<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
<TABLE>
<S> <C>
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the Commission Only
[X] Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
PHOENIX INTERNATIONAL LTD., INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PHOENIX INTERNATIONAL LTD., INC.
500 INTERNATIONAL PARKWAY
HEATHROW, FLORIDA 32746
April 12, 2000
Dear Shareholder:
We cordially invite you to attend our 2000 Annual Meeting. The meeting
will be held on Friday, May 5, 2000, at 9:00 a.m. local time at our corporate
headquarters located at 500 International Parkway, Heathrow, Florida 32746. We
are conducting the Annual Meeting for the following purposes:
1. To elect four directors to serve on the Board of Directors;
2. To vote on a proposal to amend the 1996 Director Stock Option Plan
to increase the shares reserved for issuance and provide for the
grant of options to directors of Phoenix and its subsidiaries in
different amounts and at different times than before;
3. To vote on a proposal to amend the 1995 Employee Stock Option Plan
to increase the shares reserved for issuance; and
4. To transact any other business properly coming before the Annual
Meeting.
We have included a copy of our Annual Report with this proxy
statement. We encourage you to read the Annual Report. It includes our 1999
financial statements and information on our operations, markets, products, and
services.
Please review the enclosed materials carefully. Whether or not you
plan to attend the Annual Meeting, please promptly return your proxy card in
the enclosed postage pre-paid envelope. If you attend the meeting, you may vote
in person if you wish, even though you have previously returned your proxy.
Your vote is very important, and we appreciate your cooperation in
considering and acting on the matters presented. We look forward to seeing you
at the meeting.
Sincerely,
/s/ Bahram Yusefzadeh
Bahram Yusefzadeh
Chairman of the Board of Directors and
Chief Executive Officer
<PAGE> 3
PHOENIX INTERNATIONAL LTD., INC.
500 INTERNATIONAL PARKWAY
HEATHROW, FLORIDA 32746
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 5, 2000
The 2000 Annual Meeting of Shareholders of Phoenix International Ltd.,
Inc. will be held on Friday, May 5, 2000, at 9:00 a.m. local time at Phoenix's
corporate headquarters located at 500 International Parkway, Heathrow, Florida
32746, for the following purposes:
1. To elect four directors to serve on the Board of Directors;
2. To vote on a proposal to amend the 1996 Director Stock Option Plan
to increase the shares reserved for issuance and provide for the
grant of options to directors of Phoenix and its subsidiaries in
different amounts and at different times than before;
3. To vote on a proposal to amend the 1995 Employee Stock Option Plan
to increase the shares reserved for issuance; and
4. To transact any other business properly coming before the Annual
Meeting.
Shareholders owning shares of common stock of Phoenix at the close of
business on March 15, 2000, are entitled to attend and vote at the meeting. In
accordance with the Florida Business Corporation Act, a list of shareholders
entitled to vote at the Annual Meeting shall be open to the examination of any
shareholder, his agent or attorney for any purpose relevant to the Annual
Meeting upon written notice, all as provided by the Florida Business
Corporation Act, during regular business hours at our corporate headquarters
located at 500 International Parkway, Heathrow, Florida 32746, from April 12,
2000 to May 4, 2000, and the list shall be available for inspection at the
Annual Meeting by any shareholder that is present.
By Order of the Board of Directors,
/s/ Bahram Yusefzadeh
Bahram Yusefzadeh
Chairman of the Board of Directors and
Chief Executive Officer
April 12, 2000
<PAGE> 4
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
PHOENIX INTERNATIONAL LTD., INC.
TO BE HELD ON MAY 5, 2000
Our Board of Directors is soliciting your proxy for the 2000 Annual
Meeting of Shareholders to be held at 9:00 a.m. local time on Friday, May 5,
2000 at Phoenix's corporate headquarters located at 500 International Parkway,
Heathrow, Florida 32746. Voting materials, including this proxy statement, the
proxy card, and the Annual Report, are first being mailed to the shareholders
on or about April 12, 2000.
YOU SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION INCLUDED IN THIS
PROXY STATEMENT BEFORE RETURNING YOUR PROXY.
VOTING AND RELATED MATTERS
Q: WHAT AM I VOTING ON?
A: You are being asked to vote on:
- the election of four directors;
- a proposal to amend the 1996 Director Stock Option Plan;
- a proposal to amend the 1995 Employee Stock Option Plan; and
- any other matter properly brought before the meeting.
Q: WHO IS ENTITLED TO VOTE?
A: Persons who are Shareholders of Phoenix as of the close of business on March
15, 2000, the official record date, are entitled to vote at the meeting.
Q: HOW MANY SHARES CAN BE VOTED?
A: As of March 15, 2000, 9,410,172 shares of common stock were issued and
outstanding. Each shareholder of common stock is entitled to one vote for each
share held.
<PAGE> 5
Q: HOW DO I VOTE?
A: Complete, sign and mail us your proxy card. If you return your signed proxy
card but do not indicate how you wish to vote, your shares will be voted FOR
each of the proposals. You may, of course, attend the Annual Meeting in person
and vote. Even if you plan to attend the meeting, we ask that you sign and
return a proxy card.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
A: You may revoke your proxy and change your vote at any time before the Annual
Meeting. You may do this by signing and sending a written notice of revocation
or another proxy with a later date than the one you want to revoke, or by
voting in person at the meeting.
Q: WHO WILL COUNT THE VOTE?
A. The chairman of the Board of Directors will select the inspectors of the
election for our Annual Meeting. The inspectors will tabulate the shareholder
votes.
Q: WHAT CONSTITUTES A QUORUM?
A: A quorum is a majority of the outstanding shares. Shareholders may be
present at the meeting or represented by proxy. There must be a quorum for the
meeting to be held. If you submit a properly executed proxy card, even if you
abstain from voting, then you will be considered part of the quorum. However,
abstentions are not counted in the tally of votes FOR or AGAINST a proposal. A
WITHHELD vote is the same as an abstention. Broker non-votes, or proxies
submitted by brokers as holders of record on behalf of their customers that do
not indicate how to vote on some or all of the proposals, are also considered
part of the quorum.
Q: HOW MANY VOTES ARE REQUIRED TO ELECT THE NOMINEES FOR DIRECTOR?
A: Directors are elected by a plurality. This means that only votes FOR a
director are counted, and the four nominees who receive the most votes will be
elected.
Q: HOW MANY VOTES ARE REQUIRED TO APPROVE THE OTHER PROPOSALS?
A: Any other proposal will be deemed to be approved by the shareholders if the
votes cast FOR the proposal exceed the votes cast AGAINST the proposal.
Q: WHO IS PAYING FOR THIS PROXY SOLICITATION?
A: We are paying the cost of soliciting proxies. In addition to mailing these
materials, our officers, directors, and employees will solicit proxies, either
personally or via telephone or facsimile. They will not be paid specifically
for this solicitation activity. We will also reimburse brokerage houses and
other custodians, nominees, and fiduciaries who are record holders for their
reasonable expenses in forwarding these materials to the beneficial owners of
those shares.
2
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Under our current articles of incorporation, the Board of Directors
must have no more than eleven directors, divided into three approximately equal
classes. The Board determines the number of directors within these limits. Our
directors serve in staggered three-year terms and are divided into three classes
- - Class I, whose term expires in 2000; Class II, whose term expires in 2001; and
Class III, whose term expires in 2002. Normally, one class of directors stands
for election in each year.
Given the current number of directors and their backgrounds, the Board
of Directors determined in January 2000 that it was appropriate to reallocate
the directors in Class I and Class II, with Ms. Ruann F. Ernst and Mr. William
C. Hess moving from Class I to Class II, and Mr. J. Michael Murphy moving from
Class II to Class I. Mr. O. Jay Tomson remains in Class I, and Mr. Bahram
Yusefzadeh, Mr. Raju M. Shivdasani, and Mr. Ronald E. Fenton remain in Class
III. As a part of the reallocation, the Board reduced the number of directors
to seven. The term for Class I directors expires this year, and the Class I
directors have been nominated for re-election at the Annual Meeting. In the
reallocation of directors, Ms. Ernst and Mr. Hess technically were appointed to
fill unexpired Class II terms, and under Florida law the term of a director
appointed to fill an unexpired term expires at the next annual meeting of
shareholders. For that reason Ms. Ernst and Mr. Hess are nominated for election
as Class II directors to fill the remaining one-year balance of the Class II
term.
All nominees are currently directors. We believe that the nominees
will stand for election and will serve if elected as directors. If, however,
any person nominated by the Board of Directors fails to stand for election or
is unable to accept election, we will vote in favor of the election of such
other person as the Board of Directors may recommend. There are no cumulative
voting rights in the election of directors, which means you may vote only once
for a nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE DIRECTOR NOMINEES.
The director nominees and their ages and terms of office as of April
1, 2000 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ----------------------------- --- ---------------------
<S> <C> <C>
Class I (term expires in 2003)
J. Michael Murphy 59 Director
O. Jay Tomson 63 Director
Class II (term expires in 2001)
Ruann F. Ernst 53 Director
William C. Hess 63 Director
</TABLE>
3
<PAGE> 7
J. Michael Murphy. Mr. Murphy has been a director of Phoenix since
1993 and currently serves as a member of the Executive Committee and as
chairman of the Audit Committee. Since 1977, he has served as president of Drum
Service Co. of Florida, which in February 1998 merged into Palex, Inc., where
he now serves as a senior vice president. From 1988 to 1998 he served as a
director of Lochaven Federal Savings and Loan Association in Orlando, Florida,
and served as its chairman of the board from 1995 to 1996. He is a past
chairman of the Reusable Industrial Packaging Association and was chairman of
the International Confederation of Drum Reconditioners from 1990 to 1993. Mr.
