<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Delphi Information Systems, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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>
[DEPHI LOGO]
3501 Algonquin Road
Rolling Meadows, Illinois 60008
July 28, 1995
Dear Stockholder:
Delphi's annual meeting of stockholders will be held at 10:00 a.m.
local time on Tuesday, August 29, 1995, at Delphi's principal executive office
located at 3501 Algonquin Road in Rolling Meadows, Illinois.
The notice of meeting, proxy statement and proxy card are included
with this letter. The formal business of the meeting is described in the
attached notice of meeting. After completion of that business, there will be an
update on developments in Delphi's products and markets.
It is important that your shares are represented and voted at the
annual meeting, regardless of the size of your holdings. Regardless of whether
you plan to attend, please complete and return the enclosed proxy to ensure that
your shares will be represented at the annual meeting. If you attend the annual
meeting, you may, of course, withdraw your proxy should you wish to vote in
person.
Sincerely,
/s/ M. Denis Connaghan
-----------------------
M. Denis Connaghan
President and Chief Executive Officer
<PAGE>
[DELPHI LOGO]
3501 ALGONQUIN ROAD
ROLLING MEADOWS, ILLINOIS 60008
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 29, 1995
The annual meeting of stockholders of Delphi Information Systems,
Inc., a Delaware corporation (the "Company"), will be held at the principal
executive office of Delphi Information Systems, Inc., located at 3501 Algonquin
Road in Rolling Meadows, Illinois, at 10:00 a.m. local time, on Tuesday, August
29, 1995, for the following purposes:
(1) To elect five directors of the Company for the ensuing year.
(2) To approve the amendment of the Company's 1989 Stock Purchase Plan to
(i) increase from 200,000 to 1,800,000 the number of shares of the
Company's Common Stock available for issuance and sale thereunder and
(ii) provide that the term of options granted thereunder on August 1,
1994, may be extended from one year to not more than 15 months at the
discretion of the Board of Directors.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on July 10, 1995, has been fixed as the record
date for determination of those stockholders entitled to vote at the meeting.
Only holders of record of shares of the Company's Common Stock, Series C
Preferred Stock or Series D Preferred Stock on that date will be entitled to
vote.
A list of the stockholders entitled to vote at the meeting may be
examined at the Company's principal executive office, located at 3501 Algonquin
Road in Rolling Meadows, Illinois, during the ten-day period preceding the
meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY. THE PROXY IS
REVOCABLE AT ANY TIME. IF YOU ARE PRESENT AT THE ANNUAL MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
By Order of the Board of Directors,
/s/ John R. Sprieser
------------------------------------
John R. Sprieser, Secretary
July 28, 1995
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
3501 ALGONQUIN ROAD
ROLLING MEADOWS, ILLINOIS 60008
------------------------------
PROXY STATEMENT
------------------------------
This proxy statement (the "Proxy Statement") and the enclosed proxy
card are being mailed on or about July 28, 1995, to stockholders of Delphi
Information Systems, Inc. (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board of Directors") for
use at the annual meeting (the "Meeting") of stockholders to be held on August
29, 1995, and any adjournments thereof.
The total cost of this solicitation will be borne by the Company. In
addition to the mails, proxies may be solicited by officers and other employees
of the Company, without extra remuneration, by personal interviews, telephone
and telecopy. It is anticipated that banks, brokerage houses and other
custodians, nominees and fiduciaries will forward soliciting material to
beneficial owners of shares entitled to vote at the Meeting, and such persons
will be reimbursed for their reasonable out-of-pocket expenses incurred in
connection therewith.
If you execute and deliver a proxy pursuant to this proxy statement,
you may revoke it at any time before it is exercised at the Meeting by filing
with the Secretary of the Company an instrument revoking it or by delivering a
duly executed proxy bearing a later date. In addition, if you are present at
the Meeting, you may vote your shares in person. Proxies in the form enclosed,
if duly signed and received in time for voting and not so revoked, will be voted
at the Meeting in accordance with the directions specified therein. If no
directions are specified, proxies will be voted in favor of each of the
proposals and for the nominees for election as directors set forth herein and at
the discretion of the proxyholders on all other matters that may properly come
before the Meeting and any adjournment thereof.
