<PAGE> 1
As filed with the Securities and Exchange Commission on October 27, 1997.
Registration No. 333-_______
--------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------------------
PHOENIX INFORMATION SYSTEMS CORP.
(Exact Name of Issuer as specified in its Charter)
Delaware 13-3337797
(State of other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Identification No.)
100 Second Avenue South, Suite 1100, St. Petersburg, FL 33701
(Address of Principal Executive Offices) (Zip Code)
-----------------------------------------------
PHOENIX INFORMATION SYSTEMS CORP.
CONSULTING AND SERVICES COMPENSATION AGREEMENT, AS AMENDED
(Full title of the Plans)
----------------------------------------------
Robert P. Gordon, Chairman of the Board
100 Second Avenue South, Suite 1100
St. Petersburg, Florida 33701
(813) 894-8021
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------------------------------
Copies of all communications to:
Steven Morse, Esq.
Lester Morse P.C.
111 Great Neck Road, Suite 420
Great Neck, NY 11021
Pursuant to Rule 429, this Registration Statement constitutes a
post-effective amendment to the Registrant's Form S-8 Registration Statements,
File No. 33-75862 and File No. 333-01013 which relate to 4,000,000 shares and
5,000,000 shares, respectively, under the Registrant's Consulting and
Compensation Agreement dated February 25, 1994, as amended.
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Proposed
Proposed Maximum
Title of Each Class Maximum Aggregate Amount of
of Securities to be Amount to be Offering Price Offering Price Registration
Registered (1) Registered Per Share (3) (3) Fee (3)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 7,000,000(1)(2) $.50 $3,500,000 $1,060.61
Par Value $.01 Per
Share
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) To be issued at the sole discretion of the Registrant, as Direct
Shares, or shares underlying options granted to and to be granted under
the Phoenix Information Systems Corp. Consulting and Services
Compensation Agreement, dated February 25, 1994, as amended (the
"Plan"). This Registration Statement registers 7,000,000 shares under
the Plan for issuance and the resale of any shares acquired by
non-affiliated persons to the public as Selling Security Holders.
(2) Pursuant to Rule 416 promulgated under the Securities Act of 1933, an
additional undeterminable number of shares of Common Stock is being
registered to cover any adjustments in the number of shares of Common
Stock pursuant to the anti-dilution provisions of the Plan.
(3) Estimated solely for the purpose of calculating the registration fee
and based on no less than the average of the closing high bid and low
asked price of the Company's Common Stock on NASDAQ within five
business days of the filing date of this Form S-8.
REGISTRATION OF ADDITIONAL SECURITIES
The Registrant currently has an effective registration statement filed
on Form S-8 relating to its employee benefit plan which registered securities
(i.e. 4,000,000 shares of Common Stock) of the same class as those being
registered herewith, File No. 33-75862, filed with the Securities and Exchange
Commission (the "Commission") on March 1, 1994. On December 4, 1995, the
Registrant filed a reoffer prospectus covering control securities by means of
Post Effective Amendment No. 1 to the aforementioned Form S-8. On February 16,
1996, the Registrant filed a Form S-8, File No. 333-01013, a registration
statement relating to its employee benefit plan which registered with the
Commission securities (i.e. 5,000,000 shares of Common Stock) of the same class
as those being registered herewith.
EXPLANATORY NOTE
Pursuant to General Instruction C of Form S-8, this Registration
statement contains a Prospectus on Form S-3 relating to the reoffering of
9,747,539 shares issuable upon exercise of stock options granted under the Plan.
The reoffer Prospectus contained herein supersedes the reoffer Prospectus
previously filed Registration Statement, File No. 33-75862.
2
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
Note: The document(s) containing the information concerning the Phoenix
Information Systems Corp. Consulting and Services Compensation Agreement, dated
February 25, 1994, as amended (the "Plan") required by Item 1 of Form S-8 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
statement of availability of registrant information, employee benefit plan
annual reports and other information required by Item 2 of Form S-8 will be sent
or given to participants as specified by Rule 428. In accordance with Rule 428
and the requirements of Part I of Form S-8, such documents are not being filed
with the Securities and Exchange Commission (the "Commission") either as part of
this registration statement on Form S-8 (the "Registration Statement") or as
prospectuses or prospectus supplements pursuant to Rule 424. Phoenix Information
Systems Corp., a Delaware corporation (the "Registrant" or the "Company"), shall
maintain a file of such documents in accordance with the provisions of Rule 428.
Upon request, the Company shall furnish to the Commission or its staff a copy or
copies of all documents included in such file.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated hereby by reference and made a part hereof is the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997,
and Form 10-Q for the quarter ended June 30, 1997, as and if amended, filed
under the Securities Exchange Act of 1934 (the "Exchange Act"), Form 8-A which
was declared effective on August 2, 1995 by the Securities and Exchange
Commission registering the Company's Common Stock under Section 12 of the
Exchange Act and all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL
The legality of the securities being registered by this Registration
Statement is being passed upon by Lester Morse P.C., 111 Great Neck Road, Suite
420, Great Neck, NY 11021, counsel to the Company. Members of Lester Morse's
family beneficially own less than 1% of the outstanding shares of the Company's
Common Stock.
3
<PAGE> 4
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Limitation of Directors' Liability.
The Company's Certificate of Incorporation contains a provision which,
in substance, eliminates the personal liability of the directors to the Company
and its stockholders for monetary damages for breaches of their fiduciary duties
as directors to the fullest extent permitted by Delaware law. By virtue of this
provision, under current Delaware law a director of the Company will not be
personally liable for monetary damages for breach of his fiduciary duty, except
for liability for (a) breach of his duty of loyalty to the Company or to its
stockholders, (b) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (c) dividends or stock
repurchases or redemptions that are unlawful under Delaware laws and (d) any
transaction from which he receives an improper personal benefit. This provision
pertains only to breaches of duty by directors as directors and not in any other
corporate capacity, such as officers, and limits liability only for breaches of
fiduciary duties under Delaware corporate law and not for violations of other
laws such as the federal securities laws. As a result of the inclusion of such
provision, stockholders may be unable to recover monetary damages against
directors for actions taken by them that constitute negligence or gross
negligence or that are in violation of their fiduciary duties, although it may
be possible to obtain injunctive or other equitable relief with respect to such
actions. The inclusion of this provision in the Company's Certificate of
Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
Management from bringing a lawsuit against directors for breach of their duty of
care, even though such an action, if successful, might otherwise have benefitted
the Company and its stockholders.
Indemnification.
The General Corporation Law of Delaware provides generally that a
corporation may indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative in nature
to procure a judgment in its favor, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) and, in a proceeding not by or in
the right of the corporation, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such suit or
proceeding, if he acted in good faith and in a manner believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reason to believe his conduct was
unlawful. Delaware law further provides that a corporation will not indemnify
any person against expenses incurred in connection with an action by or in the
right of the corporation if such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for the expenses which such court shall deem proper.
The indemnification and advancement of expenses provided by, or granted
pursuant to Delaware Corporation Law is not be deemed exclusive of any other
rights to which those seeking indemnification or advance of expenses may be
entitled under any bylaw, agreement, vote of stockholders of disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
4
<PAGE> 5
The Company's Certificate of Incorporation provides that the Company
shall indemnify in the manner and to the extent permitted by law, any person (or
that person's testator or intestate successor) made or threatened to be made a
party to any action or proceeding, whether domestic or foreign, civil or
criminal, judicial or administrative, or federal or state, by reason of the fact
that the person was a director or officer of the corporation or served any other
corporation in any capacity at the request of the corporation, in the manner and
to the extent permitted by law. The Company has entered into employment
contracts with various officers and directors to provide for indemnification
under certain circumstances.
