payment and performance of the loan and
loan documents.
<PAGE> 2
Phoenix International, Inc.
Commitment Letter
May 1, 1996
page 2
Conditions:
1. Annual receipt of CPA audited financial statements within
120 days of FYE. (Receipt and satisfactory review of last
three years prior to formal commitment.)
2. Annual receipt of personal financial statement of guarantor
certified to bank or on bank form. (Receipt of certification
of current statement prior to formal commitment.)
3. Annual receipt of personal tax return of guarantor. (Receipt
and satisfactory review of tax returns for 1992, 1993 and 1994
prior to formal commitment.)
4. Monthly receipt of company prepared financial statements
within 30 days of month end.
5. Monthly receipt of AR & AP agings and Borrowing Base
Certificate within 30 days of month end.
6. DSC covenant to be maintained at no less than 1.25x based on
quarterly financial statements.
7. Barnett Bank to be main bank of account for borrower.
8. Waiver of trial by jury.
Equipment Financing
Borrower: Phoenix International, Inc.
Type: Secured Revolving Line of Credit
Amount: Up to $250,000
Purpose: Finance equipment purchases
Rate: BBI Prime + 1.5%, ADOC
Fee: $100 per funding
Repayment: Each funding to amortize over 24 months with monthly payments
of principal and interest.
Maturity: Six month maturity with a review at 6 months. Demand.
Annual review to be completed no later than 6/30 of each year.
<PAGE> 3
Phoenix International, Inc.
Commitment Letter
May 1, 1996
page 3
Collateral: Blanket lien on equipment and furniture. Advances to
be made based on invoices presented at 100% of hard
cost. Minimum funding request of $10,000.
Guarantor: Mr. Bahram Yusefzadeh shall jointly and severally
guarantee full payment and performance of the loan
and loan documents.
Conditions:
1. Annual receipt of CPA audited financial statements
within 120 days of FYE. (Receipt and satisfactory
review of last three years prior to formal commitment.)
2. Annual receipt of personal financial statement of
guarantor certified to bank or on bank form. (Receipt
of certification of current statement prior to formal
commitment.)
3. Annual receipt of personal tax return of guarantor.
(Receipt and satisfactory review of tax returns for
1992, 1993 and 1994 prior to final commitment.)
4. Monthly receipt of company prepared financial statements
within 30 days of month end.
5. Debt service coverage to be maintained at no less than
1.25x based on quarterly financial statements. (To be
tested quarterly.)
6. Barnett Bank to be main bank of account for borrower.
7. Waiver of trail by jury.
<PAGE> 4
Phoenix International
Commitment Letter
May 1, 1996
page 4
This outlines the structure of what the bank intends to provide based on the
information currently in hand. If this structure is acceptable to you, we will
require receipt and satisfactory review of the information referenced above to
make a formal commitment.
Bahram, I am pleased to be able to work with you and Phoenix to establish what
I believe can be a long and mutually rewarding relationship. I look forward to
hearing from you in response to this outline.
Sincerely,
/s/ Catherine L. Sterba
- -----------------------
Catherine L. Sterba
Vice President
Corporate Banking
CLS:dlf
<PAGE> 1
EXHIBIT 10.53
MASTER NOTE MODIFICATION AGREEMENT
THIS MASTER NOTE MODIFICATION AGREEMENT ("Agreement") is dated as of
May 22, 1996, by and among Bahram Yusefzadeh ("Mr. Yusefzadeh"), the
Yusefzadeh Family Limited Partnership (the "Partnership"), and Phoenix
International Ltd., Inc. (the "Company").
RECITALS
A. Mr. Yusefzadeh executed and delivered to the order of the
Company the Promissory Note dated November 17, 1994 in the original principal
amount of Forty Thousand Eight Hundred Fifty-Four Dollars ($40,854.00) (the
"Yusefzadeh Note").
B. The Partnership executed and delivered to the order of the
Company the Promissory Note dated December 19, 1994 in the original principal
amount of Nine Hundred Thirty-Two Thousand Nine Hundred Ten Dollars
($932,910.00) and the Promissory Note dated January 30, 1995 in the original
principal amount of Three Hundred Forty-Four Thousand Seven Hundred Sixty
Dollars ($344,760.00) (collectively, the "Partnership Notes").