Murphy holds an MBA from the Harvard Graduate School of Business
Administration.
O. Jay Tomson. Mr. Tomson has been a director of Phoenix since 1993
and was chairman of the board of Phoenix from August 1993 to February 1994. Mr.
Tomson is also a member of the Audit Committee. 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. Mr. Tomson was a member of the Board of Directors of the Federal
Reserve Bank of Chicago from 1980 to 1986. He is a former director and
president of Shazam, Inc., a regional electronic funds transfer network. In
1987, he served as the president of the Independent Community Bankers
Association, formerly the Independent Bankers Association of America.
Ruann F. Ernst. Ms. Ernst has been a director of Phoenix since 1996
and currently serves as a member of the Executive Committee and is the chairman
of the Compensation and Stock Option Committee. Ms. Ernst has served as
chairman of the board of Digital Island, Inc. since December 1999 and as its
chief executive officer and as a director since June 1998. She was president of
Digital Island, Inc. from June 1998 until December 1999. Prior to joining
Digital Island, Ms. Ernst served with Hewlett Packard, a computer equipment and
services company, for approximately ten years, most recently as general manager
of the Financial Services Business Unit. Ms. Ernst serves on the Board of
Directors of The Institute for the Future and Advanced Fibre Communications,
Inc.
William C. Hess. Mr. Hess has been a director of Phoenix since 1993
and currently serves as a member of the Audit Committee. Since 1984, he has
been the president of Iowa Savings Bank, and since 1988 he has been chairman of
the board of Sac City State Bank. Mr. Hess serves as an officer and director of
several bank holding companies and he is also a director of Audubon State Bank,
Iowa Savings Bank, Perry State Bank and Raccoon Valley State Bank. Mr. Hess is
a past member of the Board of Directors of the Iowa Department of Banking, a
past director of the Iowa Bankers Mortgage Association and Iowa Bankers
Association, and a past director of Shazam, Inc., a regional electronic funds
transfer network.
4
<PAGE> 8
OTHER DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ----------------- --- -----------------------------------
<S> <C> <C>
Bahram Yusefzadeh 53 Chairman of the Board, Chief
Executive Officer, and Class III
Director
Raju M. Shivdasani 49 President, Chief Operating Officer,
and Class III Director
Ronald E. Fenton 71 Class III Director
Theodore C. Burns 43 Senior Vice President and Chief
Financial Officer
Richard T. Powers 52 Executive Vice President,
U.S. Business
Daniel P. Baker 37 Senior Vice President,
Research and Development
Harold C. Boughton 48 Senior Vice President,
Corporate Marketing
C. Russell Pickering 31 Senior Vice President and
Corporate Counsel
Ronald G. Welsh 52 Senior Vice President,
Worldwide Services
</TABLE>
Bahram Yusefzadeh. Mr. Yusefzadeh, Phoenix's founder, chairman of the
board and chief executive officer, has 31 years of experience in the banking
software industry. In 1969, he co-founded Nu-Comp Systems, Inc., 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. 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, first as president of the product and marketing
strategies division, and later as president of both the independent banking
group and the outsourcing division. Mr. Yusefzadeh has been a director of
Phoenix since its inception, and his current term as a director expires in
2002. Mr. Yusefzadeh currently serves as a member of the Executive Committee
and as a non-voting member of the Compensation and Stock Option Committee. Mr.
Yusefzadeh has been a director of Towne Services, Inc., a publicly traded
company, since 1997 and has been a member of its Audit and Compensation
Committees since 1998.
Raju M. Shivdasani. Mr. Shivdasani joined Phoenix in July 1996 as a
senior vice president and president of the International Sales Division. In
January 1998, Mr. Shivdasani assumed the position of president and chief
operating officer and was appointed a director of Phoenix. Mr. Shivdasani's
term as a director expires in 2002. From 1990 to 1996, he worked for Fiserv,
Inc. where he served as group executive vice president of the bank services
sector and president of CBS Worldwide, a banking software division. Mr.
Shivdasani has over 28 years of experience working for companies in the banking
software, service bureau, and data center services industries.
Ronald E. Fenton. Mr. Fenton has been a director of Phoenix since 1993
and currently serves as a member of the Executive Committee and Compensation
and Stock Option Committee. Mr. Fenton's term as a director expires in 2002.
Mr. Fenton is the chairman of the board of directors of F&M Bank - Iowa Central
and a board member of F&M Bank - Iowa Story County and F&M Bank -
5
<PAGE> 9
Iowa South Central. He also serves as chairman of the board of directors of
BancSecurity Corporation (where he has been since 1982), and recently retired
as president, chief executive officer, and director of Security Bank (where he
had been since 1976). He is also a director and former chairman of the board of
Shazam, Inc., a regional electronic funds transfer network.
Theodore C. Burns. Mr. Burns joined Phoenix in October 1998 as senior
vice president and chief financial officer. From 1993 to 1998, Mr. Burns worked
with PricewaterhouseCoopers LLP (and its predecessor, Price Waterhouse LLP) in
the U.S., Indonesia, India, and South Korea, most recently as a director in
their Financial Advisory Services Group. He previously advised banking
institutions in the areas of mergers & acquisitions, capital raising, and
strategy for over eight years, first with Golembe Associates, Inc. and later
with Fox-Pitt, Kelton Inc. Mr. Burns holds an MBA from Columbia University and
is a certified public accountant.
Richard T. Powers. Mr. Powers was promoted to executive vice president
U.S. Business in March 2000, and is the executive responsible for U.S.
operations, including the company's in-house and application service center
businesses. He joined Phoenix in October 1999 as senior vice president of
e-Commerce Services and was responsible for the company's U.S. e-commerce
initiatives. He brings more than 26 years experience in all facets of the
financial services industry, both as a banker and as founder, president, and
chief operating officer of Servers On-Line, Inc., a New York information
processing business for financial institutions which began in 1998, now
majority-owned and managed by Phoenix. Prior to that, he served as president
and chief operating officer of Waterhouse National Bank, a virtual financial
institution and affiliate of Waterhouse Securities of New York, from 1993 to
1997. During his tenure, Mr. Powers was instrumental in growing the
organization from $30 million to more than $1.3 billion in assets in just two
years. Mr. Powers also served as executive vice president and chief operations
officer of North Fork Bank located in Long Island, New York, where the bank
grew from $484 million in assets to $6 billion in assets under his leadership.
Daniel P. Baker. Mr. Baker joined Phoenix in February 1998 as senior
vice president for Research and Development and is responsible for U.S. and
international product development and quality assurance of the Phoenix System
and Phoenix ancillary products. From 1995 to 1998, Mr. Baker served as senior
vice president, Information Technology Division and director of Market Systems
Strategy at the John H. Harland Company. From 1993 to 1995, he worked for
Fiserv, Inc., where he served as vice president of Technology Services. Prior
to Fiserv, Mr. Baker served over 15 years in the banking industry.
Harold C. Boughton. Mr. Boughton joined Phoenix in June 1996 as senior
vice president of U.S. Business Development and became senior vice president of
Corporate Marketing in March 2000. 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.
6
<PAGE> 10
C. Russell Pickering. Mr. Pickering joined Phoenix in February 2000 as
senior vice president and corporate counsel. Prior to joining Phoenix, Mr.
Pickering was from 1994 to 2000 an associate with Nelson Mullins Riley &
Scarborough, L.L.P., where he practiced in the areas of general corporate law,
securities, mergers and acquisitions, and computer law, specializing in the
representation of emerging technology companies and financial institutions. As
outside counsel, Mr. Pickering managed Phoenix's U.S. and international
intellectual property, software licensing, third party distributor, and third
party product contracts. Mr. Pickering received his J.D. from the University of
Texas at Austin in 1994, and he is a licensed member of the State Bar of
Georgia.
Ronald G. Welsh. Mr. Welsh joined Phoenix in February 1999 as senior
vice president of Worldwide Services. He is responsible for the ongoing support
and implementation functions for Phoenix's clients around the world. He brings
a wide range of hands-on expertise in bank data processing, data center
management, strategic technology planning, training, and support, as well as
mergers and acquisitions. Prior to joining Phoenix, he served as both vice
president of Strategic Technology Planning and vice president of Operations and
Information Technology for NationsBank from 1985 to 1994. Mr. Welsh also worked
with Honeywell Information Systems in their North American banking and
government divisions and managed independent service bureaus for S&Ls and banks
in the 1980s.
Our executive officers are appointed by the Board of Directors, and
other officers are appointed by the executive officers. Officers serve at the
pleasure of the Board or the executive officer authorized to make the
appointment until their successors are chosen and qualified or until their
earlier resignation or removal.
