<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997.
Or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
____________, 19__.
Commission file number : 0-20937
---------------------
PHOENIX INTERNATIONAL LTD., INC.
(Exact name of registrant as specified in its charter)
Florida 59-3171810
(State or other jurisdiction (I.R.S Employer Identification No.)
of incorporation or organization)
500 International Drive, Heathrow, Florida 32746
(Address of principal executive offices)
(407) 548-5100
(Registrant's telephone number including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 5, 1997
Common Stock, $0.01 par value 3,864,615
(No. of Shares)
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PHOENIX INTERNATIONAL LTD., INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
FINANCIAL INFORMATION
PART I
Financial Statements 3
Item 1.
Condensed Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996 3
Condensed Consolidated Statements of Operations for the Three
Months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for
the Three Months ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES
EXHIBIT INDEX
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,770,815 $ 3,770,889
Investments -- 2,730,825
Accounts receivable, net of allowance for doubtful accounts of $50,000 and
$15,000 at March 31, 1997 and December 31, 1996, respectively 1,667,900 935,736
Unbilled accounts receivable 1,577,347 1,188,282
Prepaid expenses and other current assets 754,907 548,379
------------ ------------
Total current assets 8,770,969 9,174,111
Property and equipment:
Computer equipment and purchased software 1,429,312 1,088,509
Furniture, office equipment and leasehold improvements 890,656 252,047
------------ ------------
2,319,968 1,340,556
Accumulated depreciation and amortization (407,165) (447,128)
------------ ------------
Total property and equipment 1,912,803 893,428
Capitalized software costs, net of accumulated
amortization of $571,351 and $446,572 at March 31, 1997 and
December 31, 1996, respectively 2,534,212 1,985,628
Other assets 546,400 30,000
------------ ------------
Total assets $ 13,764,384 $ 12,083,167
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 449,755 $ 384,693
Accrued expenses 510,243 922,040
Note payable 250,000 --
Capital lease, current portion 121,633 --
Deferred revenue 899,453 1,002,417
------------ ------------
Total current liabilities 2,231,084 2,309,150
Deferred revenue under economic development grant 190,000 190,000
Capital lease, long term portion 595,219 --
------------ ------------
Total long term liabilities 785,219 190,000
Shareholders' equity:
Common Stock, $0.01 par value
20,000,000 shares authorized, 3,864,374 and 3,838,910 issued and
outstanding at March 31, 1997 and December 31, 1996, respectively 38,644 38,389
Additional paid-in capital 10,850,528 10,727,255
Stock subscription receivables (83,443) (110,683)
Accumulated deficit (57,648) (1,070,944)
------------ ------------
Total shareholders' equity 10,748,081 9,584,017
------------ ------------
Total liabilities and shareholders' equity $ 13,764,384 $ 12,083,167
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
3
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PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
License fees and other $ 2,268,406 $ 1,127,607
Implementation, customer and software
support and other service fees 1,445,318 653,723
----------- -----------
Total revenues 3,713,724 1,781,330
Expenses:
Cost of license fees and other 219,737 131,029
Cost of implementation customer and
software support and other service fees 831,633 457,196
Sales and marketing 560,997 268,818
General and administrative 436,607 358,260
Product development 553,140 299,067
----------- -----------
Total expenses 2,602,114 1,514,370
Other income (expense):
Interest income 74,788 28,647
Interest expense (5,389) (1,081)
----------- -----------
Income before income taxes 1,181,009 294,526
Income tax expense 167,713 153,000
----------- -----------
Net income $ 1,013,296 $ 141,526
=========== ===========
Net income per share $ 0.24 $ 0.04
=========== ===========
Weighted average shares outstanding 4,286,640 3,298,444
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of operations.
4
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PHOENIX INTERNATIONAL LTD., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,013,296 $ 141,526
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 216,891 108,360
Provision for doubtful accounts 35,000 --
Deferred taxes -- 153,000
Changes in operating assets and liabilities:
Accounts receivable (767,164) (138,303)
Unbilled accounts receivable (389,065) (38,561)
Interest receivable, related party -- (26,008)
Prepaid expenses and other current assets (206,528) (25,569)
Accounts payable 65,062 124,855
Accrued expenses (411,797) 76,438
Deferred revenue (102,964) (125,467)
----------- -----------
Net cash provided by (used in) operating activities (547,269) 250,271
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (384,978) (61,943)
Sale of short term investments 2,730,825 --
Changes in other assets (266,400) --
Capitalized software costs (673,363) (313,278)
----------- -----------
Net cash provided by (used in) investing activities 1,406,084 (375,221)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital lease obligation (9,657) --
Net proceeds from issuance of common stock 123,528 50,000
Cash payments for stock subscription receivable 27,240 --
----------- -----------
Net cash provided by financing activities 141,111 50,000
Net increase (decrease) in cash and cash equivalents 999,926 (74,950)
Cash and cash equivalents at beginning of the period 3,770,889 425,931
----------- -----------
Cash and cash equivalents at end of the period $ 4,770,815 $ 350,981
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.
5
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PHOENIX INTERNATIONAL LTD., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation
of the financial position and the results of operations for the interim
periods presented. The condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information
and footnote disclosures usually found in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. The condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements and "Selected Financial and Operating Data" included in the
Company's annual report on Form 10-K for the year ended December 31,
1996.
2. NET INCOME PER SHARE
Net income per share is based on the weighted average number
of common shares outstanding and dilutive common stock equivalents
outstanding, using the treasury stock method, 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 and through the effective date 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 through June 30,
1996. Also see footnote 5 "New Accounting Pronouncements" below.
3. CERTAIN TRANSACTIONS
On March 5, 1997, the Company entered into a Stock Purchase
Agreement with Dyad whereby the Company purchased a minimal equity
interest in Dyad Corporation ("Dyad"). Dyad is developing automated
loan and mortgage and financial services delivery products. Pursuant to
the Company's agreement with Dyad, the Company has an option for one
year to increase its equity interest in Dyad to no more than 10% of the
outstanding shares of Dyad. In addition, the Company and Dyad entered
into a License and Distribution Agreement (the "License Agreement")
whereby the Company obtained certain rights to market, sell and license
Dyad's products. The Company paid Dyad license fees upon execution of
the License Agreement and is obligated to pay additional license fees
in May 1997. License fees are classified as prepaid royalties against
future sales of Dyad products. A shareholder and director of the
Company is a shareholder and director of Dyad.
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4. CAPITALIZED SOFTWARE 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." These costs include costs incurred internally
after technological feasibility has been established to develop and
enhance computer software products and include certain purchased
software costs. Capitalized software costs include purchased software
costs of $311,000 and $0 at March 31, 1997 and December 31, 1996,
respectively.
5. NEW ACCOUNTING PRONOUNCEMENTS
In February 1997 the Financial Accounting Standards Board
issued a new accounting pronouncement, SFAS No. 128, "Earnings per
Share", which will change the current method of computing earnings per
share. The new standard requires presentation of "basic earnings per
share" and "diluted earnings per share" amounts, as defined therein.
"Basic earnings per share" is computed by dividing net income by
weighted average shares outstanding and does not include potentially
dilutive securities. "Diluted earnings per share" is computed by
dividing net income by weighted average shares outstanding, including
potentially dilutive securities using the treasury stock method based
on the average stock price for the period. SFAS No. 128 will be
effective for the Company's quarter and year ending December 31, 1997,
and, upon effectiveness, all prior-period earnings per share data
presented shall be restated to conform with the provisions of the new
pronouncement. Application of the pronouncement earlier than the
Company's quarter ending December 31, 1997 is not permitted.
Pro forma basic and diluted earnings per share for the quarters ended
March 31, 1996 and 1997 calculated under the provisions of SFAS No. 128
are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1997
---- ----
<S> <C> <C>
Basic earnings per share $.05 $.26
Diluted earnings per share $.04 $.24
</TABLE>
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following discussion 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, and the
Company's operating performance each quarter is subject to various risks and
uncertainties that are discussed in detail in the Company's filings with the
Securities and Exchange Commission, including the "Risk Factors" section in the
Company's Registration Statement (the "Registration Statement") on Form S-1
(Registration Number 333-03355), as amended, declared effective by the
Securities and Exchange Commission on July 1, 1996.
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 financial institutions. 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 Retail Banking System (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, programming services, conversion training and installation
services, interface services for tying the Phoenix System to third-party
applications, customer and software support services, disaster recovery services
and Internet/Intranet consulting services. 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. Revenues for
implementation, conversion, installation, training, interface and consulting
services are recognized when the services are performed. Service revenues for
ongoing customer and software support and product updates and disaster recovery
services provide recurring revenues as they are recognized ratably over each
year of the license agreement, the term of which is typically five years.