C. The Yusefzadeh Note and the Partnership Notes (collectively,
the "Notes") each mature on the last business day prior to any public offering
of the Company's capital stock. Mr. Yusefzadeh and the Partnership have
requested that the Company extend the maturity date of the Notes to the first
business day after the closing of any public offering of the Company's capital
stock. The Company has agreed to this request upon the terms and conditions
provided in this Agreement, which amends the Notes in certain stated respects.
NOW THEREFORE, in consideration of these premises, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Acknowledgement Of Recitals. Each of the parties hereto
hereby reaffirms all of the Recitals set forth above, which are hereby made a
part of this Agreement as if set forth in the body hereof.
2. Amendments To Maturity Date. The Notes are hereby amended by
deleting therefrom the words "on the last business day prior to any public
offering of the capital stock of Phoenix International Ltd., Inc." and
inserting in lieu thereof the following: "that date which occurs one (1)
business day following the date on which closing of a public offering of
Phoenix International Ltd., Inc.'s capital stock occurs."
3. Direct Payment From Underwriters. Mr. Yusefzadeh and the
Partnership agree that the Company shall be entitled to receive payment of all
amounts owed to the Company under the Notes directly from the underwriters out
of the proceeds of the public offering of the Company's capital stock. The
Company agrees to accept such payments directly from the underwriters and apply
such proceeds in satisfaction of the Notes. Notwithstanding any language
herein to the contrary, Mr. Yusefzadeh and the Partnership shall remain liable
to the Company for any and all amounts owed under the Notes should
<PAGE> 2
the proceeds delivered to the Company from the underwriters be insufficient in
amount to satisfy the Notes in full.
4. NO NOVATION; NO REFINANCE; NO EXTINGUISHMENT. THE PARTIES
HERETO DO NOT INTEND THAT THE AMENDMENT OF THE NOTES, AS DESCRIBED HEREIN,
SHALL: (A) CREATE OR EFFECT A NOVATION OF ANY OF THE NOTES; (B) CREATE OF
EFFECT A REFINANCE OF THE LOANS EVIDENCED BY THE NOTES; OR (C) EXTINGUISH OR
IMPAIR THE VALIDITY, FORCE OR EFFECT OF THE NOTES.
5. Incorporation; Other Terms; Final Agreement. The terms and
conditions of the Notes are incorporated by reference and made a part hereof,
as if fully set forth herein. Other than the foregoing, all other terms and
conditions of the Notes shall remain unchanged and in full force and effect
except as otherwise expressly modified or amended in writing by the parties
hereto or thereto. This Agreement and the other Notes constitute the entire
agreement between the parties hereto with respect to the subject matter hereof,
and may not be altered, modified, or amended except by a writing executed by
the Company and all other parties to this Agreement. This Agreement shall
inure to the benefit of the parties hereto, and shall be binding upon their
respective successors, personal representatives and permitted assigns.
6. Choice Of Law. The laws of the State of Florida (excluding,
however, conflict of law principles) shall govern and be applied to determine
all issues relating to this Agreement and the rights and obligations of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
WITNESS/ATTEST:
/s/ Bahram Yusefzadeh
- ------------------------- -------------------------------(SEAL)
Bahram Yusefzadeh
The Partnership:
/s/ Bahram Yusefzdeh
- ------------------------- By:----------------------------(SEAL)
Bahram Yusefzadeh, General Partner
The Company:
- ------------------------- By:/s/ Ralph Reichard
----------------------------(SEAL)
Name: Ralph Reichard
-----------------------------
Title: President and Chief
-----------------------------
Operating Officer
-----------------------------
<PAGE> 1
EXHIBIT 10.54
FORM PROMISSORY NOTE
DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $___________._____ HAVE BEEN
OR WILL BE PAID TO THE COMPTROLLER OF ORANGE COUNTY, FLORIDA IN CONNECTION
WITH THE STOCK PLEDGE AND SECURITY AGREEMENT OF EVEN DATE HEREWITH
MAITLAND, FLORIDA $___________.___
_____________, 1996
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned ("Borrower"), promises to pay to the
order of Phoenix International Ltd., Inc. ("Lender"), at Lender's offices at
900 Winderely Place, Suite 140, Maitland, Florida 32751, or at such other
places as the holder of this Promissory Note may from time to time designate,
the principal sum of _______________________________ and _____/100 Dollars
($_____________.____), together with interest until paid in full at the rate or
rates provided below and any and all other sums which may be owing to the
holder of this Promissory Note by Borrower pursuant to this Promissory Note.