7
<PAGE> 11
COMMITTEES OF THE BOARD OF DIRECTORS AND NOMINATIONS BY SHAREHOLDERS
<TABLE>
<CAPTION>
NAME OF COMMITTEE NUMBER OF MEETINGS
AND MEMBERS FUNCTIONS OF THE COMMITTEE IN 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Executive - is vested with all the powers of the Board, Six
Bahram Yusefzadeh (Chair) except that the Executive Committee cannot take
Ronald E. Fenton action to: (a) approve or recommend to shareholders
J. Michael Murphy actions or proposals required by the Florida
Ruann F. Ernst Business Corporation Act to be approved by the
shareholders; (b) fill vacancies on
the Board or any committee of it;
(c) adopt, amend or repeal the
Amended and Restated Bylaws; (d)
authorize or approve the
reacquisition of shares; (e)
authorize or approve the issuance or
sale or contract for the sale of
shares, or determine the designation
and relative rights, preferences and
limitations of a voting group; or
(f) take any other action not
permitted to be delegated to a
committee under the Florida Business
Corporation Act or the Bylaws
- acts as the nominating committee of the Board
- recommends qualified candidates for election as
officers and directors
- ----------------------------------------------------------------------------------------------------------------------
Audit - reviews internal controls and objectivity of Two
J. Michael Murphy (Chair) financial reporting
William C. Hess - makes recommendations regarding employment of
O. Jay Tomson independent auditors
Ronald E. Fenton (effective 2000) - reviews annual audit with the auditors
- ----------------------------------------------------------------------------------------------------------------------
Compensation and Stock Option - reviews and recommends to the Board of Directors Two
Ruann F. Ernst (Chair) the compensation and benefits of officers
Ronald E. Fenton - administers the issuance of stock options to
Bahram Yusefzadeh (non-voting officers, employees, consultants and advisors
member) - reviews general policy matters relating to
compensation and benefits of employees
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
We do not have a standing nominating committee. The Executive
Committee recommends candidates, and the Board of Directors nominates
candidates to stand for election as directors. Under our Bylaws, shareholders
may make nominations for directors, but only if nominations are delivered in
writing to the Secretary no less than 90 days before the first anniversary of
the previous year's annual meeting. Nominations must include the candidate's
name, biographical data and qualifications in accordance with the Bylaws.
During 1999, the Board of Directors held six meetings. All directors
attended 75% or more of the aggregate of all board meetings and all meetings of
committees of which they were members, except for Ms. Ernst.
8
<PAGE> 12
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table provides information, as of March 15, 2000,
concerning the beneficial ownership of common stock by: (a) each person or
entity known by Phoenix to beneficially own more than 5% of the outstanding
common stock; (b) each director; (c) each executive officer; and (d) all
directors and executive officers as a group. The information in the table is
based on information from the named persons regarding their ownership of common
stock. Unless otherwise indicated, each of the shareholders has sole voting and
investment power with respect to the shares shown as beneficially owned by
them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED (1)
---------------------------------------
NUMBER PERCENT
------------------ ------------------
<S> <C> <C>
SAFECO Corporation (2).................................. 2,811,700 29.9%
Bahram Yusefzadeh (3)................................... 1,484,786 15.4
London Bridge Software Holdings (4)..................... 861,623 9.2
Robert Fleming, Inc.(5)................................. 589,870 6.3
Ronald E. Fenton (6).................................... 397,796 4.2
Raju M. Shivdasani (7).................................. 305,750 3.2
William C. Hess (8)..................................... 226,823 2.4
J. Michael Murphy (9)................................... 94,288 1.0
Harold C. Boughton (10)................................. 84,938 *
O. Jay Tomson (11)...................................... 60,646 *
Ruann F. Ernst (12)..................................... 52,500 *
Daniel P. Baker (13).................................... 44,000 *
Theodore C. Burns (14).................................. 27,000 *
C. Russell Pickering (15)............................... 24,000 *
Richard T. Powers (16).................................. 19,515 *
Ronald G. Welsh (17).................................... 2,500 *
All directors and officers as a group (13 persons)...... 2,824,542 27.3
</TABLE>
- ---------------
* Indicates less than 1.0%.
(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 March 15, 2000, 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.
9
<PAGE> 13
(2) As reported by SAFECO Corporation in a Statement on Schedule 13G filed
with the SEC as of December 31, 1999. In its Statement on Schedule
13G, Safeco reports that it is a holding company for SAFECO Asset
Management Company, a registered investment advisor to several
investment companies and sponsor of SAFECO Common Stock Trust, an
employee benefit plan. As a result of its ownership of SAFECO Asset
Management and sponsorship of SAFECO Common Stock Trust, SAFECO may be
deemed to be the beneficial owner of the shares of our Common Stock
managed by SAFECO Asset Management and owned by SAFECO Common Stock
Trust. SAFECO specifically disclaims ownership over these shares of
Common Stock. SAFECO's address is SAFECO Plaza, Seattle, Washington
98185.
(3) Includes: (a) 920,276 shares held in his name; (b) 291,541 shares held
by the Yusefzadeh Family Limited Partnership of which Mr. Yusefzadeh
is the general partner; (c) 55,143 shares held by the Bahram and Laury
Yusefzadeh Charitable Remainder Trust, of which Mr. Yusefzadeh is a
director; (d) options to acquire 118,478, 3,000, 3,000, 15,000, 6,000,
6,000, 25,000, 25,000, and 6,000 shares that are currently exercisable
at exercise prices of $3.16, $8.00, $14.08, $9.83, $18.50, $14.75,
$6.06, $6.67, and $3.88, respectively, per share; (e) 348 shares held
by his daughter; and (f) 10,000 shares held at Roxbury Capital. Mr.
Yusefzadeh disclaims beneficial ownership with respect to the shares
held by his daughter. Mr. Yusefzadeh's address is c/o Phoenix
International Ltd., Inc., 500 International Parkway, Heathrow, Florida
32746.
(4) As reported by London Bridge Software Holdings PLC in a statement on
Schedule 13D filed with the SEC as of February 14, 2000. Pursuant to
such Statement on Schedule 13D, such holder owns 861,623 shares in its
name. London Bridge Software Holding's address is 25 London Bridge
Street, 16th Floor, New Long Bridge House, London, England SE1 95G.
(5) As reported by such shareholder, a New York Trust, in a Statement on
Schedule 13G filed with the SEC on February 9, 2000. Pursuant to such
Statement on Schedule 13G, such holder owns 589,870 shares in its
name. Robert Fleming's address is 320 Park Avenue - 11th Floor, New
York, New York 10022.
(6) Includes: (a) 5,757 shares held by Mr. Fenton; (b) 9,621 shares held
by Janice Rae Fenton; (c) 9,621 shares held by Julia Anne Fenton; (d)
3,632 shares in an irrevocable trust for Oliver E. Henderson; (e)
3,632 shares in an irrevocable trust for Elliott F. Chanen; (f) 3,632
shares in an irrevocable trust for Aron R. Fenton; (g) 3,632 shares in
an irrevocable trust for Amelia E. Henderson; (h) 3,632 shares in an
irrevocable trust for Emma F. Chanen; (i) 9,621 shares held by Lynn M.
Flater; (j) 750 shares held by Michael Flater, (k) 772 shares held by
Michael Flater's individual retirement account; (l) options to acquire
3,000, 4,500, 6,000, 13,500, 13,500, and 15,000 shares that are
currently exercisable at exercise prices of $8.00, $10.17, $14.08,
$18.50, $14.75, and $3.88 respectively, per share; and (m) 287,994
shares held in the name of BancSecurity Corporation. Mr. Fenton
disclaims beneficial ownership of the shares held by BancSecurity
Corporation. Mr. Fenton's address is c/o Security Bank, 11 North First
Avenue, Marshalltown, Iowa 50158.
(7) Includes options to acquire 87,000, 56,250, 15,000, 6,000, 50,000,
4,000, 73,500, 2,000, and 6,000 shares that are currently exercisable
at exercise prices of $8.00, $13.75, $9.83, $11.83, $13.38, $14.75,
$6.13, $14.75, and $3.88 respectively, per share. Includes 6,000
shares purchased in 1999 through J.C. Bradford & Co.
10
<PAGE> 14
(8) Includes: (a) 30,294 shares held in Mr. Hess' name; (b) 7,666 shares
held by his individual retirement account; (c) options to acquire
3,000, 13,938, 4,500, 7,500, 7,500, and 7,500 shares that are
currently exercisable at exercise prices of $8.00, $2.87, $14.08,
$18.50, $14.75, and $3.87, respectively, per share; (d) 96,429 shares
held in the name of Community Grain Corporation, of which he is
secretary and treasurer and over which he shares voting and
dispositive power; (e) 4,425 shares held in the name of Raccoon Valley
State Bank Charitable Fund, of which he is an officer and director;
(f) 4,425 shares held in the name of Perry State Bank Charitable Fund,
of which he is an officer and director; (g) 4,425 shares held in the
name of Sac City State Bank Charitable Fund, of which he is an officer
and director; (h) 30,796 shares held in the name of Iowa Savings Bank
Charitable Foundation, of which he is an officer and director; (i)
4,425 shares held in the name of Audubon State Bank Charitable
Foundation. 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 (d) - (i) above.
(9) Includes: (a) 33,850 shares held in the name of Murphy Family
Partners, Ltd.; and (b) options to acquire 3,000, 13,938, 1,500,
4,500, 12,000, 12,000, and 13,500 shares that are currently
exercisable at exercise prices of $8.00, $2.87, $10.17, $14.08,
$18.50, $14.75, and $3.88 respectively, per share. Mr. Murphy is the
general partner of Murphy Family Partners, Ltd. and exercises sole
voting and dispositive power over the shares held by Murphy Family
Partners, Ltd.
(10) Includes options to acquire 79,438 and 5,500 shares that are currently
exercisable at exercise prices of $8.00 and $6.13, respectively, per
share.