The Company currently has director and officer liability insurance in
the amount of $5,000,000. No assurances can be given that such insurance will be
maintained by the Company due to the high cost of such coverage.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
The following is a complete list of exhibits filed as a part of, or
incorporated by reference in, this Registration Statement.
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
4.1 Registration Statement of the Registrant
on Form 8-A (filed on August 2, 1995, File
No. 0-26532, and incorporated herein by
reference)
5.1 Opinion of Counsel, Lester Morse P.C.*
10.1 Consulting Services and Compensation
Agreement dated February 25, 1994, as
amended and restated on October 7, 1997.*
23.1 Consent of Coopers & Lybrand, LLP
Certified Public Accountants*
23.2 Consent of BDO Seidman, LLP,
Certified Public Accountants*
23.3 Consent of Counsel, Lester Morse P.C.
(contained as part of Exhibit 5.1 hereto)
</TABLE>
- ---------------
*Filed herewith
5
<PAGE> 6
Item 9. UNDERTAKINGS
A. To Update Annually
The undersigned registrant hereby undertakes (1) other than as provided
in the proviso to item 512(a) of Regulation S-K, to file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement (a) to include any prospectus required by Section
10(a)(3) of the Securities Act, (b) to reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement, and (c) to include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration; (2)
that for the purpose of determining any liability under the Securities Act, each
such post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from registration by means
of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
B. Incorporation of Subsequent Securities
Exchange Act of 1934 Documents by Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Indemnification of Officers and Directors
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
6
<PAGE> 7
PHOENIX INFORMATION SYSTEMS CORP.
Up to 9,747,539 Shares
Common Stock, $.01 par value
All of the shares of Common Stock offered hereby are being sold by the
Selling Security Holders, each of whom may be deemed to be affiliates of the
Company. The shares of Common Stock being registered hereunder for reoffer and
resale are defined as control securities and may be reoffered and resold on a
continuous or delayed basis in the future. See "Selling Security Holders." The
Company will not receive any of the proceeds from the sale of shares sold by the
Selling Security Holders. The Common Stock has been registered with the
Securities and Exchange Commission pursuant to Section 12(g) of the Securities
Exchange Act of 1934, and is traded on the Electronic Bulletin Board of the
National Association of Securities Dealers, Inc. under the trading symbol
"PHXS." On October 6, 1997, the closing sale price was $.65.
See "Risk Factors" for a discussion of certain factors that should be considered
by prospective purchasers of the securities offered hereby.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OFFERED BY
THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SHARES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
THE DATE OF THIS PROSPECTUS IS OCTOBER __, 1997
<PAGE> 8
AVAILABLE INFORMATION AND CERTAIN DEFINITIONS
The Company is a reporting company subject to the informational
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, Proxy and
Information Statements and other information filed by the Company can be
inspected and copied at the public reference facilities, maintained by the
Commission at 450 Filth Street, N.W., Washington, D.C. 20549. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Material filed electronically through EDGAR (Electronic Data Gathering
Analysis and Retrieval System) may also be accessed through the SEC's home page
on the worldwide web at http:\\www.sec.gov.
The Company has filed with the Commission, 450 5th Street, N. W.,
Washington, D.C. 20549, a registration statement on Form S-8 (herein, together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act of 1933, as amended, regarding the shares of the Company
offered. This Prospectus, filed as part of the Registration Statement, omits
certain information regarding the Company and the securities offered. Reference
is made to the Registration Statement and the Exhibits filed therewith, which
may be obtained from the principal office of the Commission at 450 Fifth Street
N.W., Judiciary PIaza, Washington, D.C. 20549 upon request and payment of the
prescribed fee.
All references herein to the "Company" include Phoenix Information
Systems Corp. and its subsidiaries, namely, Phoenix Systems Group, Inc., Phoenix
Systems Ltd., Phoenix Transaction Services, Inc. and Hainan Phoenix Information
Systems, Ltd.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
lnsofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will governed by the final adjudication of
such issue.
2
<PAGE> 9
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES SECURITIES LAWS
Certain of the Company's and subsidiaries' directors, officers, and
controlling persons reside outside the United States, and all or a substantial
portion of their assets are located outside the United States. As a result, it
may not be possible for investors to effect service of process within the United
States upon these persons or to enforce against them judgments of courts of the
United States predicated upon civil liabilities under the United States federal
securities laws or state securities laws. The Company has been advised that
there is doubt as to the enforceability against such persons, whether in
original actions or in actions for enforcement of Judgments of United States
courts, of civil liabilities predicated solely upon the United States federal
securities laws or state securities laws.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated into this Prospectus by
reference and made a part hereof:
(I) Contents of the Company's Registration Statements on Form S-8, SEC
File No.33-75862, filed with the Commission on March 1, 1994 and SEC File No.
333-01013 filed with the Commission on February 16, 1996; (ii) contents of the
Company's Registration Statement on Form 8-A, filed with the Commission on
August 2, 1995, SEC File No.0-26532; (iii) the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1997, and (iv) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained herein or in
a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the documents
incorporated by reference herein (other than exhibits and schedules to such
documents, unless such exhibits or schedules are specifically incorporated by
reference in such documents). Requests should be directed to Phoenix Information
Systems Corp., Shareholder Relations Department. 100 Second Avenue South, Suite
1100. St. Petersburg, Florida 33701. and at (813)894-8021.
3
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION AND CERTAIN DEFINITIONS ...................... 2
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES ..................................... 2
ENFORCEABILITY OF CIVIL LIABILITIES ................................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................... 3
PROSPECTUS SUMMARY ................................................. 4
RISK FACTORS ....................................................... 8
SELLING SECURITY HOLDERS ........................................... 12
PLAN OF DISTRIBUTION ............................................... 15
INTERESTS OF NAMED EXPERTS AND COUNSEL ............................. 15
</TABLE>
PROSPECTUS SUMMARY
The following summary information should be read in conjunction with,
and is qualified in its entirety by, the detailed information and financial
statements and related notes thereto appearing either elsewhere in this
Prospectus or included in the Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q, which are incorporated herein by reference.
THE COMPANY
Phoenix Information Systems Corp. and its subsidiaries, Phoenix Systems
Group, Inc. (wholly owned since March 27, 1995), Phoenix Systems Ltd. (wholly
owned since November 11, 1993), Phoenix Transaction Services, Inc. (wholly owned
since June 3, 1997), and Hainan Phoenix Information Systems, Ltd. (70% owned
since November 22, 1993) are collectively referred to herein as "Phoenix" or the
"Company." Phoenix was incorporated in Delaware on April 4, 1986, as C.S. Primo
Corp., changed its name to Dynasty Travel Group, Inc., on July 9, 1991, and
subsequently changed its name to Phoenix on September 29, 1993. Phoenix is a
development-stage information systems and services company that was formed
specifically to support the growing demand for automation services in the
travel, tourism and aviation transportation industry. Phoenix has installed, and
received formal approval from the Civil Aviation Administration of China
("CAAC") to operate, an advanced computerized reservation system for the
domestic airlines, hotels and travel agencies in the People's Republic of China
("China"). Phoenix provides state-of-the-art, travel-related services to China
through its joint venture with China Southern Airlines ("China Southern"), named
Hainan Phoenix Information Systems, Ltd. ("Hainan-Phoenix" or the "Joint
Venture"). Hainan-Phoenix is the only commercial entity to receive formal
approval to operate a computerized reservation system in China. The Company owns
70% of Hainan-Phoenix through its wholly-owned subsidiary, Phoenix Systems Ltd.,
a Bermuda corporation ("PSL"). Phoenix has not generated any significant
revenues, earnings or history of operations from inception through March 31,
1997. Consequently, Phoenix's continued existence has depended primarily upon
its ability to raise capital.