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. Due to all of the foregoing
8
<PAGE> 9
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 Company's common stock would likely be
materially adversely affected.
RESULTS OF OPERATIONS
The following table sets forth the percentage of total revenues represented by
certain line items in the Company's statement of operations for the periods
indicated.
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Revenues
License fees and other 61.1 % 63.3 %
Implementation, customer and software
software support and other service fees 38.9 % 36.7 %
----- -----
Total revenues 100.0 % 100.0 %
Expenses
Cost of license fees and other 5.9 % 7.4 %
Cost of implementation, customer and
software support and other service fees 22.4 % 25.6 %
Sales and marketing 15.1 % 15.1 %
General and administrative 11.8 % 20.1 %
Product development 14.9 % 16.8 %
----- -----
Total expenses 70.1 % 85.0 %
Other income (expense)
Interest income 2.0 % 1.6 %
Interest expense (0.1)% (0.1)%
----- -----
Income before taxes 31.8 % 16.5 %
Income tax expense 4.5 % 8.6 %
----- -----
Net income 27.3 % 7.9 %
===== =====
</TABLE>
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Revenues. Total revenues increased 109% to $3.7 million in the quarter
ended March 31, 1997 from $1.8 million for the quarter ended March 31, 1996.
Revenues from license fees and other increased $1.1 million or 101% to $2.3
million for the quarter ended March 31, 1997 from $1.1 million in the quarter
ended March 31, 1996 due to increased number of customers. Revenues from
implementation, customer and software support and other service fees increased
$792,000 or 121% to $1.4 million in the quarter ended March 31, 1997 from
$654,000 in the quarter ended March 31, 1996 due to increased implementation and
other service fees.
Expenses. Cost of license fees and other was $220,000 and $131,000 in
the quarters ended March 31, 1997 and 1996, respectively. These costs increased
as a result of higher amortization of capitalized software development costs and
higher third party software royalties.
9
<PAGE> 10
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 increased $374,000 or 81.9% to $832,000 in the quarter ended March 31, 1997
from $457,000 in the quarter ended March 31, 1996 as a result of additional
personnel costs related to increased Phoenix System implementation activity.
Sales and marketing expenses increased $292,000 or 108% to $561,000 in
the quarter ended March 31, 1997 from $269,000 in the quarter ended March 31,
1996 as a result of additional expenses incurred in connection with increased
staffing and personnel related costs and from the opening of a new sales office
in the United Kingdom in December 1996.
General and administration expenses increased $78,000 or 21.9% to
$437,000 in the quarter ended March 31, 1997 from $358,000 in the quarter ended
March 31, 1996 primarily as the result of increased public company related
expenses and personnel costs.
Product development expenses increased $254,000 or 85% to $553,000 in
the quarter ended March 31, 1997 from $299,000 in the quarter ended March 31,
1996. Product development expenses increased as a result of increased contract
labor and personnel related costs.
Other Income (Expense). Interest income was $75,000 and $29,000 in the
quarters ended March 31, 1997 and 1996, respectively. Interest income increased
primarily due to the increase in interest-bearing funds resulting from the
investment of the proceeds from the initial public offering of the Company's
common stock in July 1996.
Income Tax Expense. Income tax expense was $168,000 and $153,000 in the
quarters ended March 31, 1997 and 1996, respectively. These income tax expenses
represent withholding taxes which relate to the license of the Company's
products to foreign customers and which are contractually payable by those
customers, and includes $24,000 in the quarter ended March 31, 1997 for
alternative minimum tax. The Company has a net operating loss carry forward and
tax credits and does not expect to pay regular income taxes during 1997.
Net Income. Net income increased $871,000 to $1,013,000 in the quarter
ended March 31, 1997 from net income of $142,000 in the quarter ended March 31,
1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $4.8 million at March 31, 1997. For the
three months ended March 31, 1997, cash used by operations was $547,000. An
increase in accounts receivable of $767,000, an increase in unbilled accounts
receivable of $389,000, and a decrease in accrued expenses of $412,000 were
significant uses of cash in operating activities. Investing activities provided
cash of $1.4 million, including $2.7 million from the sale of short term
investments. Purchases of property and equipment were $385,000. Increases in
other assets which include minority investments in other companies and
non-current prepaid royalties (see footnote 3 to the financial statements) used
$266,000 of cash. Increases in capitalized software costs, including $311,000 of
purchased software, used $673,000 of cash. Financing activities provided
$141,000 of cash, including $124,000 from the issuance of common stock pursuant
to the exercise stock options. In addition, the Company entered into a capital
lease obligation of $727,000 for furniture as the Company moved into its new
corporate offices in
10
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March, 1997.
Working capital was $6.5 million as of March 31, 1997 and excluding
deferred revenue, which represent advance payments for license fees and
services, adjusted working capital was $7.4 million at March 31, 1997.
The Company believes its cash balances, investments and cash flow from
operations will be sufficient to meet its working capital, capital expenditure
and capitalized software development requirements for the foreseeable future.
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.
11
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to, nor is any of its property subject to,
any material legal proceedings, other than routine litigation incidental to its
business.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote at the Company's security holders
during the first quarter of the year ended March 31, 1997.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit
No. Description
3.1 Amended and Restated Articles of Incorporation, as filed with the
Secretary of State of the State of Florida on July 8, 1996
(incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q,
dated August 14, 1996, File No. 0-20937).
3.2 Amended and Restated Bylaws, effective July 8, 1996, (incorporated by
reference to Exhibit 3.2 of the Company's Form 10-Q, dated August 14,
1996, File No. 0-20937).
4.1 See Exhibits 3.1 and 3.2 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 Company (incorporated by
reference to Exhibit 4.1 of the Company's Form 10-Q, dated August 14,
1996, File No. 0-20937).
10.1 Addendum to Lease Agreement, dated March 17, 1997, between 500
International Parkway Development Company and the Company.
10.2 Coopertive Marketing Agreement, dated March 26, 1997, between
International Turnkey Systems and the Company. +
11.1 Statement re: Computation of Earnings Per Share.
27.1 Financial Data Schedule (for SEC use only).
- ---------
+ Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 24(b)(2) under the
Securities Exchange Act of 1934, as amended. In accordance with
Rule 24(b)(2), these confidential portions have been omitted from
this exhibit and filed separately with the Commission.
b) Reports on Form 8-K
None.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934,the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PHOENIX INTERNATIONAL LTD., INC.
May 5, 1997 /s/ Bahram Yusefzadeh
- ----------- -------------------------------------------------
Date Bahram Yusefzadeh
Chairman of the Board and Chief Executive Officer
(principal executive officer)
May 5, 1997 /s/ Clay E. Scarborough
- ----------- -------------------------------------------------
Date Clay E. Scarborough
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer)
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
--- ----------- ----
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation, as filed with the
Secretary of State of the State of Florida on July 8, 1996
(incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q,
dated August 14, 1996, File No. 0-20937)
3.2 Amended and Restated Bylaws, effective July 8, 1996, (incorporated by
reference to Exhibit 3.2 of the Company's Form 10-Q, dated August 14,
1996, File No. 0-20937)
4.1 See Exhibits 3.1 and 3.2 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 Company (incorporated by
reference to Exhibit 4.1 of the Company's Form 10-Q, dated August 14,
1996, File No. 0-20937)
10.1 Addendum to Lease Agreement, dated March 17, 1997, between 500
International Parkway Development Company and the Company
10.2 Cooperative Marketing Agreement, dated March 26, 1997, between
International Turnkey Systems and the Company. +
11.1 Statement re: Computation of Earnings Per Share
27.1 Financial Data Schedule (for SEC use only).
</TABLE>
- ----------
+ Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 24(b)(2) under the
Securities Exchange Act of 1934,as amended. In accordance with
Rule 24(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
<PAGE> 1
EXHIBIT 10.1
ADDENDUM TO LEASE AGREEMENT
November 27, 1996
This Addendum to Lease Agreement ("Addendum") is entered into as of the date
set forth above by 500 International Parkway Development Company ("Landlord")
and Phoenix International Ltd., Inc. ("Tenant").
BACKGROUND
Effective as of September 11, 1996, Landlord and Tenant entered into a Lease
Agreement ("Original Lease"), pursuant to which Landlord agreed to lease to
Tenant 37,259 square feet of rentable space in Landlord's 75,860 rentable
square foot office building located at 500 International Parkway, Heathrow,
Seminole County, Florida ("Original Leased Premises"). The Original Lease
granted Tenant the right to expand its Leased Premises by leasing the south
half of the first floor of the 500 International Parkway building. Effective
as of November 27, 1996, Tenant has exercised its right to so expand its Leased
Premises. Landlord and Tenant now desire to enter into this Addendum to set
forth the terms and conditions of Tenant's leasing of the south half of the
first floor of the 500 International Parkway building. All capitalized terms
which are used, but not defined herein, will have the meanings attributed to
such terms in the Original Lease.