The following terms shall apply to this Promissory Note.
1. Interest. From the date hereof until all sums due hereunder, including
principal, interest, charges, fees and expenses are paid in full, the principal
amount outstanding from time to time pursuant to this Promissory Note shall
bear interest as follows (Check One):
[ ] No Interest. Unless and until a Default (defined below) has
occurred, no interest shall be paid with respect to the principal balance
hereof.
[ ] Fixed Rate. At the fixed per annum rate of ________%.
If no box in this Section is marked, this Promissory Note shall bear
interest at the fixed per annum rate of eight percent (8%). Interest shall be
calculated on the basis of a three hundred sixty (360) days per year factor
times the actual days on which there exists an unpaid balance hereunder.
2. Repayment. The balance of this Promissory Note shall be paid as
follows (check one):
[ ] a. Semi-monthly Payments. Beginning on the last day of the calendar
month in which this Promissory Note is executed and continuing on the fifteenth
day and last business day of each successive calendar month thereafter, until
____________, 199___, which date is the final and absolute maturity date of
this Promissory Note ("Maturity Date"), Borrower shall pay to the holder ______
semi-monthly installments of principal and interest, each in amount of
__________________________ and ____/100 Dollars ($___________.___), and a final
payment of ______________________ and ____/100 Dollars ($__________.___),
together with all fees and other charges due under or pursuant to this
Promissory Note, as of the date each such payment is due.
<PAGE> 2
[ ] b. Time. The entire principal balance and any and all interest,
fees, charges and expenses shall be paid in full on or before
_______________________, 199___, which date is the final and absolute maturity
date of this Promissory Note ("Maturity Date").
On the Maturity Date, in addition to all other payments required
hereunder, all sums due hereunder, including principal, interest, charges and
fees, shall be paid in full.
3. Application Of Payments; Prepayment. All payments made hereunder shall
be applied in such order or proportion as the holder, in the holder's sole
discretion, may elect from time to time. Borrower may prepay this Promissory
Note in whole or in part at any time without premium or penalty interest. All
prepayments hereunder shall be applied to the principal balance in the inverse
order of scheduled maturities.
4. Security. This Promissory Note is secured by any property described as
collateral in any security agreement, mortgage, deed of trust, pledge agreement
or other document previously, simultaneously, or hereafter entered into by
Borrower in connection with any obligation or liability of Borrower to Lender
or any affiliate of Lender, such other security document(s) including but not
limited to the Stock Pledge and Security Agreement of even date herewith
between Borrower and Lender ("Agreement"). This Promissory Note specifically
incorporates by reference, as if fully set forth herein, all of the language
and provisions of the security documents described generally or specifically
above.
5. Default. The occurrence of any of the following shall immediately
constitute a default ("Default") hereunder: (i) Borrower fails, for any reason,
to pay the amounts payable under this Promissory Note when and as due; (ii)
Borrower dies or ceases, for any reason, to be an employee of Lender; (iii) any
representation or warranty made by Borrower under this Promissory Note or any
other Obligation Documents (defined below) shall be untrue or incorrect in any
respect, or Borrower shall violate any covenant or agreement made under this
Promissory Note or any other Obligation Documents; or (iv) Borrower becomes
unable to pay its debts as they become due or a petition is filed, a proceeding
is commenced or an assignment for the benefit of creditors is made, by or
against Borrower, for relief under any federal or state bankruptcy, insolvency
or other law relating to the relief of debtors.
6. Rights Upon Default. Immediately upon the occurrence of a Default, the
holder may, in its sole discretion and without notice or demand: (i) declare
the entire unpaid balance hereof and all other sums due hereunder and under any
other Obligation Documents (defined below) immediately due and payable; (ii)
may charge interest at a rate of ten percent (10%) per annum on the unpaid
principal balance hereunder, independent of whether the holder elects to
accelerate the unpaid principal balance as a result of such default, (iii)
exercise any other right or remedy under Agreement or any other agreement or
document executed by or on behalf of Borrower to or for the benefit of Lender
or any holder (collectively with the Agreement, the "Obligation Documents"); or
(iii) exercise any right or remedy provided by applicable law. Notwithstanding
the foregoing, the obligations of Borrower under this Promissory Note shall
automatically be immediately due and payable in full upon a Default under
Section 5(iv) above.