(11) Includes: (a) 3,000 shares held in Mr. Tomson's name; (b) options to
acquire 3,000, 3,000, 7,500, 7,500, and 7,500 shares that are
currently exercisable at exercise prices of $8.00, $14.08, $18.50,
$14.75, and $3.88 respectively, per share; (c) 29,146 shares held in
the name of First Citizens National Bank Charitable Foundation, Inc.
Mr. Tomson is a director of First Citizens Financial Corporation and
First Citizens National Bank Charitable Foundation, Inc. Mr. Tomson
disclaims beneficial ownership of the shares held by these entities.
(12) Includes options to acquire 3,000, 4,500, 15,000, 15,000, and 15,000
shares that are currently exercisable at exercise prices of $8.50,
$14.08, $18.50, $14.75, and $3.87, respectively, per share.
(13) Includes options to acquire 18,000, 6,000, and 20,000 shares that are
currently exercisable at exercise prices of $13.00, $18.33, and $6.13,
respectively, per share.
(14) Includes options to acquire 12,000 and 7,500 shares that are currently
exercisable at prices of $16.38 and $6.13 respectively, per share.
Includes 7,500 shares purchased by Mr. Burns in 1999: (a) 2,500 shares
are held directly by Burns; and (b) 5,000 shares are held in an IRA
account on behalf of Burns.
(15) Includes: (a) options to acquire 5,000, 6,000, 6,000, and 6,000 shares
that are currently exercisable at exercise prices of $13.38, $6.13,
$3.88, and $3.94, respectively, per share; and (b) 1,000 shares held
in the name of Pickering Investments, of which Mr. Pickering is a
general partner.
11
<PAGE> 15
(16) Includes: (a) options to acquire 17,000 shares that are currently
exercisable at a price of $4.375 per share; (b) 1,015 shares held in
IRA accounts; and (c) 1,500 shares held jointly with Mr. Powers' wife.
(17) Includes options to acquire 2,500 shares that are currently exercisable
at a price of $6.13 per share.
12
<PAGE> 16
EXECUTIVE COMPENSATION
The following table provides information concerning the cash and
non-cash compensation during the years indicated earned by or awarded to the
chief executive officer and to the other four most highly compensated executive
officers whose combined salary and bonus exceeded $100,000 during 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------- ---------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
YEAR SALARY($) BONUS($)(1) COMPENSATION OPTIONS/SARs(2) COMPENSATION
---- --------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh
Chairman of the Board and
Chief Executive Officer ........... 1999 266,667 -- 19,661(3) 56,000 11,660(4)
1998 240,000 -- 12,159(3) 36,000 12,347(5)
1997 210,800 -- 14,826(3) 3,000 11,397(6)
Raju M. Shivdasani
President and Chief
Operating Officer ................. 1999 191,667 -- 11,628(7) 153,000 2,875(8)
1998 175,000 1,667(9) 6,783(10) 86,000 --
1997 120,000 54,100(11) -- 75,000 --
Theodore C. Burns
Senior Vice President and
Chief Financial Officer
(12) .............................. 1999 140,000 -- 38,735(13) 15,000 1,050(14)
1998 22,825 -- 1,135(13) 30,000 --
Harold C. Boughton
Senior Vice President,
U.S. Business ....................... 1999 120,000 40,000(15) -- 11,000 2,400(16)
1998 120,000 42,358(17) -- -- --
1997 100,000 80,083(18) -- -- --
Daniel P. Baker
Senior Vice President,
Research and Development (19) ....... 1999 136,666 -- 11,076(20) 40,000 --
1998 114,987 -- -- 45,000 --
</TABLE>
- ---------------
(1) Bonuses and commissions for each year include amounts earned for that
year, even if paid in a subsequent year, and exclude bonuses paid
during that year but earned for a prior year.
(2) All figures in this column reflect options to purchase shares of Common
Stock.
(3) Represents automobile lease payments and automobile expenses paid by
Phoenix for Mr. Yusefzadeh.
(4) Includes $6,413 for long term disability premiums paid by Phoenix,
$2,344 for term life insurance paid by Phoenix for Mr. Yusefzadeh's
beneficiaries, $750 for health insurance premiums paid by Phoenix for
Mr. Yusefzadeh's dependents and $2,143 401(k) matching contribution.
(5) Includes $6,410 for long term disability premiums paid by Phoenix,
$2,681 for term life insurance paid by Phoenix for Mr. Yusefzadeh's
beneficiaries and $3,256 for health insurance premiums paid by Phoenix
for Mr. Yusefzadeh's dependents.
(6) Includes $6,241 for long term disability premiums paid by Phoenix,
$2,035 for term life insurance paid by Phoenix for Mr. Yusefzadeh's
beneficiaries and $3,121 for health insurance premiums paid by Phoenix
for Mr. Yusefzadeh's dependents.
13
<PAGE> 17
(7) Represents automobile lease payments paid by Phoenix for Mr.
Shivdasani.
(8) Represents a 401(k) matching contribution.
(9) Represents an incentive-based commission all of which was earned and
paid in 1998.
(10) Represents automobile lease payments paid by Phoenix for Mr.
Shivdasani.
(11) Includes $19,637 earned and paid in 1997 and $34,463 earned in 1997 and
paid in 1998.
(12) Mr. Burns' employment with Phoenix commenced in October 1998.
(13) Represents relocation expenses paid by Phoenix.
(14) Represents a 401(k) matching contribution.
(15) Represents an incentive-based commission, including draws, all of which
was earned and paid in 1999.
(16) Represents a 401(k) matching contribution.
(17) Represents an incentive-based commission, including draws, all of which
was earned and paid in 1998.
(18) Represents an incentive-based commission, including draws, of
which $54,252 was earned and paid in 1997 and $25,831 was earned in
1997 and paid in 1998.
(19) Mr. Baker's employment with Phoenix commenced in February 1998.
(20) Represents relocation expenses paid by Phoenix grossed up for taxes.
OPTION GRANTS AND EXERCISES DURING 1999
The following table provides information with respect to grants of
stock options to each of the five most highly compensated executive officers
during 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK
NUMBER OF GRANTED TO PRICE APPRECIATION
SECURITIES EMPLOYEES FOR OPTION TERM(2)
UNDERLYING IN ---------------------
OPTIONS FISCAL EXERCISE GRANT EXPIRATION
NAME GRANTED YEAR PRICE (1) DATE DATE 5% 10%
---------- ----------- --------- ----- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh 4,000(3) 0.9% $ 14.75 1/1/99 2003 $16,291 $35,995
2,000(4) 0.5 14.75 1/1/99 2003 8,145 17,998
25,000(5) 6.2 6.06 5/7/99 2009 95,292 241,469
16,493(6) 4.0 6.67 5/7/99 2004 17,628 51,050
8,507(7) 2.1 6.67 5/7/99 2004 9,092 26,331
Raju M. Shivdasa 4,000(8) 0.9 14.75 1/1/99 2003 16,291 35,995
8,572(9) 2.1 6.13 3/12/99 2009 33,008 83,642
138,428(10) 34.1 6.13 3/12/99 2009 533,037 1,350,715
2,000(11) 0.5 14.75 1/1/99 2003 8,145 17,998
Harold C. Boughton 8,251(12) 2.0 6.13 3/12/99 2009 31,772 80,509
2,749(13) 0.7 6.13 3/12/99 2009 10,585 26,823
Theodore Burns 15,000(14) 3.7 6.13 3/12/99 2009 57,760 146,363
Daniel P. Baker 40,000(15) 9.9 6.13 3/12/99 2009 154,025 390,300
</TABLE>
- ---------------
14
<PAGE> 18
(1) The exercise price is the fair market value of the Common Stock on the
grant date as determined by the Board of Directors.
(2) The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by SEC rules. We cannot guarantee 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 non-qualified, director stock options which were granted
on January 1, 1999 that are fully vested.
(4) Represents non-qualified, director stock options which were granted on
January 1, 1999 that are fully vested.
(5) Represents non-qualified stock options which were granted on May 7, 1999
that are fully vested.
(6) Represents incentive stock options which were granted on May 7, 1999 that
are fully vested.
(7) Represents non-qualified stock options which were granted on May 7, 1999
that are fully vested. (8) Represents non-qualified, director stock
options which were granted on January 1, 1999 that are fully vested.
(9) Represents incentive stock options which were granted on March 12, 1999
that are fully vested as to two shares and vest as to 4,285 shares on
January 1, 2001 and 4,285 shares on January 1, 2002.
(10) Represents non-qualified stock options granted on March 12, 1999 that
are fully vested as to 73,498 shares and vest as to 32,465 shares on
January 1, 2001, and 32,465 shares on January 1, 2002.
(11) Represents non-qualified, director stock options which were granted on
January 1, 1999 that are fully vested.
(12) Represents incentive stock options which were granted on March 12, 1999
that are fully vested as to 2,751 shares and vest as to 2,750 shares on
January 1, 2001 and 2,750 shares on January 1, 2002.
(13) Represents non-qualified stock options which were granted on March 12,
1999 that are fully vested.
(14) Represents non-qualified stock options which were granted on March 12,
1999 that are fully vested as to 7,500 shares and vest as to 3,750 shares
on January 1, 2001 and 3,750 shares on January 1, 2002.
(15) Represents non-qualified stock options granted on March 12, 1999 that are
fully vested as to 20,000 shares and vest as to 10,000 shares on January
1, 2001 and 10,000 shares on January 1, 2002.