AGREEMENT
Landlord and Tenant hereby agree as follows:
Section 1. LEASING OF EXPANSION SPACE. Landlord hereby leases to Tenant
the 11, 098 square feet of rentable space, as measured in accordance with the
standards of the Building Owners and Managers Association International
("BOMA") and as modified to allocate space contained within the first floor
lobby and atrium proportionately among all space in the building (also
containing 9,609 square feet of usable space), contained in the south half of
the first floor of the 500 International Parkway building ("Expansion Space").
The location and configuration of the Expansion Space is delineated on attached
Exhibit A, which Exhibit A is incorporated herein by this reference.
Section 2. TERMS GOVERNING LEASE OF EXPANSION SPACE. Tenant's leasing of
the Expansion Space will be upon the following terms and conditions:
(a) The initial term of Tenant's leasing of the Expansion
Space will commence on October 1, 1997 and will
terminate on the Termination Date of the initial term
under the Original Lease ("Expansion Term"),
<PAGE> 2
unless otherwise extended as provided under the Original Lease
and this Addendum.
(b) The monthly Base Rent payable by Tenant for the Expansion
Space during the Expansion Term will be as set forth in the
Base Rent Schedule attached hereto as Exhibit B, which Exhibit
B is incorporated herein by this reference.
(c) Tenant's "Proportionate Share" with respect to the Expansion
Space will be determined in the manner set forth in Item N, of
the Lease Summary of the Original Lease, including the terms
of Section 9(h). Based upon the projected rentable square
footage for the Expansion Space and the rentable square
footage for the Building set forth herein, Tenant's
Proportionate Share for the Expansion Space would be 14.62%,
subject to adjustment as set forth pursuant to the terms of
the Original Lease.
(d) Landlord will provide Tenant with a tenant improvement
allowance of $18 per rentable square foot contained within the
Expansion Space for the design and construction of tenant
improvements to such space. Landlord agrees that it will bid
the construction of all such tenant improvements to three
mutually agreed-upon and reputable general contractors. Upon
the receipt of bids from all three such general contractors,
Landlord will present such bids to Tenant and Tenant will have
the right to select the general contractor to construct the
tenant improvements among the three general contractors
submitting such bids. Landlord will thereafter construct
tenant improvements to the Expansion Space in accordance with
plans and specifications developed and approved by Landlord
and Tenant in the some manner as contemplated in Section 9(c)
of the Original Lease. All of the terms and conditions set
forth in Article 9 of the Original Lease related to the design
and construction of Tenant Improvements to the Original Leased
Premises will be applicable to Landlord's construction of
tenant improvements to the Expansion Space, except that: (i)
none of the dates or time frames referred to in Section 9(c)
with respect to the design of the tenant improvements will be
applicable to the design of the improvements to be made to the
Expansion Space; and (ii) the provisions of Section 9(d) will
not apply to the construction of the tenant improvements to
the Expansion Space, for the reason that those provisions
relate solely to the construction of the Base Building and
Tenant Improvements to the Original Leased Premises.
(e) All of the other provisions of the Original Lease (for
example, the provisions for parking spaces, renewal,
relocation costs and refurbishment allowance) will apply to
the Expansion Space during the Expansion Term in the same
manner as such provisions apply to the Original Leased
Premises under the Original Lease; provided, however,
<PAGE> 3
that if any provision of the Original Lease, by its terms, expressly
applies only to the Original Leased Premises (for example, the
targeted dates for the design and construction of the Tenant
Improvements to the Original Leased Premises), such provision will not
have any application whatsoever to Tenant's leasing of the Expansion
Space hereunder.
Section 3. MISCELLANEOUS. Except as otherwise expressly provided in this
Addendum, all of the terms and conditions of the Original Lease will remain in
full force and effect.
Section 4. AMENDMENT TO ORIGINAL LEASE. During the execution of the
Original Lease, the parties inadvertently omitted the following language from
Section 9(d) and (e) of the Original Lease, which shall be reinserted on page
10 of the Original Lease, at the end of the twelfth line of the fourth
paragraph of Section 9(d) after the word "written":
"notice of termination of this Lease Agreement to Landlord
within five days after such termination."
"Section 9(e): SUBSTANTIAL COMPLETION. For the purposes of
this Lease, the terms "Substantial Completion", "Substantially
Complete" and "Substantially Completed" and the like shall
mean the date when:"
Landlord and Tenant have executed this Addendum as of the date first set forth
above.
WITNESS: 500 INTERNATIONAL PARKWAY
DEVELOPMENT COMPANY
By Pizzuti Management Inc., its Agent
- ---------------------------------
By: /s/ Richard C. Daley
- --------------------------------- ----------------------------------
Richard C. Daley, Vice President
PHOENIX INTERNATIONAL LTD., INC.
- ---------------------------------
By: /s/ Bahram Yusefzadeh, CEO
- --------------------------------- ----------------------------------
(Name) (Title)
<PAGE> 4
State of Ohio:
County of Franklin:
Before me, a notary public in and for said state and county,
personally appeared Richard C. Daley, the Vice President of Pizzuti Management
Inc., who acknowledges the signing of the foregoing instrument to be his free
act and deed for the uses and purposes set forth herein.
IN WITNESS WHEREOF, I have signed my name and affixed my official seal
on March 17, 1997.
/s/ Nova S. Witte
-------------------------
Notary Public
<PAGE> 5
State of Florida:
County of Orange:
Before me, a notary public in and for said state and county,
personally appeared Bahram Yusefzadeh the Chairman and CEO of Phoenix
International Ltd., Inc. who acknowledges the signing of the foregoing
instrument to be his free act and deed for the uses and purposes set forth
herein.
IN WITNESS WHEREOF, I have signed my name and affixed my official seal
on March 7, 1997.
/s/ Lois Jean Smail
-------------------------
Notary Public
<PAGE> 6
EXHIBIT B
BASE RENT SCHEDULE
The monthly Base Rent payable by Tenant during the Expansion Term for the
Expansion Space will be set forth in the following schedule:
<TABLE>
<CAPTION>
PER RENTABLE SQUARE FOOT
------------------------
LEASE PERIOD BASE RENT MONTHLY BASE RENT
------------ --------- -----------------
<S> <C> <C>
Lease Year 1 (being a partial lease year) 18.50 17,109
Lease Year 2 18.75 17,340
Lease Year 3 19.00 17,572
Lease Year 4 19.25 17,803
Lease Year 5 19.50 18,034
Lease Year 6 20.00 18,497
Lease Year 7 20.25 18,728
Lease Year 8 20.50 18,959
Lease Year 9 20.75 19,190
Lease Year 10 21.00 19,422
</TABLE>
The total monthly payment due from Tenant during the partial first year of the
Expansion Term will be $18,306.63 (consisting of Base Rent of $17,109 and sales
tax thereon of $1,197.63). For the purposes of this Lease, all references to a
"Lease Year" will mean, as to Lease Year 1, the period beginning on the first
day of the Expansion Term and, ending on the first anniversary of the
Commencement Date under the Original Lease and, as to each subsequent Lease
Year, each successive twelve month period thereafter beginning on the day
following the first anniversary of the Commencement Date under the Original
Lease.
Notwithstanding the foregoing, after Lease Year 1, the per rentable square foot
Base Rent shall be the lesser of the amount shown above or the prior year's
Base Rent multiplied by the Consumer Price Index Adjustment ("CPI Adjustment")
as defined herein. The CPI Adjustment for any Lease Year shall be a fraction,
the numerator of which shall be the average CPI for the 12 months ending with
the Commencement Date anniversary immediately preceding such Lease Year and the
denominator of which shall be the average CPI for the 12 months ending with the
Commencement Date or the Commencement Date anniversary before the Commencement
Date anniversary immediately preceding such Lease Year. For the purpose
hereof, the term "Commencement Date" shall mean the Commencement Date set forth
in the Original Lease. The term "CPI" as used herein shall mean the Consumer
Price Index for All Urban Consumers in the Central Florida Area (or any
reconstituted geographic area covering the Central Florida Area), published by
the United States Department of Labor, Bureau of Statistics.
<PAGE> 7
For example, if the Commencement Date of the Original Lease is April
1, 1997, the Base Rent for Lease Year 2 (from April 1, 1998 to March
31, 1999) shall be calculated as follows:
If (1) the average CPI for the 12 months prior to April 1, 1998
was 132.2, and (2) the average CPI for the 12 months prior to April 1,
1997 was 129.6, then (1) the CPI Adjustment would be 1.02, (2) the CPI
Adjustment would be multiplied by the Year 1 Rent ($17,109) to get a
total of $17,451, and (3) because $17,451 is greater than the $17,340
listed on this Exhibit B Rent Schedule for Year 2, the Base Rent for
Year 2 would be $17,340.