7. Interest Rate After Judgment; Costs of Collection. If judgment is
entered against Borrower on this Promissory Note or any other Obligation
Documents, the amount
<PAGE> 3
of the judgment entered (which may include principal, interest, fees, and
costs) shall bear interest at the higher of the maximum interest rate imposed
upon judgments by applicable law or the above described default interest rate,
to be determined on the date of the entry of the judgment. Should this
Promissory Note or any other Obligation Documents be referred to an attorney
for collection, whether or not suit has been filed, Borrower shall pay all of
the holder's costs and expenses, including reasonable attorneys' fees,
resulting from such referral.
8. WAIVER OF PRESENTMENT, PROTEST AND NOTICE OF DISHONOR. BORROWER, AND
ALL PARTIES HERETO, WHETHER MAKER, INDORSER, OR GUARANTOR, WAIVE PRESENTMENT,
NOTICE OF DISHONOR AND PROTEST.
9. Extensions Of Maturity. Borrower and all parties hereto, whether
maker, indorser, or guarantor, agree that the maturity of this Promissory Note,
or any payment due hereunder, may be extended at any time without releasing,
discharging, or affecting the liability of such party.
10. Manner and Method of Payment. WITHOUT IN ANY WAY LIMITING OR
CONDITIONING THE BORROWER'S OBLIGATIONS HEREUNDER, ALL PAYMENTS OWED UNDER THIS
PROMISSORY NOTE SHALL BE PAID BY DIRECT DEDUCTION FROM THE BORROWER'S WAGES IN
THE AMOUNT WHICH ARE TO BE PAID IN ACCORDANCE WITH SECTION 2.A. ABOVE WHEN AND
AS DUE. THE BORROWER HEREBY AUTHORIZES AND CONSENTS TO SUCH WAGE DEDUCTION BY
LENDER AND AGREES TO EXECUTE AND DELIVER TO THE LENDER ALL CONSENTS AND OTHER
DOCUMENTATION REQUIRED BY THE LENDER TO DEDUCT THE AMOUNTS OWED HEREUNDER FROM
THE BORROWER'S WAGES. All payments called for in this Promissory Note shall be
made in lawful money of the United States of America and, if made by check or
other payment instrument shall represent immediately available funds. In the
holder's discretion, any payment made by check or other payment instrument
shall not be deemed to have been made until the funds represented thereby have
been collected by the holder.
11. Notices. Any notice or demand required or permitted by or in
connection with this Promissory Note shall be given in the manner specified in
the Agreement for the giving of notices under the Agreement; provided that all
notices and demands for payment from the holder actually received by Borrower
shall be effective upon the receipt thereof by Borrower.
12. Assignability. This Promissory Note may be assigned by Lender or any
holder at any time or from time to time. Borrower may not assign its
obligations under this Promissory Note without the express written consent of
Lender. Any attempted assignment without the Lender's approval shall be null
and void.
13. Liability; Binding Nature. All liabilities under this Promissory Note
shall be joint and several with respect to each person or entity that is
executing this Promissory Note. This Promissory Note shall inure to the
benefit of and be enforceable by Lender and Lender's successors and assigns and
any other person to whom Lender or any holder may grant an interest in
Borrower's obligations hereunder, and shall be binding and enforceable against
Borrower and Borrower's personal representatives, successors and permitted
assigns, including trustees and receivers.
<PAGE> 4
14. Invalidity Of Any Part. If any provision or part of this Promissory
Note shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Promissory Note and this Promissory Note shall be
construed as if such invalid, illegal or unenforceable provision or part
thereof had never been contained herein, but only to the extent of its
invalidity, illegality, or unenforceability.
15. Choice Of Law; Consent To Jurisdiction; Agreement As To Venue. This
Promissory Note shall be governed, construed and interpreted in accordance with
the laws of the State of Florida, even if the Florida rules governing conflicts
of laws would otherwise require that the laws of another jurisdiction govern
this Promissory Note. Borrower consents to the jurisdiction and venue of the
courts of any county in the State of Florida or to the jurisdiction and venue
of the United States District Court for any District of Florida in any action
or judicial proceeding brought to enforce, construe or interpret this
Promissory Note. Borrower agrees that any forum other than the State of
Florida is an inconvenient forum and that a suit (or non-compulsory
counterclaim) brought by Borrower against Lender in a court of any state other
than the State of Florida should be forthwith dismissed or transferred to a
court located in the State of Florida.