4
<PAGE> 11
PSL was formed in 1993 to provide reservation systems and services
worldwide. PSL formed its first joint venture company with Hainan Airlines. PSL
has the responsibility to market, outside of each joint venture's defined
territory, all Phoenix travel products (including the inventory of airline seats
and hotel rooms). PSL has also established a turnkey reservations center in the
United States and is currently taking on-line reservations for Laker Airways.
Eastwind Airlines, Inc., a former customer, was the first U.S. carrier to
use Phoenix's airline reservation system and reservation center. PSL is also
actively pursuing other small to medium carriers throughout North America to
provide a complete, low-cost solution for their reservation needs.
Hainan-Phoenix is a Chinese joint venture that was formed in late 1993.
The Joint Venture was granted its business license in March 1994. In January,
1995, the Joint Venture installed its proprietary airline and hotel reservation
systems software on Stratus Computer, Inc. ("Stratus") hardware located in the
Joint Venture's office in Hainan Province, China. The Company's system is
presently capable of providing computer reservation services to subscribing
Chinese airlines, hotels, tour companies and other travel providers.
On June 1, 1996, Hainan-Phoenix officially went operational with its
first customer, Hainan Airlines. Hainan Airlines, a publicly held airline in
China, is a fast growing airline that carried more than 870,000 passengers in
1995, over 1,200,000 in 1996, and expects to carry over 2.7 million passengers
by 1998. Based in China's Hainan province, Hainan Airlines currently operates a
fleet of six Boeing 737, two Metro 23 and one Lear 55 aircraft throughout China.
Hainan Airlines, like the other regional and independent airlines in China, is
hampered by the lack of automation. In order to remedy this problem, Hainan
Airlines entered into the Joint Venture as a means of gaining access to
automated reservation services. Through its reservation system, the Joint
Venture has created a database of airline seats and hotel rooms that will be
marketed in mainland China by the Joint Venture.
On November 15, 1996, China Southern, the largest domestic airline in
the People's Republic of China, became Phoenix's new joint venture partner in
Hainan-Phoenix. In a trilateral agreement between Phoenix, China Southern, and
the Company's former joint venture partner, Hainan Airlines, China Southern
acquired the entire equity interest held by Hainan Airlines, representing 30% of
the Joint Venture, for US$2,580,000. Further, China Southern agreed to invest an
additional US$4,780,000 in capital contributions of cash and real estate in
exchange for an additional 15% interest in the Joint Venture, which will raise
China Southern's total stake to 45% upon the completion of the additional
contribution. Hainan Airlines continues as a customer of the Joint Venture on a
limited basis.
On December 23, 1996, Phoenix acquired for $7,500,000 a 25% interest in
American Aviation Ltd., through the exercise of an option. American Aviation is
a company owned by affiliates of George Soros, Purnendu Chatterjee, and Quantum
Industrial Holdings Ltd. American Aviation's sole asset is a 25% interest in
Hainan Airlines, which it purchased
for $25,000,000 in December 1995.
Phoenix Systems Group, Inc. ("PSG"), a wholly-owned subsidiary of the
Company,
5
<PAGE> 12
is responsible for the development, support and maintenance of the Company's
application software systems.
Phoenix Transaction Services, Inc. ("PTS"), a wholly-owned subsidiary
of the Company, was established in June 1997. PTS now manages the existing U.S.
reservations and call center operation, which was previously controlled by PSL.
The goal of PTS is to establish ventures in volume-intensive transaction
environments such as passenger reservation services, airline cargo services, and
hotel reservation services. These ventures will be created through alliances,
partnerships, and acquisitions. PTS would bring industry knowledge and
proprietary solutions, built or acquired, to the ventures, while the partners
would have the facility, manpower, and management responsibilities. PTS is
responsible for securing strategic partners and achieving revenue growth.
6
<PAGE> 13
THE OFFERING
Common Stock offered by the Selling Security Holders 9,747,539
Shares of Common Stock Outstanding
as of September 30, 1997 49,867,200
Use of Proceeds The Company will not
receive any proceeds from
the sale of shares by the
Selling Security Holders
Electronic Bulletin Board Symbol PHXS
DESCRIPTION OF SECURITIES TO BE REGISTERED
The Registrant's Common Stock was registered with the Commission on
August 2, 1995, pursuant to Section 12(g) of the Exchange Act on Form 8-A, SEC,
File No.0-26532, and the securities to be registered hereunder for reoffer and
resale by the Selling Security Holders are of the same class. The Selling
Security Holders acquired the shares of Common Stock pursuant to Registrant's
employee's and consultant's benefit plan, entitled "Consulting and Services
Compensation Agreement dated February 25, 1994," as may be amended from time to
time (the "Plan"). The shares to be issued pursuant to the Plan and the shares
underlying any grant of option thereunder have been registered with the
Commission under its registration statements on Form S-8, SEC File No.33-75862
and SEC File No. 333-01013, of which this Prospectus is a part.
7
<PAGE> 14
RISK FACTORS
POTENTIAL BUSINESS OBSTACLES
The Company faces the following potential obstacles, among others, to
the successful execution and completion of its proposed operations:
1. delays or failure to obtain adequate financing;
2. delays in the timetable for completing the software
installation effort, due to unforeseen difficulties;
3. delays in effecting workstation communications to the airline
reservations system via a data transmission network in China;
4. delays in effecting agreements with international airlines,
travel agency reservation systems and other travel entitles;
5. inability to obtain additional contracts with domestic
airlines in China;
6. competition from Civil Aviation Administration of China
("CAAC"), the government-owned airline reservation system and
other entities;
7. delays or failure in connecting the planned network to the
existing CAAC network; and
8. unforseen regulatory, political or economic changes in China.
The Company's securities involves a high degree of risk, including, but
not limited to, the factors described herein. An investment in the Company's
securities should be made only by persons who can afford a loss of their entire
investment. Investors should consider carefully the following risk factors
inherent in and affecting the business of the Company.
1. DEVELOPMENT STAGE COMPANY. The Company was organized under the laws
of the State of Delaware on April 4,1986. On March 4, 1991, the Company entered
into an agreement to acquire approximately 98% of PSG pursuant to a Plan of
Reorganization in exchange for an amount representing 90% of the Company's
outstanding Common Stock. PSG was incorporated under the laws of the State of
Delaware on June 25, 1987 and commenced development stage operations on April 1,
1989.
Since inception, the Company has been engaged principally in
negotiating various agreements with respect to its proposed business operations
and attempting to obtain financing to support its operations. The likelihood of
success of the Company must be considered in light of the risks, costs,
difficulties and delays frequently encountered in a development stage company
establishing new businesses and developing new products and/or services,
particularly such types of activities within China. There could be no
8
<PAGE> 15
assurance that the Company's business will prove to be commercially feasible,
successful or profitable.
2. HISTORY OF OPERATING LOSSES; WORKING CAPITAL DEFICIT; FINANCIAL
INSTABILITY. During the years ended March 31, 1997, 1996, 1995, 1994, 1993,1992
and 1991, the Company sustained net losses of $11,031,821, $9,704,318,
$4,841,824, $2,567,932, $1,640,852, $549,095, and $167,007, respectively. These
losses are expected to continue for the fiscal year ending March 31, 1998 and
for a presently undetermined time.
The Company is a development stage company which has had limited
revenues, and a history of operating losses. The Company's independent certified
public accountants have included an explanatory paragraph in their reports on
the Company's financial statements stating that various factors affecting the
Company's operations raise substantial doubt as to the Company's ability to
continue as a going concern. There can be no assurance that the Company will be
able to continue as a going concern or achieve material revenues or profitable
operations.
3. ADDITIONAL FINANCING. The Company will from time-to-time require
additional financing for its operations. No assurances can be given that such
financing will be available or, if available, that it can be obtained on terms
satisfactory to the Company.