The Board of Directors, upon recommendation by the Audit Committee,
has appointed Arthur Andersen & Co. as independent public accountants to examine
the financial statements of the Company for the year ending March 31, 1996, and
to perform other appropriate accounting services. One or more members of that
firm are expected to be present at the Meeting to respond to appropriate
questions and to make a statement if they so desire.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on July 10, 1995, the record date for the
Meeting, there were 8,318,453 shares of Common Stock outstanding, 36,268 shares
of Series C Preferred outstanding and 16,356 shares of Series D Preferred
outstanding. Each share of Common Stock is entitled to one vote, each share of
Series C Preferred is entitled to 50 votes (representing a total of 1,813,400
votes for the Series C Preferred), and each share of Series D Preferred is
entitled to 113 votes (representing a total of 1,849,855 votes for the Series D
Preferred), on all matters of business to come before the Meeting. There is no
right to cumulative voting as to any matter, including the election of
directors. The Common Stock, the Series C Preferred and the Series D Preferred
will vote together as a single class on all matters expected to come before the
Meeting. Under Delaware law, abstentions are treated as present and entitled
to vote and, therefore, have the effect of a vote against the matter. A broker
nonvote on a matter is considered not entitled to vote on that matter and,
therefore, is not counted in determining whether a matter requiring approval of
a majority of the shares present and entitled to vote has been approved.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth the ownership as of July 1, 1995, of
Common Stock, Series C Preferred and Series D Preferred by each director of the
Company, by each of the Named Officers (as defined under "EXECUTIVE
COMPENSATION" below), by all current executive officers and directors of the
Company as a group, and by all persons known to the Company to be beneficial
owners of more than five percent of the Common Stock, the Series C Preferred or
the Series D Preferred. The Common Stock, the Series C Preferred and the Series
D Preferred are the Company's only outstanding classes of voting securities.
The information set forth in the table as to directors and officers is based
upon information provided to the Company by such persons in connection with the
preparation of this Proxy Statement. Except where otherwise indicated, the
mailing address of each of the stockholders named in the table is: c/o Delphi
Information Systems,Inc., 3501 Algonquin Road, Suite 500, Rolling Meadows,
Illinois 60008.
-2-
<PAGE>
<TABLE>
<CAPTION>
Common stock Series C Preferred Series D Preferred
---------------------------------------------------------------------------------------------
Name and Percent Percent Percent
Position of Percent of of of of Total
Beneficial Owner Ownership(1) Class(2) Ownership(1) Class(2) Ownership(1) Class(2) Vote(2)
- ---------------- ----------- ------- --------- ------- ----------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Coral Partners II, 500,000 6.0 14,603 40.3 13,054 79.8 22.6
a limited
partnership(3)
Richard M. 42,500 * 370 * 1,878 11.5 2.3
Lucas Cancer
Foundation(4)
Bellco -- -- 10,000 27.6 -- -- 4.2
Partnership(5)
Sand Hill -- -- 2,685 7.4 -- -- 1.1
Financial
Company(6)
Schloss Bros., -- -- 2,500 6.9 -- -- 1.0
L.P.(7)
Phil and Brenda 714,280 8.6 -- -- -- -- 6.0
Frandsen(8)
Yuval Almog(9) 524,998 6.3 14,603 40.3 13,054 79.8 22.8
Director
- -----------------------------------
<FN>
(1) Each holder has sole voting and investment power with respect to the
shares listed unless otherwise indicated.
(2) Percentages less than one percent are indicated by an asterisk.
(3) Coral Partners II owns a $1,000,000 principal amount promissory note
convertible into 500,000 shares of Common Stock and also owns 13,054 shares of
Series D Preferred convertible into 1,476,407 shares of Common Stock and 14,603
shares of Series C Preferred convertible into 730,150 shares of Common Stock.
The address of Coral Partners II is 60 South Sixth Street, Suite 3510,
Minneapolis, Minnesota 55402.