In the event the federal government changes the publication frequency of the
CPI so that the CPI is not available to make a CPI Adjustment of annual rent,
the CPI Adjustment shall be based on the percentage difference between the CPI
for the closest preceding month for which a CPI is available and the CPI for
the last anniversary of the Commencement Date. If the issuance of the CPI by
the federal government is discontinued, the Landlord shall use for the CPI the
official index published by a federal governmental agency which is most nearly
equivalent to the CPI. If no such index is available, then Landlord shall use
such index or procedure which reasonably reflects national average of increases
or decreases in consumer prices. If the rental payments determined pursuant to
this Exhibit B exceed that allowed by the terms of any valid governmental
restriction which limits the amount of rent or if the rental payments described
pursuant to this Exhibit B exceed any limitation otherwise imposed by this
Lease, the amount of rent or other payments shall be the maximum permitted by
such governmental restriction and by such limitation; however, all increases or
decreases in rent or other payments provided in this Lease shall be calculated
thereafter based upon the amount of the rent which would have been payable
under the Lease as if such government restriction or other limitation had not
limited the rent payable under the terms of this Lease. Notwithstanding the
above, the increase in per rentable square foot base rent from Year 5 to Year 6
shall be $.50, regardless of any increase in the CPI.
<PAGE> 1
EXHIBIT 10.2
CONFIDENTIAL TREATMENT
REQUESTED
PHOENIX INTERNATIONAL LTD., INC.
COOPERATIVE MARKETING AGREEMENT
Marketing Partner: International Turnkey Systems Date: March 26, 1997
----------------------------- --------------
(X) Corporation ( ) Partnership
( ) Limited Partnership ( ) Limited Liability Company
Country/State of Organization: Kuwait
----------------
Address: c/o P.O. Box 26729
--------------------------------------
Safat, 13128 Kuwait
--------------------------------------
Attention: Senior Marketing Manager
----------------------------
Fax:
----------------------------------
This COOPERATIVE AGREEMENT (this "Agreement") is entered into as of
the date first set forth above by and between Phoenix International Ltd., Inc.
a Florida corporation ("Phoenix"), and the party first identified above as the
Marketing Partner ("Marketing Partner"). The parties hereto, intending to be
legally bound, agree as follows:
1. APPOINTMENT. Subject to the terms and conditions of this Agreement,
the Marketing Partner hereby agrees to enter into a cooperative
marketing relationship with Phoenix as set forth in the relationship
addendum(a) attached hereto and listed below (the "Addenda") :
Relationship Addendum - Marketing Partner
-----------------------------------------
Training and Support Addendum
-----------------------------------------
-----------------------------------------
-----------------------------------------
2. DEFINITIONS. As used in this Agreement or Exhibits or Addenda
attached hereto, capitalized terms shall have the following meanings:
2.1 Annual Price List means the price list attached hereto as
Exhibit C, as reviewed and amended by the parties as set forth in
Section 5 below.
<PAGE> 2
2.2 Confidential Information means any business, technical or
other information furnished by Phoenix to the Marketing Partner or
disclosed to the Marketing Partner as a result of examination or
inspection of Phoenix's facilities or product prototypes.
Confidential Information shall in all cases include all object and
source code, development level documentation, and technical
information regarding the Software and all marketing and product
development information provided by Phoenix. Information which is
disclosed orally will be deemed to be Confidential Information
provided that it is identified as confidential at the time of
disclosure.
2.3 Documentation means the documentation associated with the
Software as produced and provided by Phoenix to the Marketing Partner
with the Software.
2.4 Eligible Prospect means a retail bank organized and doing
business exclusively in the Territory.
2.5 End Users means customers presented to Phoenix by the
Marketing Partner who license the Software under an End User License.
2.6 End User License means the form of agreement or agreements
applicable to the license of the Software as provided by Phoenix to
the Marketing Partner from time to time. All End User Licenses shall
be in English and governed by the law of choice of Phoenix.
2.7 Intellectual Property Rights means all copyrights and design
rights, whether registered or unregistered, patents, patent
applications, patent registration rights, know-how, trade secrets,
Confidential Information, and other intellectual property related to
or arising in the Software or Documentation, including all applicable
architecture, designs, modules, routines, programming, command
structures, interfaces, and any Modifications thereto.
2.8 Maintenance means making Modifications to the Software to
correct verifiable and reproducible errors reported to Phoenix and
includes all error correction, maintenance and emergency releases and
other modifications required as a result of changes made by Phoenix
which directly affect any of the Software.
2.9 Modification means a work which is based upon one or more
preexisting works, such as a revision, modification, translation,
abridgment, condensation, expansion, or any other form in which such
preexisting works may be recast, transformed, or adapted, and shall
include any work that incorporates or is combined with such a
preexisting work or any portion thereof.
2.10 Modify means, with respect to any of the Software, to make a
Modification.
2
<PAGE> 3
2.11 New Release means a release of any of the Software to
introduce changes or additions to the Software for purposes of error
correction or enhancement of functionality, performance, or features.
2.12 Related Expenses mean all reasonable travel, meal, lodging and
other living expenses and all expenses for materials or equipment
incurred by Phoenix in the provisions of services or otherwise in the
performance of its duties hereunder.
2.13 Support means the provision of relevant assistance in the form
of telephone assistance and consultation, personnel, and materials for
the implementation and continued use of the Software, including any
Modification which Phoenix offers as an addition to, replacement for,
or option with such Software under this Agreement.
2.14 Software means the Phoenix software set forth in Exhibit A
attached hereto, as such Exhibit may be amended from time to time in
writing.
2.15 Territory means the regions set forth on Exhibit B, as such
regions exist as of the date of this Agreement.
2.16 Trademarks means the trademarks, service marks and trade names
used by Phoenix in connection with its software, products and
services, whether registered or unregistered.
3. LICENSE.
3.1 License Grant. Subject to the terms of this Agreement, and
only as appropriate under the applicable Relationship Addendum(s),
Phoenix hereby grants to the Marketing Partner the following revocable
rights and licenses to use the Software at ITS premises in Kuwait:
(a) To use the Software as reasonably required to fulfill
its obligations and exercise its rights under this Agreement
and in accordance with the Relationship Addendum(s);
(b) Subject to completion of sufficient training as
applicable and as required by Phoenix from time to time, to
use the Software for back up, demonstrations, and evaluations
involving Eligible Prospects; and
(c) To use the Trademarks relating to the Software,
provided, however, that such use shall be subject to
reasonable advertising and promotion guidelines which Phoenix
may provide from time to time. Phoenix reserves the right to
disallow any use of the Trademarks which would in any way, in
Phoenix's opinion, harm the validity or value of the
Trademarks.
3
<PAGE> 4
3.2 Restrictions. The Marketing Partner shall not:
(a) Copy, adapt, modify or reproduce the Software in any
manner whatsoever except as reasonably necessary for
demonstration, marketing, backup and archival purposes or as
otherwise permitted in attached Addenda;
(b) Provide the Software to any third party except
pursuant to a fully executed End User License;
(c) Use the Software in production for the benefit of any
third party, except as otherwise allowed in a Relationship
Addendum attached hereto or as otherwise provided by written
agreement signed by both parties; or
(d) Use the Software or Documentation or any Confidential
Information that it may acquire in connection with this
Agreement to develop, have developed, support, or invest in,
directly or indirectly, the development of any product which
has, entirely or partially, the same functions as any of the
Software or which would be in direct or indirect competition
with any of the Software, or to sell competing products or
services.
4. TERM
4.1 Term and Renewal. This Agreement shall become effective on
the date first set forth above and shall continue for an initial
period of three (3) years, beginning on the date first set forth
above. This Agreement shall automatically renew thereafter for
subsequent one year periods, unless and until terminated by either
party, in its discretion, by written notice at least thirty days prior
to the end of the then current term. Phoenix may terminate this
Agreement at any time on at least thirty (30) days' prior written
notice if the Marketing Partner materially breaches its obligations
hereunder, incurs a conflict of interest of significant impact, or
fails to devote reasonable effort to the license of the Software to
End Users. Notwithstanding the termination of this Agreement, Phoenix
shall continue to be entitled to any fees earned prior to and after
such termination.
4.2 Survival. Notwithstanding termination of this Agreement for
any reason, Sections 10 (Title to Intellectual Property), 11
(Confidentiality) and 14 (General) shall continue to have effect as
shall any other provisions which by their nature or necessary
implication ought or were intended to continue to have effect, and End
User Licenses of customers already granted prior to the date of such
termination shall continue to be valid.