4. NEGOTIATIONS WITH ADDITIONAL DOMESTIC AIRLINES IN CHINA AND HOTELS.
The Company is presently negotiating to install its Reservation Systems with
various additional hotels and domestic airlines located in China and on Hainan
Island besides those already under contract. No assurances can be given that the
Company will successfully conclude these negotiations by executing definitive
agreements, or, if successful, that such agreements will be on terms
satisfactory to the Company.
5. POLITICAL ECONOMIC AND LEGAL UNCERTAINTIES OF CONDUCTING BUSINESS IN
THE PEOPLE'S REPUBLIC OF CHINA. The Company is subject to various significant
risks inherent in doing business in The People's Republic of China, including
political and economic instability and undetermined difficulty in engaging in
any type of litigation to enforce contractual rights and copyright protection.
In June 1989, uncertainties resulting from political instability in China
generally had a detrimental impact on foreign companies conducting business in
China and had the effect of delaying the Company's proposed operations and
financing efforts. There can be no assurance that similar events in the future,
in China or elsewhere, will not disrupt the Company's activities and have a
material adverse effect on the Company's operations. There can be no assurance
that the Company will be able to enforce its contractual rights or receive
damages for their breach or other justified remedies in China should the
occasion arise.
The Company is also subject to various additional risks of doing
business in China and abroad, including, but not limited to, volatile
fluctuations in foreign currency, restrictions
9
<PAGE> 16
on transfer of funds, and risks of non-acceptance in currency exchanges, all of
which could have a significant impact upon the Company's business.
6. TECHNOLOGICAL OBSOLESCENCE. The computer software field is
characterized by rapid technological developments and advances, particularly in
the travel industry. Although the Company believes that its reservation system
is expected to be technically and economically competitive and it is anticipated
that it will not become obsolete for the foreseeable future, it is possible that
intervening development of new technology and/or new systems could render all or
part of the Company's reservation system virtually obsolete at any time.
7. COMPETITION. Hotel chains such as Sheraton and Hyatt have
computerized reservation Systems pertaining to their own hotels, however,
management believes that they do not offer the complete services which are
anticipated to be offered by the Company. International Air Carriers, such as
United, Northwest, Air China and Japan Airlines have computerized reservation
systems for international travel, however, they do not offer complete
reservation services for intra-China flights. No assurances can be given that
other better capitalized companies with greater resources and more experienced
personnel may not seek to compete directly with the Company's proposed
computerized reservation system.
Fundamental to installing any reservation system is access to a
communications link, and China's network capacity is believed by management to
be severely limited. The Joint Venture has successfully negotiated an agreement
to obtain access to ChinaPac, China's only state-of-the-art data communications
line. Management has been informed that it is difficult to obtain access to
ChinaPac. However, the Company cannot make representations that a competitor
could not gain access to ChinaPac, obtain contracts with various Chinese
domestic airlines, and enter into competition with the Company.
8. NO DIVIDENDS AND NONE ANTICIPATED. The payment by the Company of
cash dividends, if any, in the future rests within the discretion of its Board
of Directors and will depend, among other things, upon the Company's earnings,
its capital requirements and its financial condition, as well as other relevant
factors. The Company has not paid or declared any cash dividends upon its Common
Stock since its inception and by reason of its present financial status and its
contemplated future financial requirements does not contemplate or anticipate
making any cash distributions upon its Common Stock in the foreseeable future.
9. FUTURE SALES OF COMMON STOCK BY MANAGEMENT AND OTHERS. The Company
has 49,867,200 shares issued and outstanding as of the date of this Prospectus.
In general, under Rule 144, a person who has satisfied a one-year holding period
may, under certain circumstances, sell within any three-month period a number of
shares which does not exceed the greater of one percent of the then outstanding
shares of Common Stock or the average weekly trading volume in shares during the
four calendar weeks
10
<PAGE> 17
immediately prior to such sale. Rule 144 also permits under certain
circumstances, the sale of shares without any quantity or other limitation by a
person who is not an affiliate of the Company and who has satisfied a two-year
holding period. Future sales of such shares made under Rule 144 may have an
adverse effect on the then prevailing market price, if any, of the Common Stock
and adversely affect the Company's ability to obtain future financing in the
capital markets as well as create a potential market overhang. As of the date of
this Prospectus, pursuant to Rule 144, over 20,000,000 shares are eligible for
sale under Rule 144.
11
<PAGE> 18
SELLING SECURITY HOLDERS
This Prospectus relates to 9,747,539 shares of Common Stock to be
offered for sale by certain officers and directors of the Company (collectively
the "Selling Stockholders"). The aforesaid shares were issued or are issuable
pursuant to the Company's Consulting and Services Compensation Agreement dated
February 25, 1994, as amended (the "Plan"). The address of each Selling
Stockholder is c/o Phoenix Information Systems Corp., 100 Second Avenue South,
Suite 1100, St. Petersburg, Florida 33701. The following table sets forth
certain information with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
===========================================================================================================
Number of Shares
(and Percentage of
Number of Shares Owned Number of Outstanding Shares)
(and Percentage of Shares Covered Owned After
Name and Position with the Outstanding Shares) as of by this Completion of this
Company During the Past September 30, 1997 Prospectus Offering
Three Years (1) (2) (3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert P. Gordon,
Chairman of the Board 8,536,271(4) 15.7% 4,641,527 3,894,744 (7.1%)
- -----------------------------------------------------------------------------------------------------------
Robert J. Conrads,
Director 2,328,000(5) 4.5% 1,178,000 1,150,000 (2.2%)
- -----------------------------------------------------------------------------------------------------------
Paul Henry,
Secretary, Director 608,000(6) 1.2% 428,000 180,000 *
- -----------------------------------------------------------------------------------------------------------
Delbert Bloss, President 1,000,000(7) 2.0% 1,000,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Frank Cappiello, Director 541,000(8) 1.1% 491,000 50,000 *
- -----------------------------------------------------------------------------------------------------------
Yu Yan 'en, Director 300,000(9)* 300,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
W. James Peet, Director 108,000(10)* 108,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Larry McGee,
Vice President of subsidiary 155,000(11)* 155,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Peter J. Ford,
Vice President and
Chief Financial Officer 168,500(12)* 160,000 8,500 *
- -----------------------------------------------------------------------------------------------------------
Frank Streine,
Vice President 120,000(13)* 120,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Robert O. Harlan,
Vice President of subsidiary 600,012(14) 1.2% 600,012 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Judith A. Schafers,
Vice President of subsidiary 216,000(15)* 216,000 -0- (0%)
- -----------------------------------------------------------------------------------------------------------
Peter Sham, Acting
President of subsidiary 350,000(16)* 350,000 -0- (0%)
===========================================================================================================
</TABLE>
12
<PAGE> 19
- -------------------
* Owns less than one percent of the issued and outstanding shares.
(1) Assumes all options covered by this Prospectus are beneficially owned
by the option holder and the underlying shares are deemed outstanding,
but such shares shall not be deemed outstanding for the purpose of
computing percentage of Common Stock owned by any other person.
(2) Includes all shares issued or issuable upon exercise of options granted
directly by the Company held by the officer/director, even though some
of said shares covered by the options are not currently beneficially
owned by Optionee under the regulations of the Exchange Act of 1934, as
amended.
(3) Assumes all Options granted are exercised and sold by each respective
person.
(4) Includes the following shares deemed to be beneficially owned by Mr.
Gordon: (a) 3,212,219 shares of the Company's Common Stock owned by him
and Heaven International Inc., (b) 682,525 shares beneficially owned by
Visitors Services Inc. and in which Mr. Gordon is a controlling
stockholder, and (c) options to purchase 4,641,527 shares of the
Company's Common Stock at exercise prices ranging from $1.35 per share
to $1.70 per share.