15
<PAGE> 19
During 1999, no stock options were exercised by the named executive
officers. The following table sets forth in formation with respect to each of
the five most highly compensated executive officers concerning the value of all
unexercised options they held at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON ----------------------------- --------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------- ----------- -------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Bahram Yusefzadeh -- -- 168,978 47,500 $85,101 --
Raju M. Shivdasani -- -- 249,500 151,500 -- --
Theodore C. Burns -- -- 15,750 29,250 -- --
Harold C. Boughton -- -- 76,377 14,061 -- --
Daniel P. Baker -- -- 25,000 60,000 -- --
</TABLE>
- --------------------
(1) Represents the difference between the exercise price per share and the
$3.875 per share market value of the common stock at December 31, 1999 as
reported on Nasdaq.
EMPLOYMENT AGREEMENTS
As of April 1, 2000, eight executive officers have employment
agreements with us. The principal terms of these agreements are summarized
below.
Bahram Yusefzadeh
- serves as chief executive officer;
- current base salary: $266,667;
- term of three years, which renews daily for each day served;
- incentive compensation based upon achievement of targeted
levels of performance and such other criteria established by
the Compensation and Stock Option Committee and an additional
bonus as determined by that Committee;
- stock options, health insurance for himself and his
dependents, long-term disability insurance, civic and social
club dues, automobile allowance, and other benefits;
- Mr. Yusefzadeh may terminate the agreement within certain
dates after a change in control; and
- if Mr. Yusefzadeh's employment is terminated by Phoenix
in breach of the agreement, or by Mr. Yusefzadeh after a
change in control:
- Phoenix shall continue to pay Mr. Yusefzadeh his base
salary and bonus for 36 months, and must continue his
life and health insurance until Mr. Yusefzadeh
reaches age 65, and
- options held by Mr. Yusefzadeh vest and become
immediately exercisable.
Raju M. Shivdasani
- serves as president and chief operating officer;
- current base salary: $191,667;
- term of three years, which renews daily for each day served;
16
<PAGE> 20
- incentive compensation based upon achievement of targeted
levels of performance and such other criteria established by
the Compensation and Stock Option Committee and an additional
bonus as determined by that Committee;
- health insurance for himself and his dependents, civil and
social club dues, and automobile allowance;
- Mr. Shivdasani may terminate the agreement within certain
dates after a change in control; and
- if Mr. Shivdasani's employment is terminated by Phoenix in
breach of the agreement, or by Mr. Shivdasani after a change
in control:
- Phoenix shall continue to pay Mr. Shivdasani his
base salary and bonus for 36 months, and must
continue his insurance until Mr. Shivdasani reaches
age 65, and
- options held by Mr. Shivdasani vest and become
immediately exercisable.
Other employment agreements between Phoenix and the following executive
officers: Harold C. Boughton, Daniel P. Baker, Theodore C. Burns, C. Russell
Pickering, Richard T. Powers, and Ronald G. Welsh
- generally provide for a minimum base salary per year, and a
bonus as determined by the chief executive officer and
president based upon achievement of targeted levels of
performance and such other criteria as they shall establish
from time to time;
- terms of one year, which renew daily for each day served;
- provide for health insurance;
- some of these agreements provide that if the employee's
employment is terminated by Phoenix without cause, Phoenix
must continue to pay the employee's base salary for six
months following termination;
- the agreement with Mr. Burns provides that if his
employment is terminated by Phoenix within one year after a
change of control, Phoenix must continue to pay his base
salary for 12 months following termination; and
- the agreement with Mr. Pickering provides that if his
employment is terminated by Phoenix within one year after a
change of control or, under certain circumstances, by Mr.
Pickering, then (a) Phoenix must continue to pay his base
salary for 12 months following termination and (b) options
held by Mr. Pickering vest and become immediately
exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation and Stock Option Committee are Ruann F.
Ernst (Chairman), Ronald E. Fenton, and Bahram Yusefzadeh (non-voting member).
Neither Ruann F. Ernst nor Ronald E. Fenton has been an officer or employee of
Phoenix at any time. Mr. Yusefzadeh serves as our chief executive officer. None
of our executive officers has served:
- as a member of the compensation committee of another entity
which has had an executive officer who has served on our
compensation committee;
- as a director of another entity which has had an executive
officer who has served on our compensation committee; or
- as a member of the compensation committee of another entity
which has had an executive officer who has served as one of
our directors.
17
<PAGE> 21
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary in any of our previous or
future filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate all or any part of this proxy statement, the
following report and Stock Performance Chart will not be deemed to be
incorporated by reference into any of those filings.
The Compensation and Stock Option Committee consists of the following
members of the Board: Ruann F. Ernst (Chairman), Ronald E. Fenton, and Bahram
Yusefzadeh (non-voting member). The Compensation and Stock Option Committee
reviews and determines the executive compensation objectives and policies and
administers the 1996 Director Stock Option Plan and 1995 Employee Stock Option
Plan. The Compensation and Stock Option Committee reviews and sets the
compensation of the chief executive officer and certain other highly
compensated executive officers.
The objectives of the executive compensation program are to:
- attract, retain, and motivate highly talented and productive
executives;
- provide incentives for superior performance by paying
above-average compensation; and
- align the interests of the executive officers with the
interests of the shareholders by basing a significant portion
of compensation upon Phoenix's performance.
The executive compensation program combines the following three components, in
addition to the benefit plans offered to all employees: base salary (including
cash provided for automobile allowances); bonus; and long-term incentive
compensation consisting of stock option grants. Each component of the executive
compensation program serves a specific purpose in meeting the objectives.
It is our policy to set base salary levels, bonuses, and long-term
incentive compensation above an average of select corporations to which we
compare our executive compensation. We select these corporations on the basis
of a number of factors, such as their size and complexity, the nature of their
businesses, the regions in which they operate, the structure of their
compensation programs (including the extent to which they rely on bonuses and
other contingent compensation), and the availability of compensating
information. The corporations with which we compare our compensation are not
necessarily those included in the indices used to compare the shareholder
return in the Stock Performance Graph. Further, the corporations selected for
such comparison may vary from year to year based upon market conditions and
changes in both our business and the corporations' businesses over time. We
believe that above-average compensation levels are necessary to attract and
retain high caliber executives necessary for the success of our business.
Base salary. The Compensation and Stock Option Committee annually
reviews the salaries of our executives. When setting base salary levels in a
manner consistent with the objectives outlined above, the Compensation and
Stock Option Committee considers competitive market conditions for executive
compensation, our performance, and individual performance.
The measures of individual performance considered in setting 1999
salaries included, to the extent applicable to an individual executive officer,
a number of quantitative and qualitative factors such as our historical and
recent financial performance in the principal area of responsibility of the
officer (including such measures as gross margin, net income, sales, customer
count, and market share), the individual's progress toward non-financial goals
within his area of responsibility, individual
18
<PAGE> 22
performance, experience and level of responsibility, and other contributions
made to our success. The Compensation and Stock Option Committee has not found
it practicable, nor has it attempted, to assign relative weights to the
specific factors used in determining base salary levels, and the specific
factors used may vary among individual officers. As is typical for most
corporations, payment of base salary is not conditioned upon the achievement of
any specific, pre-determined performance targets.
Bonus. Our cash bonus program seeks to motivate executives to work
effectively to achieve our financial performance objectives and to reward them
when those objectives are met. Executive bonus payments are based upon our
overall profitability.
Long-term incentive compensation. We believe that option grants:
- align executives' interests with shareholder interests by
creating a direct link between compensation and shareholder
return;
- give executives a significant, long-term interest in our
success; and
- help retain key executives in a competitive market for
executive talent.
Benefits. We believe that we must offer a competitive benefit program
to attract and retain key executives. During 1999, we provided medical and
other benefits to our executive officers that are generally available to our
other employees.
The 1995 Employee Stock Option Plan authorizes the Compensation and
Stock Option Committee to grant stock options to executives. Option grants are
made from time to time to executives whose contributions have or will have a
significant impact on our long-term performance. Our determination of whether
option grants are appropriate each year is based upon individual performance
measures established for each individual. Options are not necessarily granted
to each executive during each year. Generally, options granted to executive
officers vest in equal annual installments over a period of three to four years
and expire ten years from the date of grant.
Compensation of the Chief Executive Officer. The chief executive
officer's compensation plan includes the same elements and performance measures
as the plans of the other executive officers. The Compensation and Stock Option
Committee believes that Mr. Yusefzadeh's total compensation reflects the unique
contributions that he makes to Phoenix's long-term strategic performance as one
of the leading innovators of the financial services technology industry. For
the year ended December 31, 1999, Mr. Yusefzadeh's base salary was $266,667,
and he was not awarded a bonus for the year. The Compensation and Stock Option
Committee believes that, based upon Phoenix's financial performance, including
earnings per share, revenue growth, and cash flow from operations, it is
appropriate for his base salary to remain the same for 2000.