(4) Richard M. Lucas Cancer Foundation owns an $85,000 principal amount
promissory note convertible into 42,500 shares of Common Stock and also owns
1,878 shares of Series D Preferred convertible into 212,402 shares of Common
Stock and 370 shares of Series C Preferred convertible into 18,500 shares of
Common Stock. The address of the Richard M. Lucas Cancer Foundation is 3000
Sand Hill Road, Building 3, Suite 210, Menlo Park, CA 94025.
(5) The address of Bellco Partnership is c/o Perry Bell Investments, Inc.,
601 Lakeshore Parkway, Suite 350, Minnetonka, MN 55305.
(6) The address of Sand Hill Financial Company is 3000 Sand Hill Road,
Building 3, Suite 210 Menlo Park, CA 94025.
(7) The address of Schloss Bros., L.P. is c/o Family Investment
Management, 655 Deep Valley Drive, Suite 220, Rolling Hills Estates, CA 90274.
(8) The address of Phil and Brenda Frandsen is 3814 East Mallory, Mesa,
Arizona 85215.
(9) Other than 15,001 shares subject to currently exercisable options
beneficially owned by Mr. Almog, all shares of Common Stock, Series A Preferred
and Series C Preferred are held by Coral Partners II. Mr. Almog is the managing
general partner of Coral Partners II. Mr. Almog disclaims beneficial ownership
of the shares held by Coral Partners II. The address of Mr. Almog is 60 South
Sixth Street, Suite 3510, Minneapolis, Minnesota 55402.
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Larry G. 95,136 * 268 * -- -- *
Gerdes(10)
Director
Richard R. 236,548 2.8 -- -- -- -- 2.0
Janssen(11)
Director
Donald L. 163,869 2.0 530 1.5 -- -- 1.6
Lucas(12)
Director
M. Denis 95,000 1.1 -- -- -- -- *
Connaghan
President and
Chief Executive
Officer, Director
David J. Torrence 13,500 * -- -- -- -- *
Former President
and Chief
Executive Officer,
Former Director
Terance A. 18,766 * -- -- -- -- *
Kinninger
Former Senior
Vice President
Jerry W. Blalock 16,250 * -- -- -- -- *
Former Presi-
dent--Agency
Business Systems
Gustavus J. 354,465 4.3 -- -- -- -- 3.0
Esselsen
Executive Vice
President
Daniel F. Dunne -- * -- -- -- -- *
Former Chief
Financial Officer,
Vice President,
Finance and
Administration
All directors and 1,473,766 17.7 15,771 43.5 14,392 91.3 33.0
executive officers
as a group (8
persons)
- -----------------------------------
<FN>
(10) Includes shares under options exercisable on July 1, 1995, and options
that become exercisable within 60 days thereafter.
(11) The address for Mr. Janssen is 29345 Castlehill Drive, Agoura Hills,
CA 91301.
(12) Includes a $75,000 principal amount promissory note convertible into
37,500 shares of Common Stock. 26,369 shares of Common Stock are beneficially
owned by Mr. Lucas. Additionally, Mr. Lucas owns a 6,25% interest in Sand Hill
Financial Company. The address of Mr. Lucas is 3000 Sand Hill Road, Building 3,
Suite 210, Menlo Park, CA 94025.
</TABLE>
-4-
<PAGE>
ELECTION OF DIRECTORS
Five members of the Board of Directors are proposed to be elected at
the Meeting to serve until the next annual meeting and until their successors
have been elected and qualified. Proxies received will be voted for the
election of the nominees named below as directors, unless authority to do so is
withheld. Each of the nominees is currently a director of the Company and has
served continuously as such since the date indicated in his biography below. In
the event that any nominee is unable or declines to serve as a director at the
time of the Meeting (which is not anticipated), proxies will be voted for the
election of such person or persons as may be designated by the present Board of
Directors. Directors will be elected at the Meeting by a plurality of the votes
cast at the Meeting by the holders of shares represented in person or by proxy.
Set forth below is information as to each nominee for director, including age,
as of July 1, 1995, principal occupation and employment during the past five
years, directorships with other publicly-held companies, and period of service
as a director of the Company.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE FOLLOWING
NOMINEES TO THE BOARD OF DIRECTORS.