(5) Includes warrants and options to purchase an aggregate of 1,378,000
shares of the Company's Common Stock at exercise prices ranging from
$1.00 per share to $3.60 per share (including options held by Voyager
Capital Group).
(6) Includes options to purchase 428,000 shares of the Company's Common
Stock at exercise prices ranging from $1.00 per share to $2.00 per
share.
(7) Includes options to purchase 1,000,000 shares of the Company's Common
Stock at an exercise price of $1.50 per share.
(8) Includes options to purchase 491,000 shares of the Company's Common
Stock at exercise prices ranging from $1.00 per share to $1.75 per
share.
(9) Includes options to purchase 300,000 shares of the Company's Common
Stock at an exercise price of $2.50 per share.
(10) Includes options to purchase 108,000 shares of the Company's Common
Stock at an exercise price of $1.70 per share.
(11) Includes options to purchase 155,000 shares of the Company's Common
Stock at an exercise price of $1.70 per share.
13
<PAGE> 20
(12) Includes options to purchase 160,000 shares of the Company's Common
Stock at an exercise price of $2.00 per share.
(13) Includes options to purchase 120,000 shares of the Company's Common
Stock at an exercise price of $1.50 per share.
(14) Includes options to purchase 600,012 shares of the Company's Common
Stock at an exercise price of $1.50 per share.
(15) Includes options to purchase 216,000 shares of the Company's Common
Stock at an exercise price of $1.70 per share.
(16) Includes options to purchase 350,000 shares of the Company's Common
Stock at an exercise price of $1.50 per share.
14
<PAGE> 21
PLAN OF DISTRIBUTION
All of the shares of Common Stock offered hereby are being sold by the
Selling Security Holders and may be offered through the selling efforts of
brokers or dealers unknown to the Registrant. Each of the Selling Security
Holders are deemed affiliates of the Company and are thereby subject to the
volume limitations imposed on affiliates and control securities by Rule 144 of
the Securities Act of 1933, as amended, and may further be subject to internal
restrictions or volume limitations on resale imposed on them by the Board of
Directors of the Registrant. In addition, the Selling Security Holders are
subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The law firm of Lester Morse P.C. (the "Firm") has acted as securities
counsel to the Registrant and has given its opinion as to the validity of the
securities registered with the Registration Statement hereunder, filed with the
Commission, which opinion appears at Exhibit 5.1 thereto. As of the date of this
Prospectus, members of the family of Lester Morse beneficially own less than 1%
of the issued and outstanding shares of the Company. Such ownership includes the
grant of stock options to purchase 200,000 shares under the Company's Plan.
15
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8 and has duly caused this Form S-8
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of St. Petersburg, State of Florida on the 27th day
of October, 1997.
PHOENIX INFORMATION SYSTEMS CORP.
By: /s/ Robert P. Gordon
-----------------------------------------
Robert P. Gordon, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Form
S-8 Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Titles Date
---------- ------ ----
<S> <C> <C>
/s/ Robert P. Gordon Chairman of the Board October 27, 1997
- --------------------------
Robert P. Gordon
/s/ Delbert F. Bloss President, Chief Executive
- -------------------------- Officer, Director October 27, 1997
Delbert F. Bloss
/s/ Paul W. Henry Secretary, Director October 27, 1997
- --------------------------
Paul W. Henry
/s/ Peter J. Ford Vice President and Chief
- -------------------------- Financial Officer October 27, 1997
Peter J. Ford
/s/ Yu Yan'en Director October 27, 1997
- --------------------------
Yu Yan'en
/s/ Frank Cappiello Director October 27, 1997
- --------------------------
Frank Cappiello
/s/ Robert J. Conrads Director October 27, 1997
- --------------------------
Robert J. Conrads
/s/ W. James Peet Director October 27, 1997
- --------------------------
W. James Peet
</TABLE>
<PAGE> 1
EXHIBIT 5.1
LESTER MORSE P.C.
111 Great Neck Road
Great Neck, New York 11021-473
--
Telephone (516) 487-1446
Telecopier (516) 487-1452
October 27, 1997
U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Phoenix Information Systems Corp.
Form S-8 Registration Statement
Ladies and Gentlemen:
OPINION OF COUNSEL
We have acted as counsel to Phoenix Information Systems Corp. (the
"Company") in connection with the preparation and filing of a Registration
Statement on Form S-8 (the "Registration Statement") covering registration under
the Securities Act of 1933, as amended, of 7,000,000 shares of the Company's
common stock, $.01 par value per share (the "Shares"), pursuant to the Phoenix
Information Systems Corp., Consulting and Services Compensation Agreement dated
February 25, 1994, as amended (the "Plan"). As such, we have examined the
Registration Statement, the Company's Articles of Incorporation and Bylaws, as
amended, and minutes of meetings of its Board of Directors.
Based upon the foregoing, and assuming that the Shares will be issued
as set forth in the Plan and Registration Statement, at a time when effective,
and that the Company will fully comply with all applicable securities laws
involved under the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated pursuant to
said Acts, and in those states or foreign jurisdictions in which the Shares may
be sold, we are of the opinion that, upon proper and legal issuance of the
Shares according the Registration Statement and receipt of the consideration to
be paid for the Shares, the Shares will be validly issued, fully paid and
nonassessable shares of Common Stock of the Company. This opinion does not cover
any matters related to any re-offer or re-sale of the Shares by any Plan
Beneficiaries except as described in the Registration Statement , once properly
and legally issued pursuant to the Plan as described in the Registration
Statement.
This opinion is not to be used, circulated, quoted or otherwise
referred to for any other purpose without our prior written consent. This
opinion is based on our knowledge of the law and facts as of the date hereof.
This opinion does not address or relate to any specific state securities laws.
We assume no duty to communicate with the Company in respect to any matter which
comes to our attention hereafter.
<PAGE> 2
CONSENT
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the prospectus which is made part
of the Registration Statement.
Sincerely,
LESTER MORSE P.C.
/s/ Steven Morse, Esq.
<PAGE> 1
EXHIBIT 10.1
PHOENIX INFORMATION SYSTEMS CORP.
CONSULTING AND SERVICES COMPENSATION AGREEMENT
(AS RESTATED OCTOBER 7, 1997)
SECTION 1. INTRODUCTION
1.1 Establishment. Effective as provided in Section 17, Phoenix
Information Systems Corp., a Delaware corporation (the "Company"), hereby
establishes a restated plan of long-term stock-based compensation incentives for
selected Eligible Participants (defined below) of the Company and its affiliated
corporations. Such a plan was adopted on February 25, 1994. The plan as restated
herein and adopted by the Board of Directors on October 7, 1997, shall be known
as the Consulting and Services Compensation Agreement (the "Plan").
1.2 Purpose. The purpose of the Plan is to promote the best interest of
the Company, and its stockholders by providing a means of non-cash remuneration
to selected Eligible Participants who contribute most to the operating progress
and earning power of the Company.
SECTION 2. DEFINITIONS
The following definitions shall be applicable to the terms used in the
Plan:
2.1 "Affiliated Corporation" means any corporation that is either a
parent corporation with respect to the Company or a subsidiary corporation with
respect to the Company (within the meaning of Sections 424(e) and (f),
respectively, of the Internal Revenue Code).
2.2 "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.3 "Committee" means a committee designated by the Board of Directors
to administer the Plan or, if no committee is so designated, the Board of
Directors. Any Committee Member who is also an Eligible Participant may receive
a grant only if he abstains from voting in favor of a grant to himself, and the
grant is determined and approved by the remaining Committee Members. The Board
of Directors, in its sole discretion, may at any time remove any member of the
Committee and appoint another Director to fill any vacancy on the Committee.