4.3 Actions Upon Termination. Upon termination the Marketing
Partner shall:
(a) promptly cease to use, license, market or promote
the Software;
4
<PAGE> 5
(b) return all copies of the Software in the possession
of the Marketing Partner to Phoenix and shall cease using the
same for any purpose whatsoever except as otherwise expressly
allowed herein or in Addenda hereto;
(c) for a period of six (6) months following termination,
refer to Phoenix all prospective customers and all inquiries
received by it relating to the Software;
(d) return and deliver or cause to be returned and
delivered to Phoenix all memoranda, notes, reports, documents
or media relating to or containing Confidential Information,
including any copies or extracts thereof;
(e) certify its compliance with this Section upon the
written request of Phoenix.
5. ANNUAL PRICE LIST. Attached hereto as Exhibit C is the current
Phoenix Annual Price List which contains the license and maintenance
fees for the Software and Phoenix's professional service fees for the
Territory (the "Annual Price List"). The parties shall review and
adjust the Annual Price List annually to reflect changes in expenses,
business environment, and other factors as reasonable or necessary.
If the parties cannot reach agreement on changes to the Annual Price
List, final authority to set the Annual Price List shall reside with
Phoenix.
6. OBLIGATIONS OF THE MARKETING PARTNER
6.1 Customer Contacts. During the term of this Agreement, the
Marketing Partner will work exclusively with Phoenix with respect to
any business opportunity presented to the Marketing Partner by Phoenix
or obtained by the Marketing Partner as a result of the working
relationship of the Marketing Partner with Phoenix.
6.2 Qualified Resources and Personnel. The Marketing Partner
shall employ suitably qualified and trained personnel in order to
perform its obligations hereunder, and under any End User License,
support, or other agreement with an End User related to the Software.
The Marketing Partner shall at its own expense obtain, license, and
maintain the hardware, network, software, database management systems,
and telecommunications resources necessary for the proper operation of
the Software in accordance with the Phoenix International Network
Design & Equipment Standards, as amended from time to time, along with
such other resources as Phoenix may reasonably require from time to
time for the operation of the Software, conduction of sales
demonstrations and evaluations, and for the provision by Phoenix of
Support or Maintenance hereunder. Phoenix may approve alternate
hardware, software, or telecommunications configurations at its sole
discretion upon the request of Marketing Partner.
5
<PAGE> 6
6.3 End User Vendor Selection. Marketing Partner will allow each
End User to select the hardware system it will use with the Software,
subject only to certification of compatibility by Phoenix, and
Marketing Partner will facilitate the procurement and support of such
system. If requested or required by End Users and/or determined by
Phoenix to be necessary or advisable, Marketing Partner and Phoenix
will work in conjunction with third parties (selected by End User of
otherwise) who will provide services to the End User, including
without limitation systems integration, software development and
modification, consulting, implementation, support and/or maintenance
services.
6.4 End User Compliance. The Marketing Partner shall inform
Phoenix of all known breaches by End Users of their agreements with
Phoenix or the Marketing Partner.
6.5 Notices, Logos and Marks. The Marketing Partner shall not
alter, erase or obscure any notices, legends, or trademarks or alter
any indications of ownership such as copyright, serial number or any
other designations or security provisions featured on copies of the
Software and Documentation, and shall include all such features on all
copies of the Software and Documentation made by the Marketing
Partner.
6.6 Copies of Materials. The Marketing Partner shall send to
Phoenix copies of all advertising, marketing and product material
related to the Software created or to be used by the Marketing
Partner.
6.7 Legal Compliance. The Marketing Partner shall insure
compliance with all laws, including without limitation tax, import,
and export laws, governing the conduct of business in the Territory or
in any country in which the Marketing Partner operates or markets or
sells the Software. Marketing Partner shall indemnify and hold
Phoenix harmless from and against any and all claims, losses or
damages arising out of or related to Marketing Partner's failure to
comply with any law.
7. PHOENIX'S OBLIGATIONS
7.1 Copies of the Software. Phoenix shall provide the Marketing
Partner with a reasonable number of copies of the Software and
Documentation as necessary for the Marketing Partner to fulfill its
obligations and exercise its rights hereunder. All Software and
Documentation shall be provided in English.
7.2 Maintenance and Support. Phoenix shall provide the following
services related to the Software during the Term of this Agreement:
6
<PAGE> 7
(a) Support. Phoenix shall provide Support and
Maintenance to the Marketing Partner for the then current
release and the immediately preceding release of the Software
which have been provided to the Marketing Partner. In order to
assist in the provision of Maintenance, the Marketing Partner
shall notify Phoenix promptly following the discovery of any
defect in the Software, and upon the request of Phoenix, the
Marketing Partner shall submit to Phoenix a listing of output
and any other data that Phoenix may require in order to
reproduce the error and the operating conditions under which
the error occurred or was discovered.
(b) Upgrades. Phoenix shall provide the Marketing
Partner with a copy of each New Release of the Software as
Phoenix may from time to time issue to its customers
generally. Phoenix shall provide reasonable telephone support
to assist in the installation and operation of each New
Release. For any particular New Release to operate properly,
the Marketing Partner must have installed all prior New
Releases.
(c) Telephone Support. Phoenix shall maintain a
telephone support line during hours to be designated by
Phoenix from time to time, which in any case shall cover at
least 8:30 a.m. to 5:30 p.m. Monday through Friday, Orlando,
Florida time. Support in response to questions which are
outside the intended scope of this Agreement may be subject to
an additional charge.
7.3 Exceptions. The following matters are not covered by
Maintenance or Support under this Agreement:
(a) Any problem resulting from the misuse, improper use,
or damage of any of the Software;
(b) Any problem caused by modifications made to the
Software other than those made by Phoenix; or
(c) Any problem resulting from the use of the Software
with software, hardware, network resources, or other operating
environments not approved in writing by Phoenix.
Phoenix may, at its discretion, provide support for any
problems caused by any of the foregoing, subject to payment of
additional fees for such services. If during the provision of
Support or Maintenance, Phoenix determines that a problem is
caused by any of the foregoing, Phoenix may charge additional
fees for the diagnostic work which was required to make such
determination.
7
<PAGE> 8
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
7.4 Expenses for Maintenance and Support. The Marketing Partner
shall pay 50% of Phoenix's fees for Support and Maintenance as set
forth in the Annual Price List plus 100% of Related Expenses incurred
in the provision of Maintenance or Support.
8. TRAINING. Phoenix shall provide training and assistance to the
personnel of Marketing Partner as reasonably requested upon at least
30 days prior written notice, or such shorter period as may be
accommodated by Phoenix at its discretion. All such training shall be
done by Phoenix at XXXXXXX set forth in the Annual Price List plus
XXXXXXXX for such training. Sales and training materials will be
provided upon request at Phoenix's cost for such materials.
9. WARRANTY.
9.1 Limited Warranty. Phoenix warrants to the Marketing Partner
that the Software will, for a period of ninety (90) days after
delivery, perform substantially in conformance with Documentation (the
"Limited Warranty"). Phoenix makes no warranty that all
nonconformities or defects have been or can be eliminated from the
Software or that operation of the Software will be uninterrupted or
error free. This Limited Warranty shall not apply to (i)
Modifications made to the Software other than those made by Phoenix,
(ii) to Software damaged due to accident, abuse or neglect, or (iii)
to Software used with hardware or operating environments other than
those approved in writing by Phoenix.
9.2 Exclusive Remedy. The Marketing Partner's sole and exclusive
remedy for breach of the above Limited Warranty shall be, at the
option of Phoenix, repair or replacement of the relevant Software.
Any replacement Software shall be covered under the Limited Warranty
for the remainder of the original warranty period, or for thirty (30)
days after receipt, whichever is longer.
9.3 DISCLAIMER. EXCEPT FOR THE WARRANTY SET FORTH ABOVE, THE
SOFTWARE IS LICENSED TO THE MARKETING PARTNER "AS IS," AND PHOENIX
DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER
ORAL OR WRITTEN, EXPRESS OR IMPLIED, INCLUDING (WITHOUT LIMITATION)
ANY WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
8
<PAGE> 9
9.4 LIMITATION OF LIABILITY AND DAMAGES. PHOENIX' LIABILITY FOR
ANY AND ALL DAMAGES SHALL BE LIMITED TO THE EXCLUSIVE REMEDY SET FORTH
ABOVE. NEITHER PARTY SHALL HAVE ANY LIABILITY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, INTERRUPTION OF
BUSINESS, OR ANY OTHER MONETARY LOSS, ARISING OUT OF THE USE OR
INABILITY TO USE THE SOFTWARE, OR FOR MISSTATEMENTS, MISTAKES OR
OMISSIONS IN THE DOCUMENTATION, EVEN IF SUCH PARTY HAS BEEN APPRISED
OF THE POSSIBILITY OF SUCH DAMAGES.