16. MAXIMUM RATE OF INTEREST. Notwithstanding any provision of this
Promissory Note to the contrary, Borrower shall not be obligated to pay
interest hereunder in excess of the maximum rate of interest permitted by the
laws of any state determined to govern this Promissory Note or the laws of the
United States applicable to loans in such state. If any provision of this
Promissory Note shall ever be construed to require the payment of any amount of
interest in excess of that permitted by applicable law, then the interest to be
paid hereunder shall be held subject to reduction to the amount allowed under
applicable law, and any sums paid in excess of the interest rate allowed by law
shall be applied in reduction of the principal balance outstanding under this
Promissory Note. Borrower acknowledges that it has been contemplated at all
times by Borrower that the laws of the State of Florida will govern the maximum
rate of interest that it is permissible for the holder of this Promissory Note
to charge Borrower under this Promissory Note.
17. Unconditional Obligations. Borrower's obligations under this
Promissory Note shall be the absolute and unconditional obligation of Borrower
and shall be independent of any rights of set-off, recoupment or counterclaim
which Borrower might otherwise have against the holder of this Promissory Note,
and Borrower shall pay absolutely the payments of principal, interest, fees and
expenses required hereunder, free of any deductions and without abatement,
diminution or set-off. TIME IS OF THE ESSENCE OF THIS PROMISSORY NOTE.
18. Seal and Effective Date. This Promissory Note is an instrument
executed under seal and is effective and enforceable as of the date set forth
on the first page hereof.
<PAGE> 5
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note under
seal as of the date first above written.
WITNESS: BORROWER:
__________________________ _______________________________(SEAL)
Name: _________________________
____________________________________
(Street Address)
____________________________________
(City-State-Zip)
____________________________________
(Telephone)
ACKNOWLEDGEMENT
STATE OF FLORIDA, COUNTY OF ___________________, TO WIT:
The foregoing Promissory Note was acknowledged before me this _____ day of
_________, 1996 by _______________________________, who is personally known to
me or who has produced _______________________________ as identification.
_______________________________________
Signature of Notary
_______________________________________
Printed/Stamped Name of Notary
<PAGE> 1
EXHIBIT 10.55
FORM STOCK PLEDGE AND SECURITY AGREEMENT
AFFIX DOCUMENTARY TAX STAMP HERE:
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT is made and entered into as of
the ____ day of _____________________ 1996, by and between
_____________________ ("Pledgor") and PHOENIX INTERNATIONAL LTD., INC.
("Secured Party").
W I T N E S S E T H:
WHEREAS, Pledgor has purchased from Secured Party __________ (____)
shares (pre-split) of the $2.50 par value common stock (the "Shares") of Phoenix
International Ltd., Inc. (the "Company"); and
WHEREAS, as consideration for the purchase of the Shares Pledgor has
delivered a Promissory Note of even date herewith to Secured Party in the
principal amount of ________________________ and ___/100 Dollars
($_____________) (together with all extensions, renewals, allonges, amendments
and modifications thereof, the "Note"); and
WHEREAS, to secure the payment of all Obligations (as hereinafter
defined) of Pledgor to Secured Party, Pledgor has agreed to pledge to Secured
Party, and to grant Secured Party a security interest in, all of the Shares;
NOW, THEREFORE, for and in consideration of the premises and the
agreements and covenants contained herein, the parties hereto agree as follows:
1. Security Interest. As security for payment of all liabilities and
obligations of Pledgor to Secured Party of every kind and description, whether
now existing or hereafter arising, fixed or contingent, joint or several, due
or to become due, under the Note and otherwise (the "Obligations"), Pledgor
hereby grants, mortgages, assigns, sets over, delivers and transfers to Secured
Party, its successors and assigns, a continuing security interest in and
security title to the Shares, together with all dividends, income, cash,
options, warrants, rights, instruments and other property, interests or
proceeds from time to time received, receivable or otherwise distributed in
respect of, or in exchange, replacement, renewal or substitution for, any or
all of the Shares (all of which shall be included in the term "Shares").