Submitted by: Ruann F. Ernst (Chairman)
Ronald E. Fenton
Bahram Yusefzadeh (non-voting member)
19
<PAGE> 23
RELATIONSHIPS AND RELATED TRANSACTIONS
In 1997 and 1998, Phoenix paid $1.5 million to Dyad Corporation, a
developer and distributor of automated loan and mortgage products, to acquire
11% of the equity interest in Dyad and certain rights to market, sell and
license Dyad's products. In 1999, Dyad merged with and became a wholly-owned
subsidiary of Netzee, Inc. In that merger, Phoenix received 70,976 shares of
Netzee common stock. Because Phoenix acquired these shares in a transaction
exempt from registration under the Securities Act, the shares are subject to
restrictions on transferability and resale and may not be transferred or resold
except as permitted under the Securities Act and applicable state securities
laws. Bahram Yusefzadeh, chairman of the board and chief executive officer of
Phoenix, was a director of Dyad, and Glenn W. Sturm, a former director of
Phoenix, is a director and the chief executive officer of Netzee.
In December 1998, Phoenix entered into a service agreement and a
marketing agent agreement with Towne Services, Inc. The marketing agent
agreement allows Phoenix exclusive marketing and distribution rights, in
various regions of the world, for a Towne Services software product, Collection
Works. Collection Works is a collection system that assists financial
institutions with managing loans in default. The agreements require Phoenix to
pay Towne Services $485,000 for these rights. Mr. Yusefzadeh is a director of
Towne Services, and Mr. Sturm, a former director of Phoenix, is a director of
Towne Services.
In October 1999, Phoenix acquired a 54% controlling interest in Servers
On-Line, Inc. and changed the name of the company to Phoenix International New
York, Inc. Before this acquisition, Phoenix recognized $169,000 in revenues
during 1999 from this company. Certain officers of the acquired company are now
officers of Phoenix, including Richard T. Powers, Phoenix's executive vice
president U. S. Business.
In February 2000, London Bridge Software Holdings plc purchased
861,623 shares of Phoenix common stock for $5,000,000. This acquisition made
London Bridge a 9.16% equity owner in Phoenix as of the transaction date. In
connection with this purchase, Phoenix entered into an agreement with London
Bridge to market its Vectus product, which is a customer relationship
management system.
STOCK PERFORMANCE GRAPH
The chart below compares the cumulative total shareholder return on
Phoenix's common stock with the cumulative total return on the Nasdaq (U.S.
Companies) Index and the Nasdaq Computer and Data Processing Services Index for
the period commencing July 2, 1996 (the first date of trading of the common
stock as a result of our initial public offering) and ending December 31, 1999,
assuming an investment of $100 and the reinvestment of any dividends. The base
price for the common stock is the initial public offering price of $8.00 per
share (adjusted to reflect a stock split in May 1998). The
20
<PAGE> 24
comparisons in the graph below are based upon historical data and are not
indicative of, nor intended to forecast, future performance of the common
stock.
<TABLE>
<CAPTION>
7/2/96 12/31/96 12/31/97 12/31/98 12/31/99
------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NASDAQ Stock Market 100 108 132 187 339
NASDAQ Computer & Data Processing Services Stocks 100 106 130 232 500
Phoenix (IPO Price) 100 144 123 184 48
</TABLE>
21
<PAGE> 25
PROPOSAL NO. 2
AMENDMENT OF 1996 DIRECTOR STOCK OPTION PLAN
- -------------------------------------------------------------------------------
On February 28, 2000, the Board approved an amendment to the 1996
Director Stock Option Plan to increase the shares authorized to be issued from
150,000 to 500,000 and to provide for the yearly grant of 10,000 options to
directors, 5,000 options to non-employee members of the executive and audit
committees, and 2,500 options to non-employee members of the compensation
committee. In addition, directors of subsidiaries of Phoenix would be eligible
to receive grants of options to acquire Phoenix stock at the discretion of
Phoenix's board. At the Annual Meeting, the Board will ask the shareholders to
ratify these increases and the other amendments. The Board believes that the
adoption of these amendments will assist in attracting and retaining directors
and encouraging directors to acquire an equity interest in Phoenix. The 1996
Director Stock Option Plan is described below. A copy of the amendments to the
1996 Director Stock Option Plan is attached to this Proxy Statement as Exhibit
A.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE 1996
DIRECTOR STOCK OPTION PLAN.
DESCRIPTION OF 1996 DIRECTOR STOCK OPTION PLAN, AS AMENDED
The 1996 Director Stock Option Plan provides for the grant of
non-qualified options to our directors. Currently, all of our directors are
eligible to participate in the 1996 Director Stock Option Plan. We believe that
stock options are an important component of compensation as a long-term
incentive that aligns the interest of directors with our shareholders. We
believe the 1996 Director Stock Option Plan benefits us by assisting in
recruiting and retaining directors with ability and initiative and providing
greater incentive for our directors through opportunities for increased stock
ownership.
As amended, the 1996 Director Stock Option Plan provides that:
(a) on the date of this Annual Meeting, each eligible director
will be granted an option to purchase 4,000 shares of Common
Stock;
(b) each eligible director newly elected or appointed to the
Board of Directors after May 5, 2000 will be granted an
option to purchase 10,000 shares of Common Stock upon the
date of his election or appointment to the Board; and
(c) on each anniversary of such director's appointment or
election thereafter, each eligible director will be granted
an option to purchase 10,000 shares of Common Stock, provided
that the director shall not have been granted a Director
Option under clause (b) above during the same calendar year.
The 1996 Director Stock Option Plan, as amended, also provides that our
directors will receive, on the date of this Annual Meeting and on each date of
appointment or reappointment thereafter, the following number of options if the
director serves on a Board committee on that date: options for 5,000 shares for
service on the Executive Committee or the Audit Committee and options for 2,500
shares for service on the Compensation and Stock Option Committee. The option
exercise price is fixed at the time the option is granted at fair market value
on the date of grant as determined by the closing sales price of our shares
22
<PAGE> 26
on the Nasdaq Stock Market on the business day immediately preceding that date.
The option exercise price may be paid in cash or with shares of Common Stock or
a combination of cash and Common Stock.
The following table reflects the options we expect to grant in 2000
under the 1996 Director Stock Option Plan to (a) Mr. Yusefzadeh, our chairman
and chief executive officer; (b) each nominee for election as a director; and
(c) our non-executive directors as a group. Other than Mr. Yusefzadeh, no
executive officers or other employees will receive options under this plan.
NEW PLAN BENEFITS
1996 Director Stock Option Plan
<TABLE>
<CAPTION>
Securities
Underlying
Name And Position Options
----------------- -------
<S> <C>
Bahram Yusefzadeh, Chairman and Chief Executive Officer................ 11,500
Ruann F. Ernst......................................................... 11,500
William C. Hess........................................................ 9,000
J. Michael Murphy...................................................... 14,000
O. Jay Tomson.......................................................... 9,000
Non-Executive Director Group........................................... 75,500
</TABLE>
All awards made under the 1996 Director Stock Option Plan are
automatic and are evidenced by written agreements between us and the holder. No
option shall be exercisable before six months after the date it is granted.
Options shall vest in their entirety on the day they are granted.
Subject to shareholder approval, we have amended the Plan to provide
that a maximum of 500,000 shares of Common Stock may be issued upon the
exercise of options under the Plan. The maximum number of shares is subject to
adjustment in accordance with the Plan.
The 1996 Director Stock Option Plan terminates on, and no options may
be issued under the Plan after, May 24, 2006. The Board of Directors may
terminate, suspend or amend the Director Plan from time to time, but not more
than once every six months except to comply with changes in the Internal
Revenue Code or ERISA.
FEDERAL INCOME TAX CONSEQUENCES OF NON-QUALIFIED OPTIONS
Generally, an optionee will not be subject to tax at the time a
non-qualified option is granted. An optionee who exercises a non-qualified
option will include in income as of the date of exercise the amount by which
the fair market value of the Common Stock as of the date of exercise exceeds
the amount paid for the Common Stock upon exercise of the option. The
optionee's federal income tax cost basis for the Common Stock will be the
amount paid for the Common Stock plus the income recognized. If the optionee
uses Common Stock in full or partial payment of the exercise price of a
nonqualified option, then the exchange should not affect the federal income tax
treatment of the exercise. The net additional shares of Common Stock received
on such exercise by the optionee will have a federal income tax cost basis
equal to the ordinary income recognized as a result of the option exercise
(plus the amount of any cash used in the option exercise) and a holding period
commencing upon the date such income is recognized. Subsequent sale of the
Common Stock will result in a capital gain or loss equal to the difference
between the optionee's federal income tax cost basis for the Common Stock and
the sale price.
23
<PAGE> 27
We will be entitled to a federal income tax deduction as of the date
the optionee recognizes ordinary income in the amount of ordinary income
recognized by the optionee. In addition, we may be required to withhold income
tax and employment tax with respect to the ordinary income recognized by the
optionee at the time of exercise.
PROPOSAL NO. 3
AMENDMENT OF 1995 EMPLOYEE STOCK OPTION PLAN
- -------------------------------------------------------------------------------
On February 28, 2000, the Board approved an amendment to the 1995
Employee Stock Option Plan to:
- increase the number of shares available for issuance as
incentive stock options or non-qualified options under the
1995 Employee Stock Option Plan from 1,304,959 to 2,100,000;
and
- provide that the number of shares of Common Stock available
for issuance thereunder shall be automatically increased on
the first trading day of each calendar year by three percent
of the number of shares outstanding on the preceding trading
day.