9.5 Limitation on Actions. No action, regardless of form, arising
out of this Agreement or the transactions contemplated hereunder may
be brought more than two (2) years after the cause of the action has
accrued.
9.6 Independent responsibility. Neither party shall be
responsible to any customer or End User for the quality of service or
performance of products furnished by the other party. Each party is
solely responsible for establishing the prices of its own products,
services and associated deliverables.
10. INDEMNIFICATION BY PHOENIX.
10.1 Infringement of Intellectual Property Rights. If a third
party claims that the Software infringes any patent, copyright, trade
secret, or similar Intellectual Property Rights, Phoenix shall (as
long as the Marketing Partner is not in default under this Agreement
or any other agreement with Phoenix) indemnify and defend the
Marketing Partner against such claim at Phoenix's expense, provided
that the Marketing Partner promptly notifies Phoenix in writing of any
such claim, allows Phoenix to control all negotiations and litigation
related thereto, and cooperates with Phoenix in the defense and
disposition of such claim, including any related settlement
negotiations.
10.2 Limitations. If such a claim is made or appears possible,
Phoenix may, at its option, (i) secure for the Marketing Partner the
right to continue to use the Software, or (ii) modify or replace the
Software so it is non-infringing. Phoenix has no obligation hereunder
for any claim based on a modified version of the Software which has
not been approved by Phoenix, or for any combination, operation or use
of the Software with a non-approved operating environment or with any
program, product, data or apparatus not approved in writing by
Phoenix. Phoenix 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
12 STATES PHOENIX' ENTIRE OBLIGATION TO THE MARKETING PARTNER WITH
RESPECT TO MATTERS OF TITLE OR ANY CLAIM OF INFRINGEMENT THEREOF.
9
<PAGE> 10
11. TITLE TO INTELLECTUAL PROPERTY. All right title and interest in and
to all copies of the Software and Documentation and all Intellectual
Property Rights pertaining thereto shall vest exclusively with
Phoenix, including the Intellectual Property Rights in all
Modifications and other related works created by or for Phoenix, the
Marketing Partner, or any End User, including their personnel and
permitted agents or contractors. To the extent rights in
Modifications and all Intellectual Property Rights therein do not
automatically and fully vest exclusively in Phoenix, the Marketing
Partner agrees to and hereby does assign to Phoenix all such rights,
and shall execute all such other agreements as Phoenix may require to
effect such assignment. To the extent Modifications are produced by or
under the supervision of the Marketing Partner with the approval of
Phoenix, Phoenix hereby grants to the Marketing Partner a
non-transferable, and royalty free license to reproduce, license and
distribute such Modifications, but only to the extent they are
marketed and licensed or sold to End Users for use solely with duly
licensed versions of the Software pursuant to End User Licenses in
effect with Phoenix.
12. CONFIDENTIALITY
12.1 Non-Disclosure. Except as otherwise provided herein or as
allowed by the prior written consent of Phoenix, for the term of this
Agreement and for a period of three (3) years following the
termination of this Agreement, the Marketing Partner shall (a)
receive all Confidential Information in strict confidence, (b) use
the same degree of care which it uses to protect its own confidential
information to maintain the confidentiality and secrecy thereof, (c)
disclose the Confidential Information, and permit the Confidential
Information to be disclosed, only to employees of the Marketing
Partner who need access to the Confidential Information to carry out
the terms and intent of this Agreement, and (d) use the Confidential
Information only in furtherance of its rights and obligations set
forth in this Agreement. Both parties shall keep confidential the
terms and conditions of this Agreement, but not its existence, and all
other information which is designated in writing as confidential by
one party to the other. Notwithstanding the foregoing, the Marketing
Partner may make such disclosures as may be required by order of a
court of competent jurisdiction, administrative agency or other
government body, or by law rule or regulation, provided, however, that
to the extent possible, the Marketing Partner gives Phoenix prior
written notice of such requirement and assists Phoenix in its efforts
to oppose such requirement.
10
<PAGE> 11
12.2 Exclusions. Confidential Information shall not include any
information (a) which at the time of disclosure to the Marketing
Partner is in the public domain or thereafter enters the public domain
for reasons not attributable to any act or omission of the Marketing
Partner in breach of its obligations hereunder, (b) which the
Marketing Partner can show was in the possession of the Marketing
Partner prior to the disclosure thereof to the Marketing Partner by
Phoenix, or (c) which the Marketing Partner can show is acquired by
the Marketing Partner from an independent third party who does not
thereby breach an obligation of confidence to Phoenix and who
discloses it in good faith.
13. EXPORTS. The Marketing Partner may not export the Software outside of
the Territory nor contact any prospective End User outside of the
Territory without Phoenix's prior written approval, which may be
granted or withheld in Phoenix' sole discretion.
14. EMPLOYEES. During the term of this Agreement and for a period of
twelve (12) months thereafter, neither party will directly or
indirectly solicit for employment or employ any employee of the other
without the prior written consent of the other.
15. GENERAL
15.1 No Authority to Bind the Other Party. The parties to this
Agreement are independent contractors and, except as provided in this
Agreement or otherwise in a writing signed by both parties, neither
party is authorized to act on behalf of the other or to bind the
other. This Agreement does not establish any relationship of agency,
partnership, or joint venture. Each party shall bear responsibility
for its own employees, including terms of employment, wages, hours,
tax withholding, required insurance, and daily direction and control.
Except as otherwise set forth in an Addendum, the relationship created
hereunder is non-exclusive as to each party.
15.2 Successors and Assigns. Except as otherwise provided in this
Agreement, neither party may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other
party. Any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement
shall inure to the benefit of and shall be binding upon the permitted
successors and assigns of the parties hereto.
15.3 Governing Law; Jurisdiction. The construction and
interpretation of, and the rights and obligations of the parties
pursuant to this Agreement shall be governed by the laws of the State
of Florida, USA, and the federal laws of the United States.
11
<PAGE> 12
15.4 Force Majeure. Neither party shall be liable for any failure
of or delay in the performance of this Agreement for the period that
such failure or delay is due to acts of God, public enemy, civil war,
strikes or labor disputes, or any other cause beyond the parties'
reasonable control. Each party agrees to notify the other party
promptly of the occurrence of any such cause and to carry out this
Agreement as promptly as practicable after such cause has terminated.
15.5 Severability. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be
null, void or unenforceable, such provision shall survive to the
extent it is not so declared, and all of the other provisions of this
Agreement shall remain in full force and effect.
15.6 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given: (i) on the date of service if served
personally on the party to whom notice is to be given; (ii) on the day
of transmission if sent via facsimile transmission to the facsimile
number given below, and telephonic confirmation of receipt is obtained
promptly after completion of transmission; (iii) on the second day
after delivery to FedEx or similar overnight courier or the Express
Mail service maintained by the United States Postal Service; or (iv)
upon receipt if sent otherwise. Notices shall be addressed to the
applicable party as set forth below unless an alternate address has
been provided in writing in conformance with this provision:
If to Phoenix:
Phoenix International Ltd., Inc.
900 Winderley Place
Suite 140
Maitland, Florida 32751
Attention: Raju M. Shivdasani
Facsimile: (407) 667-0133
If to the Marketing Partner, at the address first set forth above.
15.7 Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties
or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by the
party waiving compliance. Any waiver by any party of a condition, or
of the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, in any one or more instances,
shall not be deemed to be nor construed as furthering or continuing
waiver of any such condition, or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
12
<PAGE> 13
15.8 Public Announcements. Neither party shall make any press
release or public announcement concerning this transaction without the
prior written approval of the other party unless a press release or
public amendment is required by law or by regulations binding upon any
of the parties of their affiliates, in which case, the disclosing
party agrees to give the non-disclosing party prior notice and an
opportunity to comment on the proposed disclosure.
15.9 Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the
transactions contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written,
with regard to such transactions. All schedules and addenda hereto
and any documents and instruments delivered pursuant to any provision
hereof are expressly made a part of this Agreement as fully as though
completely set forth herein. The rights of the parties are only as
set forth herein, and there are and shall be no implied rights or
obligations whatsoever.
15.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but both of which shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Phoenix International Ltd., Inc.: Marketing Partner:
By: /s/ Bahram Yusefzadeh By:/s/ Khalid Alfarkh
----------------------------- --------------------------
Signature Signature
Bahram Yusefzadeh Khalid Alfarkh Name
- --------------------------------- -----------------------------
(Print) Name (Print)
Chairman & CEO Sr. Marketing Manager
- --------------------------------- -----------------------------
Title Title
13
<PAGE> 14
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
TRAINING AND SUPPORT ADDENDUM
Marketing Partner: Date:
------------------------------ --------------------
This Addendum provides additional terms defining the relationship between the
Marketing Partner and Phoenix. The terms and conditions contained herein are
in addition to those contained in the applicable Cooperative Marketing
Agreement. If any terms contained herein are inconsistent with the terms of
the Cooperative Marketing Agreement, this Addendum shall control.