Concurrently herewith Pledgor has delivered to Secured Party a certificate
representing the Shares and stock powers in the form attached hereto as Exhibit
A endorsed in blank, as security for payment of the Obligations. Beneficial
ownership of the Shares, including, without limitation, all voting, consensual
and dividend rights, shall remain in Pledgor until the occurrence of a Default
pursuant to Section 6 hereof. At the Secured Party's option, the Shares shall
bear the following legend: "THESE SHARES ARE SUBJECT TO A STOCK PLEDGE AND
SECURITY AGREEMENT DATED ___________, 1996."
<PAGE> 2
2. Warranty. Pledgor hereby represents and warrants to Secured Party that
Pledgor owns the Shares free and clear of all liens, claims and encumbrances,
except for the security interest created hereby.
3. Covenants. The Pledgor shall not transfer, assign or otherwise dispose
of its beneficial interest in any of the Shares without the prior written
consent of the Secured Party. For so long as Pledgor shall have the right to
vote the Shares, Pledgor covenants and agrees that it will not, without the
prior written consent of Secured Party, vote or take any consensual action with
respect to the Shares which would constitute a default under this Agreement.
4. Permitted Sale of Shares. Upon at least five (5) days advance written
request of the Pledgor, the Secured Party agrees to permit the Shares (or a
portion thereof) to be sold provided that (i) the Secured Party shall receive
payment in full of all amounts owed under the Note directly from the proceeds
of such sale, and (ii) the Pledgor shall execute and deliver, or cause to be
executed and delivered, any and all documents and agreements required by the
Secured Party in connection with such sale, including the agreement of the
selling agent, if any, to deliver all proceeds from the sale(s) permitted
hereunder directly to the Secured Party. Notwithstanding any language herein
to the contrary, the Pledgor shall remain liable to the Secured Party for any
and all amounts owed under the Note should the proceeds delivered to the
Secured Party from the sale of the Shares be insufficient to pay the Note in
full.
5. Secured Party's Duty of Care. Secured Party shall have no duty with
respect to any of the Shares other than the duty to sue reasonable care in the
safe custody of the Shares in its possession. Without limiting the generality
of the foregoing, Secured Party shall be under no obligation to take any steps
necessary to preserve the value of any of the Shares or to preserve rights in
the Shares against any other parties, but may do so at its option, and all
expenses incurred in connection therewith shall be for the sole account of
Pledgor and shall be included in the Obligations secured hereby.
6. Default. Upon the occurrence of an event of default under the Note or
if Pledgor shall fail to perform or observe any provision of this Agreement or
any other document or instrument which evidences or secures any of the
Obligations (any of such occurrences being hereinafter referred to as a
"Default"), Secured Party shall be entitled (but not obligated) to exercise,
without limitation, the following rights, which Pledgor hereby agrees to be
commercially reasonable:
(a) to receive all amounts payable in respect of the Shares otherwise
payable to Pledgor, and to exercise all of the rights, powers and remedies of
Pledgor with respect to such payments;
(b) to transfer all or any part of the Shares into Secured Party's name or
the name of its nominee or nominees;
(c) to vote all or any part of the Shares (whether or not transferred into
the name of Secured Party) and give all consents, waivers and ratifications in
respect of the
2
<PAGE> 3
Shares and otherwise act with respect thereto as though it were the outright
owner thereof;
(d) at any time or from time to time to sell, assign and deliver, or grant
options to purchase, all or any part of the Shares in one or more blocks, or
any interest therein, at any public or private sale at any exchange or
elsewhere, without demand of performance, advertisement or notice of intention
to sell or of the time or place of sale or adjournment thereof (all of which
are hereby expressly and irrevocably waived by Pledgor to the fullest extent
permitted by law), for cash, on credit or for other property, for immediate or
future delivery without any assumption of credit risk, and for such price or
prices and on such terms as Secured Party in its sole discretion may determine;
Pledgor agrees that to the extent that notice of sale shall be required by law
that at least five (5) business days' notice to Pledgor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification; Secured Party shall not be obligated to
make any sale of the Shares regardless of notice of sale having been given;
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and any such sale may,
without further notice, be made at the time and place to which it was so
adjourned; Pledgor hereby waives and releases to the fullest extent permitted
by law any right or equity of redemption with respect to the Shares, whether
before or after sale hereunder, and all rights, if any, of marshalling the
Shares; at any such sale, unless prohibited by applicable law, Secured Party
may bid for and purchase all or any part of the Shares so sold free from any
such right or equity of redemption; and Secured Party shall not be liable for
failure to collect or realize upon any or all of the Shares or for any delay in
so doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto;
(e) Accelerate and call due the unpaid principal balances of the Note and
any or all of the Obligations and all accrued interest and other sums due as of
the date of Default;
(f) Foreclose or enforce all or any security interests, mortgage
interests, liens, assignments, or pledges created by this Agreement or any
other document, instrument or agreement which evidences or secures any
Obligations (collectively, the "Obligation Agreements");
(g) File suit against the Pledgor on the Notes, this Agreement or any
Obligation Agreements;
(h) Seek specific performance or injunctive relief to enforce performance
of the undertakings, duties, and agreements provided in the Note, this
Agreement or any other Obligation Agreements whether or not a remedy at law
exists or is adequate;
(i) Set-off any amounts in any account or represented by any certificate
with the Secured Party in the name of the Pledgor or in which the Pledgor has
an interest;
(j) Generally, to take all such other action as Secured Party in his sole
discretion may determine as incidental or conducive to any of the matters or
powers mentioned in the foregoing provisions of this Section and which Secured
Party may or can do lawfully and to
3
<PAGE> 4
use the name of Pledgor for the purposes aforesaid and in any proceedings
arising therefrom.