YUVAL ALMOG, 45, was elected as a director in September 1991 and was
elected Chairman of the Board on November 30, 1993. Mr. Almog is President of
Coral Group, Inc. and Managing General Partner of its venture capital
partnerships. He joined the Coral Group in 1986 and became Managing Partner in
1991. Mr. Almog is Chairman of the Board of Directors of Tricord Systems, Inc.,
Racotek, Inc. and Computer Aided Service, Inc. and is also a director of
Advanced Telecommunication Services, Systems & Networks and Teltech Resource
Network. Mr. Almog earned a bachelor of arts degree in mathematics and bachelor
of science degree in computer sciences and economics from the University of
Alabama and a master of science degree in management from the Massachusetts
Institute of Technology.
M. DENIS CONNAGHAN, 45, joined the Company in July 1994 as Executive
Vice President and Chief Operating Officer. In August 1994, Mr. Connaghan was
elected President of the Company, and in November 1994, he was elected Chief
Executive Officer. From February 1991 to June 1994, Mr. Connaghan was with IBAX
Healthcare Systems, most recently as Vice President, Technology and Business
Unit General Manager, IBAX was a joint venture between IBM and Baxter in the
development and marketing of computerized solutions to health care providers.
From May 1978 to February 1990, Mr. Connaghan held a number of managerial and
executive positions with Pansophic Systems, Inc., a publicly-held computer
software company.
LARRY G. GERDES, 46, was elected a director of the Company in 1985.
Mr. Gerdes has been Chief Executive Officer of Transcend Services, Inc., which
provides consulting and management services to hospitals in the medical records
area, since 1991. From 1977 to 1990, Mr. Gerdes served in various positions
with HBO & Company, a turnkey supplier of information systems in the health care
field, including Executive Vice President, Vice President of Finance and Chief
Financial Officer and Controller. He is also a director of Transcend Services,
Inc.
-5-
<PAGE>
RICHARD R. JANSSEN, 46, is a co-founder of the Company and served as
its President and Chief Operating Officer from April 1986 to November 1988, as
President and Chief Executive Officer from November 1988 to December 1991, and
as Chairman of the Board from December 1991 to June 30, 1992. He has served as
a director of the Company since its inception in 1976. He is President and
Chief Executive Officer of InfoTouch Corporation.
DONALD L. LUCAS, 65, has been a director of the Company since 1983.
Mr. Lucas was Chairman of the Board from August 1989 through December 1991 and
from June 30, 1992, until November 30, 1993. He has been a venture capitalist
for more than 30 years. Mr. Lucas is also a director of Cadence Design Systems,
Inc., ICOT Corporation, Kahler Realty Corporation, Macromedia, Inc., Oracle
Corporation, Quantum Health Resources, Inc., Raycotek Inc., Transcend Services,
Inc. and Tricord Systems, Inc.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has a standing Audit Committee. The function
of the Audit Committee, which is composed exclusively of directors who are not
employees of the Company, is to meet with the Company's independent auditors,
review audit procedures, receive recommendations and reports from the auditors
and review internal controls. The Audit Committee currently consists of Messrs.
Gerdes (Chairman) and Lucas. The Audit Committee met one time during fiscal
1995.
The Board of Directors has a standing Compensation Committee. The
Compensation Committee, which is composed exclusively of directors who are not
employees of the Company, is responsible for reviewing and recommending to the
full Board of Directors compensation of officers and directors and
administration of the Company's various employee benefit plans. The
Compensation Committee currently consists of Messrs. Almog (Chairman) and
Gerdes. The Compensation Committee met one time during fiscal 1995.
The Board of Directors does not have a nominating committee or a
committee performing similar functions.
The Board of Directors held three meetings during fiscal 1995. No
director attended fewer than 75 percent of the meetings of the Board of
Directors and its committees on which he served.
COMPENSATION OF DIRECTORS
Nonemployee directors participate in the Company's Nonqualified Stock
Option Plan for Directors under which a nonqualified option to purchase 15,000
shares of Common Stock is granted to each director on the date he first becomes
a nonemployee director and an additional option to purchase 5,000 shares is
granted to such director on the first business day of each year thereafter for
so long as he continues to serve as a nonemployee director. Nonemployee
directors do not receive an annual retainer or any other fees for their service
as directors.