2.4 "Common Stock" means the Company's $.01 par value voting common
stock.
2.5 "Company" means Phoenix Information Systems Corp., a Delaware
corporation and its subsidiaries.
2.6 "Effective Date" means the effective date of the Plan, as set forth
in Section 17 hereof.
<PAGE> 2
2.7 "Eligible Participant" or "Participant" means any employee,
director, officer, consultant, or advisor of the Company who is determined (in
accordance with the provisions of Section 4 hereof) to be eligible to receive
stock and exercise stock options hereunder.
2.8 "Fair Market Value" means with respect to Common Stock, as of any
date, the closing price of a share of Common Stock as reported on such exchange
on which the Company's Common Stock may be listed.
2.9 "Option" means the grant to an Eligible Participant of a right to
acquire shares of Restricted Stock of the Company, unless said shares are duly
registered, and thus freely tradeable, pursuant to a Grant of Option approved by
the Committee and executed and delivered by the Company.
2.10 "Plan" means this Phoenix Information Systems Corp. Consulting and
Services Compensation Agreement as restated and adopted on October 7, 1997.
2.11 "Registered Stock" means shares of common stock, $.01 par value,
of the Company underlying an Option which, if specified in the written Option
are, upon issuance, freely tradeable by virtue of having been registered with
the Securities and Exchange Commission under cover of Form S-8, or another
appropriate registration statement, and which shares have been issued subject to
the "blue sky" provisions of any appropriate state jurisdiction. Special resale
restrictions may, however, apply to officers, directors, control shareholders
and affiliates of the Company and such individuals or entities will be required
to obtain an opinion of counsel as regards their ability to resell shares
received pursuant to this Plan.
2.12 "Stock" or "Restricted Stock" means shares of common stock, $.01
par value, of the Company issuable directly under the Plan or underlying the
grant of the Option, which are, upon issuance, subject to the restrictions set
forth in Section 11 hereof.
Wherever appropriate, words used in the Plan in the singular may mean
the plural, the plural may mean the singular, and the masculine may mean the
feminine.
SECTION 3. ADOPTION AND ADMINISTRATION OF THE PLAN
A plan of long-term stock-based compensation incentives for selected
Eligible Participants of the Company and its affiliated corporations was adopted
by the Board of Directors on February 25, 1994. The plan was restated and
adopted by the Board of Directors on October 7, 1997 (the "Plan"). In the
absence of contrary action by the Board of Directors, and except for action
taken by the Committee pursuant to Section 4 in connection with the
determination of Eligible Participants, any action taken by the Committee or by
the Board of Directors with respect to the implementation, interpretation or
administration of the Plan shall be final, conclusive and binding.
<PAGE> 3
SECTION 4. ELIGIBILITY AND AWARDS
The Committee shall determine at any time and from time to time after
the effective date of the Plan: (i) the Eligible Participants; (ii) the number
of shares of Common Stock issuable directly or to be granted pursuant to the
Option which an Eligible Participant may exercise; (iii) the price per share at
which each option may be exercised, in cash or cancellation of fees for services
for which the Company is liable, if applicable, or the value per share if a
direct issue of stock; and (iv) the terms on which each option may be granted.
Such determination may from time to time be amended or altered at the sole
discretion of the Committee. Notwithstanding the provisions of Section 3 hereof,
no such determination by the Committee shall be final, conclusive and binding
upon the Company unless and until the Board of Directors has approved the same;
provided, however, that if the Committee is composed of a majority of the
persons then comprising the Board of Directors of the Company, such approval by
the Board of Directors shall not be necessary.
SECTION 5. GRANT OF OPTION
Subject to the terms and provisions of this Plan, the terms and
conditions under which the Option may be granted to an Eligible Participant
shall be set forth in a written agreement (i.e., a Consulting Agreement,
Services Agreement, Fee Agreement, or Employment Agreement) or a written Grant
of Option in the form attached hereto as Exhibit A and made a part hereof and
containing such modifications thereto and such other provisions as the
Committee, in its sole discretion, may determine. Notwithstanding the foregoing
provisions of this Section 5, each Grant of Option shall incorporate the
provisions of this Plan by reference.
SECTION 6. TOTAL NUMBER OF SHARES OF COMMON STOCK
The total number of shares of Common Stock that have been reserved for
issuance by the Company either directly or underlying Options granted under this
Plan from inception to date is 16,000,000. The total number of shares of Common
Stock reserved for such issuance may be increased only by a resolution adopted
by the Board of Directors and amendment of the Plan. Such Common Stock may be
authorized and unissued or reacquired common stock of the Company.
SECTION 7. PURCHASE OF SHARES OF COMMON STOCK
7.1 As soon as practicable after the determination by the Committee and
approval by the Board of Directors (if necessary, pursuant to Section 4 hereof)
of the Eligible Participants and the number of shares an Eligible Participant
may be issued directly or granted pursuant to an Option, the Committee shall
give notice (written or oral) thereof to each Eligible Participant, which notice
may be accompanied by the Grant of Option, if appropriate, to be executed by
such Eligible Participant. Upon receipt, an Eligible Participant may exercise
his right to an Option to purchase Common Stock by providing written notice as
specified in the Grant of Option.
7.2 The negotiated cost basis of stock issued directly or the exercise
price for each option to purchase shares of Common Stock pursuant to paragraph
7.1 shall be as determined by the Committee, it being understood that the price
so determined by the Committee may vary from one
<PAGE> 4
Eligible Participant to another. In computing the negotiated direct issue price
or the Option exercise price of a share of Common Stock, the Committee shall
take into consideration, among other factors, the restrictions set forth in
Section 11 hereof.
SECTION 8. PAYMENT UPON EXERCISE OF OPTION OR DIRECT ISSUANCE
The Committee shall determine the terms of the Grant of Option and the
exercise price or direct issue price for payment by each Participant for his
shares of Common Stock granted thereunder. Such terms shall be set forth or
referred to in the Grant of Option or Board Resolution authorizing the share
issuance. The terms and/or exercise price so set by the Committee may vary from
one Participant to another. In the event that all the Committee approves an
Option grant permitting deferred payments, the Participant's obligation to pay
for such Common Stock shall be evidenced by a Promissory Note executed by such
Participant and containing such modifications thereto and such other provisions
as the Committee, in its sole discretion, may determine.
SECTION 9. DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE
The Company shall deliver to or on behalf of each Participant such
number of shares of Common Stock as such Participant elects to purchase upon
direct issuance or upon exercise of the Option. Such shares, which shall be
fully paid and nonassessable upon the issuance thereof (unless a portion or all
of the purchase price shall be paid on a deferred basis) shall be represented by
a certificate or certificates registered in the name of the Participant and
stamped with an appropriate legend referring to the restrictions thereon, if
any, as may be set forth in the Grant of Option. Subject to the terms and
provisions of the General Corporation Law of Delaware and the Grant of Option to
which he is a party, a Participant shall have all the rights of a stockholder
with respect to such shares, including the right to vote the shares and to
receive all dividends or other distributions paid or made with respect thereto
(except to the extent such Participant defaults under the promissory note, if
any, evidencing the deferred purchase price for such shares), provided that such
shares shall be subject to the restrictions hereinafter set forth. In the event
of a merger or consolidation to which the Company is a party, or of any other
acquisition of a majority of the issued and outstanding shares of common stock
of the Company involving an exchange or a substitution of stock of an acquiring
corporation for common stock of the Company, or of any transfer of all or
substantially all of the assets of the Company in exchange for stock of an
acquiring corporation, a determination as to whether the stock of the acquiring
corporation so received shall be subject to the restrictions set forth in
Section 11 shall be made solely by the acquiring corporation.