7. Application of Proceeds. The proceeds of the public or private sale or
other disposition shall be applied (a) to the costs incurred in connection with
the sale, including, without limitation, attorneys' fees actually incurred; (b)
to any unpaid interest which may have accrued on any Obligations secured
hereby; and (c) to any unpaid principal on any Obligations secured hereby, and
(d) any remaining proceeds shall be paid over to Pledgor or others as provided
by law. In the event the proceeds of the sale or other disposition of the
Shares are insufficient to pay such costs, interest and principal, Pledgor
shall be personally liable to Secured Party for any such deficiency.
8. Additional Rights of Secured Party. In addition to its rights and
privileges under this Agreement, Secured Party shall have all the rights,
powers and privileges of a Secured Party under the Florida Uniform Commercial
Code and other applicable law. The rights and remedies provided in this
Agreement, the Note, the Obligation Agreements or otherwise under applicable
law shall be cumulative, and the exercise of any particular right or remedy
shall not preclude the exercise of any other rights or remedies in addition to,
or as an alternative of, such right or remedy. In any action or proceeding
brought by the Secured Party to collect the sums owed on the Obligations, a
certificate signed by an officer of the Secured Party setting forth the unpaid
balances of principal, and any accrued interest, default interest, legal fees,
and late charges owed on the Obligations shall be presumed correct and shall be
admissible in evidence for the purpose of establishing the truth of what it
asserts. If the Pledgor wishes to contest the accuracy of the figures set
forth in any such certificate, the Pledgor shall have the burden of proving
that the certificate is inaccurate or incorrect.
9. Return of Shares to Pledgor. Upon payment in full of all principal and
interest on the Note and all sums due in respect of all other Obligations, this
Agreement shall terminate and Secured Party shall return to Pledgor all of the
then remaining Shares.
10. Notices. Any notices or other communications, required or permitted
by this Agreement shall be in writing and shall be deemed to have been duly
given and delivered when delivered in person, when mailed postage prepaid by
registered or certified mail with return receipt requested, or when delivered
by overnight delivery service to the recipient at the address set forth below,
or to such other address as to which the other party has been subsequently
notified in writing by such recipient.
Pledgor: Secured Party:
_____________________ Phoenix International Ltd., Inc.
_____________________ 900 Winderely Place
_____________________ Suite 140
Maitland, Florida 32751
Attn: Chairman of the Board of Directors
4
<PAGE> 5
11. Applicable Law; Binding Agreement. The provisions of this Agreement
shall be construed and interpreted, and all rights and obligations of the
parties hereto determined, in accordance with the laws of the State of Florida.
This Agreement, together with all documents referred to herein, constitutes
the entire agreement between Pledgor and Secured Party with respect to the
matters addressed herein and may not be modified except by a writing executed
by Secured Party and Pledgor. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
12. Severability. If any Section or part thereof shall for any reason be
held or adjudged to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such Section or part thereof so adjudicated invalid,
illegal or unenforceable shall be deemed separate, distinct and independent,
and the remainder of this Agreement shall remain in full force and effect and
shall not be affected by such holding or adjudication.