1. Training and Certification. Phoenix shall provide training to
Marketing Partner's personnel in the support of the Software. Upon
satisfactory completion of such training, Phoenix shall certify certain of the
Marketing Partner's personnel to provide support of the Software to End Users.
Marketing Partner's personnel shall be trained and certified to provide XXXXX
support at a minimum by the XXX anniversary of the date of this Addendum. Upon
agreement of the parties, further training and certification for higher levels
of support may be obtained. The Marketing Partner shall pay Phoenix for all
training and certification at XXXXXX for such services as set forth in the
Annual Price List plus XXXXXXX. Training materials shall be provided at
Phoenix's cost.
2. Right to Support. Once the Marketing Partner's personnel have
completed the requisite training and have been certified for support of the
Software by Phoenix, the Marketing Partner may provide the level of support for
the Software for which it has been certified, under the direction and
supervision of certified personnel. Marketing Partner shall provide all such
support in a workmanlike manner consistent with Phoenix's professional
standards.
3. Additional License. Once the training has been completed, the
Marketing Partner shall have the additional right and license to use the
Software for the purpose of providing support to End Users as set forth herein.
4. Maintenance and Support. The Marketing Partner may enter into Support
Agreements with End Users who choose to receive support from the Marketing
Partner at the level for which the Marketing Partner has been certified. Each
such Support Agreement shall be in a form approved by Phoenix from time to
time. If, at any time, the Marketing Partner materially fails to provide
support under an agreement with an End User, Phoenix shall assume the Marketing
Partner's responsibilities under such agreement, and the marketing Partner
shall assign the agreement to Phoenix and forward to Phoenix all maintenance
and support fees received from such End User for the period for which Phoenix
assumes maintenance and support obligations, including fees received prior to
the assignment.
14
<PAGE> 15
5. Termination. Upon termination of the Cooperative Marketing Agreement,
the Marketing Partner may continue to provide support to End Users for the
remaining term of support agreements then in effect between Marketing Partner
and End Users, but only so long as the Marketing Partner continues to satisfy
its obligations to End Users under such agreements and has and continues to pay
all amounts due to Phoenix of whatever nature.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Phoenix Marketing Partner
By: /s/ Bahram Yusefzadeh By: /s/ Khalid Alfarkh
-------------------------------- --------------------------
Signature Signature
Bahram Yusefzadeh Khalid Alfarkh
- ----------------------------------- -----------------------------
Name (Print) Name (Print)
Chairman & CEO Sr. Marketing Manager
- ----------------------------------- -----------------------------
Title Title
15
<PAGE> 16
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
RELATIONSHIP ADDENDUM
MARKETING PARTNER
Marketing Partner: Date:
--------------------------- ---------------------------
This Addendum provides additional terms defining the relationship between the
Marketing Partner and Phoenix. The terms and conditions contained herein are
in addition to those contained in the applicable Cooperative Agreement. If any
terms contained herein are inconsistent with the terms of the Cooperative
Agreement, this Addendum shall control.
1. Marketing. Phoenix hereby grants to the Marketing Partner the
exclusive right and license, subject to the restrictions set forth
herein or in Exhibit B, to market the Software to Eligible Prospects
within the Territory. Marketing Partner shall use its best efforts to
identify and introduce Eligible Prospects to Phoenix and to
demonstrate the Software to such Eligible Prospects. The Marketing
Partner may market the Software outside the Territory only as set
forth herein.
2. End User Licenses. Each End User shall be required to enter into an
End User License directly with Phoenix. Prior to delivery of the
software to any End User, the Marketing Partner shall present an End
User License to each potential customer, shall cause all End Users to
execute an End User License, and shall forward each executed End User
License to Phoenix for acceptance and execution.
2.1 Copies of Software and Documentation. Marketing Partner shall
be responsible for delivering the requisite number of copies of the
Software and Documentation to each End User as set forth in valid End
User Licenses.
3. Collection of Fees. Marketing Partner shall be responsible for
invoicing and collecting all fees due from End Users within the
Territory. Amounts due Phoenix shall be paid promptly as set forth
herein and will be secured by an irrevocable letter of credit upon
signing of each End User License.
4. Fees.
4.1 Marketing Partner License Fee. The Marketing Partner shall
pay to Phoenix a license fee of XXXXX in each year of this Agreement,
payable in XXXXXXXX installments beginning on March 31, 1997.
Beginning in the second year of this Agreement, the annual license fee
shall be XXXXXXXXXX in the Territory who has executed an End User
License, paid all applicable license fees for the Software in the
prior year, and for which Phoenix received its royalties as se forth
herein on a timely basis, until the annual license fee reaches XXXXXX.
16
<PAGE> 17
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
4.2 End User Fees.
(a) Amount. All End User license and maintenance fees
shall conform to the Annual Price List. Unapproved discounts
from the Annual Price List shall cause Marketing Partner's
marketing rights within the Territory to become non-exclusive.
(b) Base and Branch License Fee Royalties. Marketing
Partner shall pay to Phoenix the following percentage of all
base and branch license fees due from each End User within the
Territory:
(i) XXXXXXXXXX per the Annual Price List in
Exhibit C for each of the first XXX End Users
(ii) XXXXXXXXXXX per the Annual Price List in
Exhibit C for each subsequent End User
Marketing Partner shall forward to Phoenix XXXXXXXXXX due for
each End User within 60 business days following execution of
each End User License, and the XXXXXXXXXXXXXXXX due for each
End User within 150 days following the execution of each End
User License.
4.3 Maintenance Fee Royalties.
(a) Fees. The Marketing Partner shall pay to Phoenix the
following percentage of all Maintenance Fees due from each End
User:
(i) XXXXXXXXXXXXXXXX from the XXXXX.
(ii) XXXXXXXXXXXXXXXXX from the XXXXXXXX or the
second year's Maintenance Fee from the
XXXXXXXXX, whichever comes first.
(iii) XXXXXXXXXXXXXXXXXXXXX for all End Users.
(b) Payment. All maintenance fee royalties shall be paid
to Phoenix within 60 days after such fees are due from each
End User.
4.4 Professional Services and Development Fees. Professional
Services and Development work includes installation, conversion,
training, Modification, implementation, and consulting services.
Phoenix shall invoice Marketing Partner for Professional Services and
Development work performed by Phoenix for End Users. Marketing
Partner shall pay to Phoenix its fees for such work as set forth in
the Annual Price List plus all Related Expenses within 60 days after
invoice from Phoenix.
17
<PAGE> 18
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
The Marketing Partner shall be responsible for billing and collecting
such fees and expenses from End Users, and may bill such services and
expenses at a higher rate and keep all amounts collected in excess of
amounts due Phoenix.
4.5 Hardware and Network Fees. The Marketing Partner shall keep
XXXXXXXXXXX services provided to End Users other than as set forth
above. Marketing Partner shall consult with Phoenix for certification
of all hardware and network products sold to End Users for use with
the Software.
5. Islamic Banking Product.
5.1 Development. Phoenix and Marketing Partner shall mutually
develop and program a banking product for Islamic banks based on the
Software.
5.2 Marketing and Fees. Sales of the Islamic Banking Product
within the Territory and fees therefrom shall be governed by the
royalty arrangement set forth above. Marketing Partner may also market
the Islamic Banking Product outside of the territory, subject to the
prior written approval of Phoenix on a case by case basis. Phoenix
and the Marketing Partner shall XXXXXXXXXXXXXXXXX from license of the
Islamic Banking Product by the Marketing Partner outside of the
Territory. All other terms, including payment terms shall be the same
as within the Territory. For all licenses of the Islamic Banking
Product by Phoenix or through Phoenix's other marketing channels
within the initial 7 year term of this Agreement, Phoenix shall
forward to the Marketing Partner XXXXXXXXXXXXXX received by Phoenix.
6. Complementary Products and Services. The Marketing Partner may
provide to End Users complementary products and services as certified
by Phoenix for provision to End Users with the Software. Such
products and services shall be provided pursuant to an agreement
between the End User and the Marketing Partner. Phoenix shall have the
right and opportunity to approve all such agreements, which approval
shall not be unreasonably withheld. The Marketing Partner may request
that such products and services be included in the End User License.
Phoenix will use its best efforts to include such products and
services in End User Licenses. Such products and services shall be
provided on reasonable terms and conditions no less favorable than the
terms and conditions under which the Marketing Partner offers similar
products and services to its other customers.