SECTION 10. RIGHTS OF EMPLOYEES; PARTICIPANTS
10.1 Employment. Nothing contained in the Plan or in any Stock Option,
Restricted Stock award or other Common Stock award granted under the Plan shall
confer upon any Participant any right with respect to the continuation of his or
her employment by the Company or any Affiliated Corporation, or interfere in any
way with the right of the Company or any Affiliated Corporation, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of a Stock
Option or other Common Stock award. Whether an
<PAGE> 5
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.
10.2 Non-transferability. No right or interest of any Participant in a
Stock Option award shall be assignable or transferable during the lifetime of
the Participant, either voluntarily or involuntarily, or subjected to any lien,
directly or indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event of a
Participant's death, a Participant's rights and interest in Stock Option awards
shall be transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall be made to,
and exercise of any Stock Options may be made by, the Participant's legal
representatives, heirs or legatees. If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is unable to
care for his or her affairs because of mental condition, physical condition, or
age, payment due such person may be made to, and such rights shall be exercised
by, such person's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status.
SECTION 11. GENERAL RESTRICTIONS
11.1 Restrictive Legend. All shares of Common Stock issued or issuable
under this plan, unless qualified as Registered Stock as defined in Section 2
hereinabove, shall be restricted, and certificates representing the shares shall
bear the following restrictive legend:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 ("the Act") and are
"restricted securities" as that term is defined in Rule 144 under
the Act. The shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an exemption
from registration under the Act, the availability of which is to
be established to the satisfaction of the Company.
11.2 Investment Representations. The Company may require any person to
whom a Stock Option, Restricted Stock award, or other Common Stock award is
granted, as a condition of exercising such Stock Option, or receiving such
Restricted Stock award, or other Common Stock award, to give written assurances
in substance and form satisfactory to the Company and its counsel to the effect
that such person is acquiring the Common Stock subject to the Stock Option,
Restricted Stock award, or other Common Stock award for his or her own account
for investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.
11.3 Compliance with Securities Laws. Each Stock Option shall be
subject to the requirement that if at any time counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such Stock Option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance or purchase of
shares thereunder, such Stock Option may not be accepted or exercised in whole
or in part unless such listing, registration, qualification,
<PAGE> 6
consent or approval shall have been effected or obtained on conditions
acceptable to the Committee. Nothing herein shall be deemed to require the
Company to apply for or to obtain such listing, registration or qualification.
11.4 Changes in Accounting Rules. Notwithstanding any other provision
of the Plan to the contrary, if, during the term of the Plan, any changes in the
financial or tax accounting rules applicable to Stock Options, Restricted Stock
awards or other Common Stock awards shall occur that, in the sole judgment of
the Committee, may have a material adverse effect on the reported earnings,
assets or liabilities of the Company, the Committee shall have the right and
power to modify as necessary, or cancel, any then outstanding and unexercised
Stock Options, any then outstanding Restricted Stock awards as to which the
applicable employment restriction has not been satisfied and any other Common
Stock awards.
11.5 Restrictions on Reoffers and Resales of Control Securities. Any
Participant issued Registered Stock who is deemed to be an "affiliate" or
"control" person, as defined in Rule 405 promulgated under the Securities Act of
1933, as amended (the "Act"), shall be restricted from the reoffer or resale of
the Registered Stock imposed on affiliates and control persons, until a reoffer
prospectus, or prospectus supplement thereto, has been filed with the Securities
and Exchange Commission ("SEC") pursuant to an effective registration statement
on Form S-8 identifying the affiliate or control person and the amounts of
Registered Stock to be reoffered or resold, whether or not they have a present
intent to do so. Furthermore, the reoffer or resale of the Registered Stock by
affiliates or control persons are subject to the provisions of Rule 144 of the
Act and Section 16 of the Securities Exchange Act of 1934, as amended, as those
provisions apply to affiliates and control persons.
SECTION 12. WITHHOLDING REQUIREMENT
The Company's obligations to deliver shares of Common Stock upon the
exercise of any Stock Option granted under the Plan or pursuant to any other
Common Stock award, shall be subject to the Participant's satisfaction of all
applicable federal, state and local income and other tax withholding
requirements.
SECTION 13. PLAN BINDING UPON ASSIGNS OR TRANSFEREES
In the event that, at any time or from time to time, any shares of
Common Stock are sold, exchanged, assigned or transferred to any party (other
than the Company) pursuant to the provisions of Section 10.2 hereof, such party
shall take such shares of Common Stock pursuant to all provisions and conditions
of this Plan, and, as a condition precedent to the transfer of such shares of
Common Stock, such party shall agree (for and on behalf of himself or itself,
his or its legal representatives and his or its transferees and assigns) in
writing to be bound by all provisions of this Plan.
SECTION 14. COSTS AND EXPENSES
All costs and expenses with respect to the adoption, implementation,
interpretation and administration of the Plan shall be borne by the Company.
<PAGE> 7
SECTION 15. CHANGES IN CAPITAL STRUCTURE OF THE COMPANY
Unless otherwise consented to by the Company in writing or unless
otherwise required by law, the shares of Restricted Stock issuable upon exercise
of the Option which are held by a Participant shall not be adjusted in any
manner for: (i) a subdivision or combination of any of the shares of capital
stock of the Company; (ii) a dividend payable in shares of capital stock of the
Company; (iii) a reclassification of any shares of capital stock of the Company;
or (iv) any other change in the capital structure of the Company.
SECTION 16. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board, upon recommendation of the Committee or at its own
initiative, at any time may terminate and at any time and from time to time and
in any respect, may amend or modify the Plan, including:
(a) Increase the total amount of Common Stock that may be
awarded under the Plan, except as provided in Section 15 of the Plan;
(b) Change the classes of Eligible Employees from which
Participants may be selected or materially modify the requirements as
to eligibility for participation in the Plan;
(c) Increase the benefits accruing to Participants; or
(d) Extend the duration of the Plan.
Any Stock Option or other Common Stock award granted to a Participant
prior to the date the Plan is amended, modified or terminated will remain in
effect according to its terms unless otherwise agreed upon by the Participant;
provided, however, that this sentence shall not impair the right of the
Committee to take whatever action it deems appropriate under Section 11 or
Section 15. The termination or any modification or amendment of the Plan shall
not, without the consent of a Participant, affect his rights under a Stock
Option, Restricted Stock Award or other Common Stock award previously granted to
him. With the consent of the Participant, the Committee may amend outstanding
option agreements in a manner not inconsistent with the Plan. The Board shall
have the right to amend or modify the terms and provisions of the Plan and of
any outstanding Stock Options granted under the Plan.
SECTION 17. EFFECTIVE DATE OF THE PLAN
17.1 Effective Date. The Plan as restated herein is effective as of
October 7, 1997.
17.2 Duration of the Plan. The Plan as restated shall terminate at
midnight on October 6, 2002, which is the day before the fifth anniversary of
the Effective Date, and may be terminated prior thereto by action of the Board
of Directors; and no Stock Option, Restricted Stock Award or other Common Stock
award shall be granted after such termination. Stock Options, Restricted Stock
<PAGE> 8
Awards and other Common Stock awards outstanding at the time of the Plan
termination may continue to be exercised, or become free of restrictions, in
accordance with their terms.
SECTION 18. BURDEN AND BENEFIT
The terms and provisions of this Plan shall be binding upon, and shall
inure to the benefit of, each Participant, his executives or administrators,
heirs, and personal and legal representatives.
Executed as a sealed instrument as of the 7th day of October, 1997.
PHOENIX INFORMATION SYSTEMS CORP.
By:
-----------------------------------------
Robert P. Gordon, Chairman
ATTEST:
- -----------------------------
Paul W. Henry, Secretary
<PAGE> 9
EXHIBIT A
FORM OF
GRANT OF OPTION PURSUANT TO THE
PHOENIX INFORMATION SYSTEMS CORP.