At the Annual Meeting, the shareholders are being asked to approve and
ratify this increase in shares available for issuance under the 1995 Employee
Stock Option Plan and the other amendments. The Board believes that the
adoption of the amendments to the 1995 Employee Stock Option Plan will foster
good employee relations and encourage and assist our employees to acquire an
equity interest in us. The Board believes the utilization of the 1995 Employee
Stock Option Plan helps align employee interest with other shareholders and
helps provide for the future financial security of our employees. The 1995
Employee Stock Option Plan should thereby be helpful in attracting, retaining,
and motivating employees. The 1995 Employee Stock Option Plan is described
below. A copy of the amendment to the 1995 Employee Stock Option Plan is
attached to this Proxy Statement as Exhibit B.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND THE 1995
EMPLOYEE STOCK OPTION PLAN.
DESCRIPTION OF THE 1995 EMPLOYEE STOCK OPTION PLAN, AS AMENDED
Effective October 21, 1995, the Board adopted, and our shareholders
approved, the 1995 Employee Stock Option Plan. As of December 31, 1999, options
to acquire approximately 1,213,349 shares were outstanding under the 1995
Employee Stock Option Plan. No director who is not also an executive officer
holds options under the 1995 Employee Stock Option Plan. As of March 15, 2000,
options held by the named executive officers under the 1995 Employee Stock
Option Plan are shown on the following table:
<TABLE>
<CAPTION>
Options Held Under the 1995
Named Executive Officer Employee Stock Option Plan
----------------------- --------------------------
<S> <C>
Bahram Yusefzadeh 80,000
Raju M. Shivdasani 464,150
Theodore C. Burns 52,650
Harold C. Boughton 105,838
Danny P. Baker 115,150
</TABLE>
24
<PAGE> 28
The purpose of the 1995 Employee Stock Option Plan is to advance the
interests of Phoenix, its subsidiaries, and its shareholders by affording
certain employees of Phoenix and its subsidiaries' employees and other key
persons an opportunity to acquire or increase their proprietary interests in
Phoenix. The objective of the issuance of the options and restricted stock
awards is to promote the growth and profitability of Phoenix and its
subsidiaries because the recipients of options or restricted stock awards will
have an additional incentive to achieve Phoenix's objectives through
participation in its success and growth and by encouraging their continued
association with or service to Phoenix. Persons eligible to participate in the
1995 Employee Stock Option Plan consist of all employees of Phoenix or any of
its subsidiaries and other key persons whose participation in the 1995 Employee
Stock Option Plan the Compensation and Stock Option Committee determines to be
in the best interests of Phoenix.
Options granted under the 1995 Employee Stock Option Plan may be
incentive stock options, which are intended to meet the requirements of Section
422 of the Internal Revenue Code of 1986, or non-qualified options, which are
not intended to meet those requirements. Incentive stock options must have
terms of ten years or less from the date of grant, and the fair market value of
grants of incentive stock options during any year on the date of grant may not
exceed $100,000. The 1995 Employee Stock Option Plan is administered by the
Compensation and Stock Option Committee, having the duties and authorities
provided in the Plan in addition to any other authority granted by the Board.
The Committee has the full power and authority, in its discretion, subject to
the provisions of the 1995 Employee Stock Option Plan, to interpret the Plan,
to prescribe, amend, and rescind rules and regulations relating to the Plan, to
determine the details and provisions of each stock option agreement and
restriction agreement, and to make all other determinations necessary or
advisable for the administration of the Plan, including, without limitation,
the amending or altering of the Plan and any options or restricted stock awards
granted under it, as may be required to comply with or to conform to any
federal, state, or local laws or regulations. The Committee, in its discretion,
selects the recipients of awards and the number of shares or options granted
under the Plan and determines other matters such as:
- vesting schedules;
- 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 incentive stock options); and
- the duration of awards (which cannot exceed ten years from
the date of grant or modification of the option).
Subject to shareholder approval, the aggregate number of shares of
Common Stock reserved for the issuance of options and restricted stock awards
under the 1995 Employee Stock Option Plan will be 2,100,000 shares. The maximum
number of shares is subject to adjustment in accordance with the 1995 Employee
Stock Option Plan. Any or all shares of Common Stock subject to the 1995
Employee Stock Option Plan may be issued in any combination of incentive stock
options, non-qualified options, or restricted stock awards. Shares subject to
an option or issued as a restricted stock award may be either authorized and
unissued shares or shares issued and later reacquired by Phoenix. The shares
covered by any unexercised portion of an option that has terminated for any
reason, or any forfeited portion of a restricted stock award, may again be
optioned or awarded under the 1995 Employee Stock Option Plan, and such shares
shall not be considered as having been optioned or issued in computing the
number of shares of Common Stock remaining available for options or restricted
stock awards under the 1995 Employee Stock Option Plan.
25
<PAGE> 29
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion of the federal income tax consequences of the
1995 Employee Stock Option Plan is intended to be a summary of applicable
federal income tax law. State and local tax consequences may differ.
Incentive Stock Options. A participant is not taxed on the grant or
exercise of an incentive stock option. However, the difference between the fair
market value of the shares on the exercise date and the exercise price will be
a preference item for purposes of the alternative minimum tax. If a participant
holds the shares acquired upon exercise of an incentive stock option for at
least two years following grant and at least one year following exercise, the
participant's gain, if any, by a later disposition of those shares will be
treated as long term capital gain for federal income tax purposes. The measure
of the gain is the difference between the proceeds received on disposition and
the participant's basis in the shares (which generally equals the exercise
price). If the participant disposes of stock acquired by exercising an
incentive stock option before satisfying the one and two year holding periods
described above, the participant will recognize both ordinary income and
capital gain in the year of disposition. The amount of the ordinary income will
be the lesser of:
- the amount realized on disposition less the participant's
adjusted basis in the stock (usually the option exercise
price); or
- the difference between the fair market value of the stock on
the option exercise date and the option price.
The balance of the consideration received on disposition will be long term
capital gain if the stock had been held for at least one year following
exercise of the incentive stock option. We are not entitled to an income tax
deduction on the grant or the exercise of an incentive stock option or on the
participant's disposition of the shares after satisfying the holding period
requirement described above. If the holding periods are not satisfied, we will
be entitled to an income tax deduction in the year the participant disposes of
the shares, in an amount equal to the ordinary income recognized by the
participant.
Non-Qualified Options. Generally, a participant is not taxed on the
grant of a non-qualified option. Upon exercise, however, the participant
recognizes ordinary income equal to the difference between the option exercise
price and the fair market value of the shares on the date of the exercise. We
are entitled to an income tax deduction in the year of exercise in the amount
recognized by the participant as ordinary income. Any gain on subsequent
disposition of the shares is long term capital gain if the shares are held for
at least one year following exercise. We do not receive an income tax deduction
for this gain.
Restricted Stock. Generally, and except as noted below, the grant of
restricted stock is not taxable at the time of the grant. Instead, at the time
restricted stock vests or becomes transferable, an employee will recognize
ordinary income equal to the amount by which the restricted stock's fair market
value on the date that it vests exceeds the price paid for the restricted
stock. An employee may, however, elect to recognize income as of the date of
grant of the restricted stock, in an amount equal to the amount by which the
fair market value of the restricted stock on the date of grant exceeds the
price paid for the restricted stock. If such an election is made, no additional
income will be recognized when the stock vests or becomes transferable. If the
shares are subsequently forfeited, an employee making such an election may be
able to recognize a capital loss with respect to the amount, if any, paid for
the restricted stock, but only to the extent the amount paid exceeds the amount
realized by the employee on the forfeiture. The employee will not be able to
recognize a loss for tax purposes with respect to the excess
26
<PAGE> 30
of fair market value over the purchase price that was previously included in
income. Dividends paid on the shares of restricted stock before they vest will
be taxed to the employee either as additional compensation or, if the employee
has made the election described above, as dividend income.
SUBMISSION OF SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in our 2001 proxy
statement, you must deliver it to our Secretary at our principal place of
business in Heathrow, Florida, no later than December 11, 2000. You may also
submit the names of individuals who you wish to be considered by the Board of
Directors as nominees for directors. Additionally, the advance notice
provisions of our Bylaws require that any shareholder proposal to be presented
from the floor of the next annual meeting must be received before February 4,
2001.
INDEPENDENT AUDITORS
We selected the firm Ernst & Young LLP to serve as the independent
auditors for Phoenix for the year ended December 31, 1999. Ernst & Young LLP
has served as Phoenix's auditors since 1995. Representatives of Ernst & Young
LLP are expected to be present at the Annual Meeting and will be accorded the
opportunity to make a statement, if they so desire, and to respond to
appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires executive officers and
directors and persons who beneficially own more than 10% of a registered class
of equity securities to file reports of securities ownership and changes in
such ownership with the SEC and Nasdaq. These persons also are required to
furnish us with copies of all Section 16(a) forms they file. Based solely on
review of the copies of such reports furnished and representations that no
other reports were required, we believe that, during fiscal 1999, our executive
officers, directors, and greater than 10% beneficial owners complied with all
applicable Section 16(a) filing requirements except for Ruann F. Ernst, Ronald
E. Fenton, J. Michael Murphy, and Ronald G. Welsh. Ms. Ernst had one
transaction which should have been reported on a Form 4 which was reported
late. Mr. Fenton had one transaction which should have been reported on a Form
4 which was reported on a Form 5. Mr. Murphy filed his Form 5 for December 31,
1999 late. Mr. Welsh had one transaction which should have been reported on a
Form 3 which was reported late.
27
<PAGE> 31
OTHER MATTERS
The Board of Directors does not know of any other matters to be
presented for action by the shareholders at the Annual Meeting. If, however,
any other matters not now known are properly brought before the Annual Meeting,
the persons named in the proxy card will vote such proxy on such matters as
determined by a majority of the Board of Directors.