7. Support. If Marketing Partner has completed a Training and Support
Addendum and completed the requisite training and certification
requirements set forth therein, Marketing Partner may provide Support
to End Users. Subject to receipt of its share of the Maintenance Fees
as set forth herein, Phoenix shall provide that Support required by
End Users and not provided by Marketing Partner. If further support
is required by any
18
<PAGE> 19
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
End User, Phoenix shall provide such support and the Marketing Partner
shall pay Phoenix the fees set forth in the Annual Price List for such
support, plus Related expenses.
8. Implementation. If the Marketing Partner has executed a Training and
Implementation Addendum and complied with the terms therein, then the
Marketing Partner may implement the software sold as a result of the
Marketing Partner's efforts. All Software not implemented by the
Marketing Partner shall be implemented by or at the direction of
Phoenix. Phoenix shall supply the Marketing Partner with one copy of
the Software and Documentation on the appropriate electronic media for
implementation for each fully executed End User License presented to
Phoenix along with Phoenix's XXXXXXXXXXXX for such End User.
9. Personnel and Training. The Marketing Partner shall assign a minimum
of one sales executive to focus exclusively on sales of the Software
in the Territory. Phoenix shall train such executive in the use of
the Software at Phoenix' offices in Orlando Florida at no cost.
10. Customization and Enhancement of the Software. Marketing Partner will
maintain a minimum of XXXXXXXXXX and XXXXXXXXXXX resource to assist
with sales support, implementation planning, requirements definition
and localization/customization specification and design work as soon
as possible, and in any case no later than the vendor of choice stage
with the first potential End User. Localization work to be provided
by Marketing Partner will consist of, at a minimum, translation of the
Software and Documentation in Arabic, support for the production of an
Islamic Banking Product, custom 3rd party interfaces, and government
regulatory support. ITS shall fund all such development work, either
independently, or passed through to End Users. The Marketing Partner
shall engage resources as necessary to meet the implementation
deadlines of the first End User. All rights in all modifications,
derivatives, and additions to the Software shall be owned by Phoenix
as set forth in the Cooperative Marketing Agreement. Assistance
provided by Phoenix for customization and enhancement work shall be
paid by the Marketing Partner XXXXXXXXXXXX set forth in the Annual
Price List, plus Related Expenses. If Marketing Partner requires
access to Phoenix Source Code to complete such Customization and
Enhancement, such access shall not be unreasonably withheld by
Phoenix.
11. Sales Assistance. During 1997, Phoenix shall assign XXXXXXXXX to
Marketing Partner on an "as needed, as available" basis for sales
support without charge, except that the Marketing Partner shall pay
all of XXXXXXXXXX Related Expenses. In subsequent years, such sales
assistance shall be paid by the Marketing Partner at
XXXXXXXXXXXXXXXXXXX personnel set forth in the Annual Price List,
XXXXXXXXXX.
19
<PAGE> 20
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
12. Source Code. Phoenix shall license source code for the Software to End
Users when required by such End Users. A one time fee shall be
charged for license of the source code equal to
XXXXXXXXXXXXXXXXXXXXXXXXX for such End User, which amount shall be
paid directly to Phoenix in its entirety.
13. Best Practices. Marketing Partner and its personnel shall adopt and
follow Phoenix Best Practices including its standards, processes and
procedures in all functional support areas, as such are provided to
Marketing Partner by Phoenix from time to time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Phoenix Marketing Partner
By: /s/ Bahram Yusefzadeh By: /s/ Khalid Alfarkh
------------------------------- --------------------------
Signature Signature
Bahram Yusefzadeh Khalid Alfarkh
- ---------------------------------- -----------------------------
Name (Print) Name (Print)
Chairman & CEO Sr. Marketing Manager
- ---------------------------------- -----------------------------
Title Title
20
<PAGE> 21
EXHIBIT A
SOFTWARE
Means the object code version of the software generally referred to as the
"Phoenix Banking System", and does not include the required database management
system nor any other third party applications or systems software.
21
<PAGE> 22
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
EXHIBIT B
TERRITORY
The Territory shall be as follows:
1) Bahrain
2) Egypt
3) Kuwait
4) Lebanon
5) Oman
6) Qatar
7) Saudi Arabia
8) UAE
The territory shall be exclusive as long as the Marketing Partner meets the
following sales minimums:
<TABLE>
<CAPTION>
Year Sales Minimum
- ---- -------------
<S> <C>
1 XXXXX
2 XXXXX
3 XXXXX
</TABLE>
Sales Minimums shall be calculated as the total of XXXXXXXXXXXXXXX paid by each
customer within each year. If the Marketing Partner fails to meet the above
minimums in any 12 month period, Phoenix may terminate the exclusivity of this
Agreement by written notice to the Marketing Partner, and the Territory shall
then be non-exclusive.
22
<PAGE> 23
CONFIDENTIAL TREATMENT REQUESTED - XXXXX
EXHIBIT C
CONFIDENTIAL
NOT FOR DISTRIBUTION
MIDDLE EAST ANNUAL PRICE LIST (US DOLLARS)
PHOENIX RETAIL BANKING SYSTEM
1. LICENSE FEES:
<TABLE>
<S> <C> <C>
A. Base License (one Server) $ XXXX
B. Remote Branch License
Branches
--------
XXXXX XXX
XXXXX $ XXX
XXXXX $ XXX
XXXXX $ XXX
XXXXX $ XXX
XXXXX $ XXX
C. Virtual Branch License (per 10,000 customer accounts) $ XXX
2. IMPLEMENTATION FEES (PLUS TRAVEL & LIVING EXPENSES)
A. Requirements Review/Analysis XXX
B. Conversion and Installation XXX
C. Training XXX
D. Enhancements and Modifications XXX
3. ANNUAL CUSTOMER AND SOFTWARE SUPPORT FEES: XXX
(PLUS TRAVEL & LIVING EXPENSES) per annum.
4. PROFESSIONAL SERVICES PER DAY RATES (PLUS RELATED EXPENSES)
Rates
-------------
Senior Manager $ XXX
Project Management/Trainer $ XXX
Implementation/ Development Professional $ XXX
</TABLE>
23
<PAGE> 24
5. THE COMPONENTS OF THE SOFTWARE AND DOCUMENTATION
Customer & Product Controls
Administrative Controls
Customer Processing
Deposit Processing
Loan Processing
Teller Processing
Nightly Processing
General Ledger Administration & Maintenance
Executive Information System
Data Dictionary: Deposits
Data Dictionary: Loans
Data Dictionary: Customer Information
Report Dictionary
Budgeting
Multi-Currency Module
THE SOFTWARE SPECIFICATIONS ARE LOCATED IN THE LICENSED DOCUMENTATION.
24
<PAGE> 1
EXHIBIT 11.1
PHOENIX INTERNATIONAL LTD., INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net income $1,013,296 $ 141,526
========== ==========
PRIMARY
Weighted average common stock outstanding 3,848,697 2,952,553
Effect of dilutive common stock equivalents
outstanding during the period (1) 437,943 116,131
Effect of common stock issued and stock options
granted during the 12-month period
preceding July 1, 1996 (3) -- 299,760
---------- ----------
Total common and common equivalent shares 4,286,640 3,298,444
========== ==========
Primary net income per share $ 0.24 $ 0.04
========== ==========
FULLY DILUTED
Weighted average common stock outstanding 3,848,697 2,952,553
Effect of dilutive common stock equivalents
outstanding during the period (2) 457,559 151,673
Effect of common stock issued and stock options
granted during the 12-month period
preceding July 1, 1996 (3) -- 229,760
---------- ----------
Total common and common equivalent shares 4,306,257 3,333,986
========== ==========
Fully diluted net income per share $ 0.24 $ 0.04
========== ==========
</TABLE>
- ----------
(1) Based on the treasury stock method using average market price.
(2) Based on the treasury stock method using the higher of the average or
period-end market price.
(3) Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin No. 83, common stock issued and stock options granted at
prices below the initial public offering price per share during the
12-month period immediately preceding the initial filing and through
the effective date of the Registration Statement, using the treasury
stock method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FROM FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 4,770,815
<SECURITIES> 0
<RECEIVABLES> 3,295,247
<ALLOWANCES> 50,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,770,969
<PP&E> 2,319,968
<DEPRECIATION> (407,165)
<TOTAL-ASSETS> 13,764,384
<CURRENT-LIABILITIES> 2,231,084
<BONDS> 0
0
0
<COMMON> 38,644
<OTHER-SE> 10,709,437
<TOTAL-LIABILITY-AND-EQUITY> 13,764,384
<SALES> 0
<TOTAL-REVENUES> 3,713,724
<CGS> 0
<TOTAL-COSTS> 2,602,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (5,389)
<INCOME-PRETAX> 1,181,009
<INCOME-TAX> 167,713
<INCOME-CONTINUING> 1,013,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,013,296
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