13. Secured Party Appointed Attorney-In-Fact. Pledgor hereby constitutes
and appoints Secured Party, with full power of substitution, Pledgor's
attorney-in-fact and grants Secured Party an IRREVOCABLE PROXY for the purpose
of carrying out the provisions of this Agreement and taking any action and
executing any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes hereof, including but not limited to voting the Shares
in any manner the Secured Party deems advisable, which appointment is coupled
with an interest and is irrevocable. Without limiting the generality of the
foregoing, Secured Party shall have the power to arrange for the transfer, upon
or at any time after the occurrence of Default and Secured Party's acceleration
of the Obligations in consequence thereof, of the Shares on the books of the
Company to the name of Secured Party. Pledgor agrees to indemnify and save
Secured Party harmless from and against any liability or damage which Secured
Party may incur, in good faith and without negligence, in the exercise or
performance of any of Secured Party's powers and duties specifically set forth
herein.
14. WAIVERS. PLEDGOR HEREBY WAIVES: NOTICE OF ACCEPTANCE OF THIS
AGREEMENT, PRESENTMENT AND DEMAND FOR PAYMENT OF ANY OF THE OBLIGATIONS;
PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE
OBLIGATIONS; AND ALL OTHER NOTICES TO WHICH THE PLEDGOR MIGHT OTHERWISE BE
ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PLEDGOR:
---------------------------------------
Name:
----------------------------------
SECURED PARTY:
PHOENIX INTERNATIONAL LTD., INC.
By:
------------------------------------
Its:
-----------------------------------
<PAGE> 7
EXHIBIT A
IRREVOCABLE STOCK POWER AND ASSIGNMENT
FOR VALUE RECEIVED, the undersigned does hereby bargain, sell, assign and
transfer unto PHOENIX INTERNATIONAL LTD., INC. ("Secured Party") ______ shares
of the capital stock of Phoenix International Ltd., Inc., a Florida corporation
(the "Company") standing in its name on the books of the Company and
represented by Certificate No. ____ and does hereby irrevocably constitute and
appoint Seller and its successors and assigns as its true and lawful attorney,
for it and in its name and stead, to transfer said stock on the books of the
Company with full power of substitution in the premises. This power of
attorney is coupled with an interest and shall be irrevocable.
This ___ day of _____________, 1996.
By:
------------------------------
Name:
---------------------------
Signed, sealed and delivered
in the presence of:
- ----------------------------
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of the Registrant
Phoenix FSC, Inc., a wholly-owned subsidiary of
the Registrant, was incorporated on May 9, 1994 with
the government of the Virgin Islands of the United States, St. Thomas.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial and Operating Data" and "Experts" and to the use of our
report dated March 1, 1996, except for Note 12, as to which the date is May 8,
1996, in Amendment No. 1 to the Registration Statement on Form S-1 and related
Prospectus of Phoenix International Ltd., Inc. for the registration of 1,239,125
shares of its common stock.
ERNST & YOUNG LLP
Atlanta, Georgia
June 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995 AND QUARTER ENDED MARCH 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REGISTRATION STATEMENTS OF
PHOENIX INTERNATIONAL LTD., INC ON FORM S-1.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 11-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> FEB-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<EXCHANGE-RATE> 1 1
<CASH> 425,931 350,981
<SECURITIES> 0 0
<RECEIVABLES> 338,693 476,996
<ALLOWANCES> 10,000 10,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,533,053 1,533,544
<PP&E> 768,333 830,686
<DEPRECIATION> 191,826 235,435
<TOTAL-ASSETS> 3,228,289 3,495,641
<CURRENT-LIABILITIES> 3,796,391 3,872,217
<BONDS> 0 0
0 0
0 0
<COMMON> 1,671,190 1,683,690
<OTHER-SE> (2,239,292) (2,060,266)
<TOTAL-LIABILITY-AND-EQUITY> (568,102) (376,576)
<SALES> 0 0
<TOTAL-REVENUES> 5,023,711 1,781,330
<CGS> 0 0
<TOTAL-COSTS> 1,622,669 588,225
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 12,060 1,081
<INCOME-PRETAX> 810,268 294,526
<INCOME-TAX> 255,999 153,000
<INCOME-CONTINUING> 554,269 141,526
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 554,269 141,526
<EPS-PRIMARY> .17 .04
<EPS-DILUTED> .17 .04
</TABLE>