By Order of the Board of Directors
/s/ Bahram Yusefzadeh
----------------------------------
Bahram Yusefzadeh
Chairman of the Board of Directors and
Chief Executive Officer
Dated: April 12, 2000
28
<PAGE> 32
EXHIBIT A
AMENDMENT NO. 1
TO
1996 DIRECTOR STOCK OPTION PLAN
OF
PHOENIX INTERNATIONAL LTD., INC.
WHEREAS, effective as of May 24, 1996, the Board of Directors of
Phoenix International and the shareholders approved and adopted the 1996
Director Stock Option Plan (the "1996 Plan"); and
WHEREAS, on February 28, 2000 the Board of Directors approved and on
May 5, 2000 the shareholders approved and adopted, certain amendments to the
1996 Plan, as set forth below.
The 1996 Director Stock Option Plan is hereby amended as follows:
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 and its Subsidiaries (as hereafter defined).
2. DEFINITIONS. As used in the 1996 Plan, as amended, the following
terms shall have the meanings indicated:
(a) "Eligible Person(s)" shall mean those persons who are Directors
of the Company or any director of any Subsidiary of the Company serving a
similar function as a Director.
(b) "Fair Market Value" of a Share on any date of reference shall be
the Closing Price on the business day preceding such date. 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.
(c) "Plan" shall mean this 1996 Director Stock Option Plan of
Phoenix International Ltd., Inc., as amended.
(d) all remaining capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Plan.
<PAGE> 33
3. AUTOMATIC GRANT OF OPTION. Section 6 of the Plan is hereby deleted
and replaced with the following:
(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 May 5, 2000, such Eligible Person shall
automatically be granted an Option to acquire 4,000
shares of Common Stock for his service as a Director
during 2000;
(ii) on the date an Eligible Person is newly elected or
appointed as a Director following May 5, 2000 and
during the existence of the Plan, such Eligible
Person shall automatically be granted an Option to
acquire 10,000 shares of Common Stock for his service
as a Director;
(iii) 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 10,000
shares of Common Stock for his service as a Director;
and
(iv) on the date an Eligible Person is elected or
reelected to serve as a Committee Member on the
Executive Committee or Audit Committee during the
existence of the Plan, such Eligible Person shall be
granted an option to acquire 5,000 shares of Common
Stock for his service as such a Committee Member on
each such committee that he serves;
(v) on the date an Eligible Person is elected or
re-elected to serve as a Committee Member on the
Compensation and Stock Option Committee during the
existence of the Plan, such Eligible Person shall be
granted an Option to acquire 2,500 shares of Common
Stock for his service as such a Committee Member on
each such committee that he serves;
(vi) on the date each Eligible Person is elected or
re-elected to serve on the Board of Directors of any
Subsidiary, and for each anniversary thereafter, such
Eligible Person (provided they are not an officer or
Director of the Company or an employee of the Company
or such Subsidiary), shall automatically be granted
an Option to acquire 5,000 shares of Common Stock
pursuant to this Plan.
A-2
<PAGE> 34
(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.
4. EXERCISE PRICE, VESTING SCHEDULE AND TERM OF OPTION. Section 7(b) of
the Plan is hereby amended and restated to provide:
(a) An Option may not be exercised prior to six months from the date
it is vested, and each grant shall vest immediately on the Date of Grant.
5. EFFECTIVE DATE AND TERMINATION DATE. The effective date of this
Amendment is February 28, 2000, the date on which the Board adopted this
Amendment, 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 Amendment which would not be capable of being
issued under the Plan before giving effect to this Amendment shall be null and
void. This Amendment shall terminate on the tenth anniversary of the effective
date of the Plan, May 24, 1996.
PHOENIX INTERNATIONAL LTD., INC.
By:
----------------------------
Name:
Title:
A-3
<PAGE> 35
EXHIBIT B
FOURTH AMENDMENT TO THE
PHOENIX INTERNATIONAL LTD., INC.
1995 STOCK OPTION PLAN
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"), effective as of 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, effective May 24, 1996, the Board of Directors approved and
the shareholders ratified certain amendments to the October Plan and on each of
May 16, 1997 and May 8, 1998, the shareholders ratified and approved certain
further amendments to the October Plan which had been previously approved by
the Board of Directors and recommended to the shareholders for approval; and
WHEREAS, on February 28, 2000, the Board of Directors approved the
following further 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. Amendments.
a. 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 2,100,000,
and not more than 577,500 shares of Stock may be made subject to
Options to any individual in the aggregate in any one fiscal year of
the Company, such limitation to be applied in a manner consistent
with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on deductibility
of compensation under Section 162(m) of the Code. The number of
shares of Stock available for issuance hereunder shall automatically
increase on the first trading day each calendar year beginning
<PAGE> 36
January 1, 2001, by an amount equal to three percent (3%) of the
shares of Stock outstanding on the trading day immediately preceding
January 1 of that year; provided, however, that such increase shall
not increase the number of Incentive Stock Options granted above the
total number of shares available for grant as stated in the first
sentence of this Section 4.1 unless the shareholders later ratify
such Incentive Stock Option grant(s). Any or all shares of stock
subject to the Plan may be issued in any combination of Incentive
Stock Options or non-Incentive Stock Options, and the amount of
Stock subject to the Plan may be increased from time to time in
accordance with Article VIII. Shares subject to an Option 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) may again be optioned 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 hereunder.
If Options are issued in respect of options to acquire stock of any entity
acquired, by merger or otherwise, by the Company (or any Subsidiary of the
Company), to the extent that such issuance shall not be inconsistent with the
terms, limitations and conditions of Code Section 422 or Rule 16b-3 under the
Exchange Act, the aggregate number of shares of Stock for which Options may be
granted hereunder shall automatically be increased by the number of shares
subject to the Options so issued; provided, however, that the aggregate number
of shares of Stock for which Options may be granted hereunder shall
automatically be decreased by the number of shares covered by any unexercised
portion of an Option so issued that has terminated for any reason, and the
shares subject to any such unexercised portion may not be optioned to any other
person.
b. Article VIII of the October Plan is restated in its
entirety as follows:
8.1 Termination and Amendment. The Board may at any time
amend or terminate the Plan; provided, however, that the Board
(unless its actions are approved or ratified by the shareholders of
the Company within twelve months of the date that the Board amends
the Plan) may not amend the Plan to:
(a) Increase the total number of shares of Stock
issuable pursuant to Incentive Stock Options under the Plan, except
as contemplated in Sections 4.1 and 4.2 hereof; or
(b) Change the class of employees eligible to receive Incentive Stock
Options that may participate in the Plan.
8.2 Effect on Optionee's Rights. No termination,
amendment, or modification of the Plan shall affect adversely an
Optionee's rights under a Stock Option Agreement without the consent
of the Optionee or his legal representative.
3. Effectiveness. This Amendment shall not become effective unless and
until such provisions are approved by vote of the holders of at least a majority
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.
B-2
<PAGE> 37
4. Approval. Except as hereinabove amended and modified, the October
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 February 28, 2000, in accordance with the authority provided by
the Board of Directors.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ Bahram Yusefzadeh
-------------------------------
Name: Bahram Yusefzadeh
Title: Chief Executive Officer
B-3
<PAGE> 38
PROXY FOR ANNUAL MEETING
OF SHAREHOLDERS OF
PHOENIX INTERNATIONAL LTD., INC.
TO BE HELD ON MAY 5, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Bahram Yusefzadeh and
Raju M. Shivdasani or either of them as true and lawful agents and proxies of
the undersigned with full power of substitution in each, to represent and vote,
as indicated below, all of the shares of common stock of Phoenix International
Ltd., Inc. that the undersigned would be entitled to vote at the Annual Meeting
of Shareholders of Phoenix to be held on May 5, 2000 at Phoenix's corporate
headquarters located at 500 International Parkway, Heathrow, Florida 32746 at
9:00 a.m. local time, and at any adjournment thereof, upon the matters described
in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
for the Annual Meeting of Shareholders, receipt of which is acknowledged, and
upon any other business that may properly come before the meeting or any
adjournment. These proxies are directed to vote on the matters described in the
notice of Annual Meeting of Shareholders and Proxy Statement for the Annual
Meeting of Shareholders as follows, and otherwise in their discretion upon such
other business as may properly come before the meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS. THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ALL PROPOSALS.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
1. ELECTION OF DIRECTORS:
J. MICHAEL MURPHY
O. JAY TOMSON
RUANN F. ERNST
WILLIAM C. HESS
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<S> <C>
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to
listed (except as vote for all nominees
marked to the contrary)
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(INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write that nominee's name(s) in the space provided
below.)
2. PROPOSAL to amend the 1996 Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to amend the 1995 Employee Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 39
4. IN THEIR DISCRETION, Bahram Yusefzadeh and Raju M. Shivdasani or either of
them may act upon such other business as may properly come before the
meeting or any adjournment thereof.
Dated:
----------------------------, 2000
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Signature of Shareholder(s)
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Signature of Shareholder(s)
Please sign exactly as name or names appear hereon.
Where more than one owner is shown on a stock
certificate, each owner should sign. Persons signing
in a fiduciary or representative capacity must give
full title. If a corporation, please sign in full
corporate name by authorized officer. If a
partnership, please sign in partnership name by
authorized person.