CONSULTING AND SERVICES COMPENSATION AGREEMENT
Phoenix Information Systems Corp., a Delaware corporation (the
"Company"), hereby grants to ________________________________ ("Optionee") an
option to purchase ___________ shares of common stock, $.01 par value, (the
"Shares") of the Company at the purchase price of $______ per share (the
"Purchase Price") in accordance with and subject to the terms of the Company's
Consulting and Services Compensation Agreement, as may be amended and restated
from time to time. This Grant of Option is exercisable in whole or in part, and
upon payment in cash or cancellation of fees, or other form of payment
acceptable to the Company, to the offices of the Company at 100 Second Avenue
South, Suite 1100, St. Petersburg, Florida 33701.
Unless otherwise set forth in an employment, consulting or other
written agreement between the Optionee and the Company, in the event that
Optionee's employee or consultant status with the Company or any of its
subsidiaries ceases or terminates for any reason whatsoever, whether voluntary,
involuntary, by contract or by mutual agreement, this Grant of Option shall
terminate with respect to any portion of this Grant of Option that has not been
validly exercised prior to either: 1) thirty days after the date of cessation or
termination of employee or consultant status, as determined in the sole
discretion of the Company; or 2) such other date as set forth in an employment,
consulting or other written agreement between the Optionee and the Company; and
no rights hereunder may be exercised after said date. In the event of a
Participant's death, a Participant's rights and interest in Stock Option awards
shall be transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall be made to,
and exercise of any Stock Options may be made by, the Participant's legal
representatives, heirs or legatees.
Subject to the preceding paragraph, this Grant of Option, or any
portion hereof, may be exercised only to the extent vested per the attached
schedule, and must be exercised by Optionee no later than
____________________________ (the "Expiration Date") by (i) notice in writing,
sent by facsimile copy to the Company at its address set forth above; and (ii)
payment of the Purchase Price pursuant to the terms of this Grant of Option and
the Company's Consulting and Services Compensation Agreement. Any portion of
this Grant of Option that is not exercised on or before to the Expiration Date
shall lapse. The notice must refer to this Grant of Option, and it must specify
the number of shares being purchased, and recite the consideration being paid
therefor. Notice shall be deemed given on the date on which the notice is
delivered to the Company by facsimile transmission bearing an authorized
signature of Optionee.
This Grant of Option shall be considered validly exercised once payment
therefor has cleared the banking system or the Company has issued a credit memo
for services in the appropriate
A-1
<PAGE> 10
amount, or receives a duly executed acceptable promissory note, if this Grant of
Option is granted with deferred payment, and the Company has received written
notice of such exercise.
If Optionee fails to exercise this Grant of Option in accordance with
this Agreement, then this Agreement shall terminate and have no force and
effect, in which event Optionor and Optionee shall have no liability to each
other with respect to this Grant of Option.
This Grant of Option may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery of
this Grant of Option by exchange of facsimile copies bearing the facsimile
signature of a party hereto shall constitute a valid and binding execution and
delivery of this Grant of Option by such party. Such facsimile copies shall
constitute enforceable original documents.
The validity, construction and enforceability of this Grant of Option
shall be construed under and governed by the laws of the State of Florida,
without regard to its rules concerning conflicts of laws, and any action brought
to enforce this Grant of Option or resolve any controversy, breach or
disagreement relative hereto shall be brought only in a court of competent
jurisdiction within the County of Pinellas, Florida.
The shares of stock issued upon exercise of this Grant of Option (the
"Underlying Shares") are not subject to adjustment due to any changes in the
capital structure of the Company as set forth in Section 15 of the Plan.
Further, the Underlying Shares may not be sold, exchanged, assigned, transferred
or permitted to be transferred, whether voluntarily, involuntarily or by
operation of law, delivered, encumbered, discounted, pledged, hypothecated or
otherwise disposed of until (i) the Underlying Shares have been registered with
the Securities and Exchange Commission pursuant to an effective registration
statement on Form S-8, or such other form as may be appropriate, in the
discretion of the Company; or (ii) an Opinion of Counsel, satisfactory to the
Company, has been received, which opinion sets forth the basis and availability
of any exemption for resale or transfer from federal or state securities
registration requirements.
This Grant of Option may not be assigned, transferred or hypothecated
(except under the laws of descent and distribution) and any purported
assignment, transfer or hypothecation shall be void ab initio and shall be of no
force or effect.
The Underlying Shares ___________________ [insert appropriate language:
"have" or "have not"] been registered with the Securities and Exchange
Commission pursuant to a registration statement on Form S-8.
A-2
<PAGE> 11
IN WITNESS WHEREOF, this Grant of Option has been executed effective as
of ____________________, 19___.
PHOENIX INFORMATION SYSTEMS CORP.
BY THE BOARD OF DIRECTORS
OR A SPECIAL COMMITTEE THEREOF
NOT FOR EXECUTION
By:
NOT FOR EXECUTION
By:
NOT FOR EXECUTION
By:
OPTIONEE:
NOT FOR EXECUTION
A-3
<PAGE> 12
GRANT OF OPTION PURSUANT TO THE PHOENIX INFORMATION SYSTEMS
CORP. CONSULTING AND SERVICES COMPENSATION AGREEMENT,
RESTATED OCTOBER 7, 1997
OPTIONEE: ____________________
OPTION GRANTED: _____________ Shares
PURCHASE PRICE: US$_______ per Share
DATE OF GRANT: ____________________
EXPIRATION DATE: ____________________
VESTING SCHEDULE: OPTION ON
#SHARES DATE VESTED
(ASSUMING CONTINUED EMPLOYEE OR
CONSULTANT STATUS, ETC.)
VESTED OPTIONS EXERCISED TO DATE: _________ (INCLUDING THIS EXERCISE)
BALANCE OF VESTED OPTIONS TO BE EXERCISED: _________
================================================================================
NOTICE OF EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF THE OPTION)
TO: Phoenix Information Systems Corp. ("Optionor")
The undersigned, the holder of the Grant of Option described above,
hereby irrevocably elects to exercise the purchase rights represented by such
Grant of Option for, and to purchase thereunder, _________ shares of the Common
Stock of Phoenix Information Systems Corp., and herewith makes payment of
_______________________ therefor. Optionee requests that the certificates for
such shares be issued in the name of Optionee and be delivered to Optionee at
the address of _________________________________________________________, and if
such shares shall not be all of the shares purchasable hereunder, represents
that a new Subscription of like tenor for the appropriate balance of the shares,
or a portion thereof, purchasable under the Grant of Option pursuant to the
Phoenix Information Systems Corp. Restated Consulting and Services Compensation
Agreement, as restated October 7, 1997, be delivered to Optionor when and as
appropriate.
OPTIONEE:
Dated: _________________________
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Phoenix Information Systems Corp. on Form S-8 related to the Consulting and
Services Compensation Agreement as amended, of our report dated May 30, 1996, on
our audits of the consolidated balance sheet of Phoenix Information Systems
Corp. and Subsidiaries as of March 31, 1996 and the related consolidated
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the years ended March 31, 1996 and 1995, and cumulative for the period
from April 1, 1991 through March 31, 1996, which report is included in the
annual report on Form 10-K.
Coopers & Lybrand L.L.P.
Tampa, Florida
October 22, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Phoenix Information Systems Corporation
St. Petersburg, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated May 28,
1997 relating to the consolidated financial statements of Phoenix Information
Systems Corporation appearing in the Company's Annual Report on form 10-K for
the year ended March 31, 1997.
We also consent to the reference to us under the caption "Experts" in
the Prospectus.
/s/ BDO Seidman, LLP
Orlando, Florida
October 20, 1997