-6-
<PAGE>
EXECUTIVE COMPENSATION
Set forth in the table below is information regarding the annual,
long-term and all other compensation for the fiscal years ended March 31, 1993,
1994 and 1995, for the President and Chief Executive Officer, the former
President and Chief Executive Officer who resigned during fiscal 1995, the other
two executive officers who earned more than $100,000 in salary and bonus
compensation during fiscal 1995 and were serving as executive officers of the
Company at the end of fiscal 1995 (one of whom has since resigned), and two
former executive officers who resigned during fiscal 1995 but earned more than
$100,000 in salary and bonus compensation during fiscal 1995 (collectively, the
"Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term
------------------- Compensation
------------
Name and Fiscal Other Annual Stock Options All Other
Present Position Year Salary Bonus Compensation Awards(1) Compensation
---------------- ------ ------ ----- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
M. Denis Connaghan, 1995 $141,104 $-- $-- 300,000 shares $--
President and CEO(2) 1994 -- -- -- -- --
1993 -- -- -- -- --
David J. Torrence, 1995 186,779 -- -- 50,000 shares(4) 54,172(5)
Former President and 1994 220,000 97,500 12,000 25,000 shares(4) --
CEO 1993 195,194 97,500 54,588(3) -- --
Gustavus J. Esselen, 1995 171,656 -- -- -- --
Executive Vice 1994 171,500 42,750 -- -- --
President 1993 171,500 42,750 -- -- --
Terance A. Kinninger, 1995 130,406 -- -- 67,000 shares(6) --
Former Senior Vice 1994 130,000 30,000 -- -- --
President 1993 130,000 30,000 -- 5,000 shares(6) --
Jerry W. Blalock, 1995 129,467 -- -- 65,000 shares(8) 30,769(9)
Former President, 1994 145,000 50,000 -- 25,000 shares(8) --
Agency Business 1993 130,000 50,000 57,702(7) 40,000 shares(8) --
Systems
Daniel F. Dunne, 1995 101,402 40,000 shares(11) 19,999(12)
Former Chief 1994 130,000 -- -- 40,000 shares(11) --
Financial Officer, Vice 1993 10,833 -- -- -- --
President, Finance and
Administration(10)
- ---------------------------
<FN>
(1) Stock option awards do not include options granted under the Company's 1989
Stock Purchase Plan in which Messrs. Torrence, Kinninger, Blalock and Dunne
participated.
(2) Mr. Connaghan joined the Company effective July 13, 1994.
(3)Includes reimbursement of relocation expenses totalling $47,714.
(4) In fiscal 1995, Mr. Torrence was granted an option to purchase 50,000 shares
of Common Stock in exchange for the surrender and cancellation of options
previously granted to him, including the option to purchase 25,000 shares of
Common Stock that was granted to him in fiscal 1994. See "Report on Repricing
of Options" below.
(5) Represents severance payments made to Mr. Torrence in connection with the
termination of his employment with the Company.
(6) In fiscal 1995, Mr. Kinninger was granted an option to purchase 67,000
shares of Common Stock in exchange for the surrender and cancellation of options
previously granted to him, including the option to purchase 5,000 shares of
Common Stock that was granted to him in fiscal 1993. See "Report on Repricing
of Options" below.
(7) Represents reimbursement of relocation expenses.
-7-
<PAGE>
(8) In fiscal 1995, Mr. Blalock was granted an option to purchase 65,000 shares
of Common Stock in exchange for the surrender and cancellation of the options to
purchase 40,000 shares of Common Stock and 25,000 shares of Common Stock that
were granted to him in fiscal 1993 and fiscal 1994, respectively.
(9) Represents severance payments made to Mr. Blalock in connection with the
termination of his employment with the Company.
(10) Mr. Dunne joined the Company effective March 1, 1993.
(11) In fiscal 1995, Mr. Dunne was granted an option to purchase 40,000 shares
of Common Stock in exchange for the surrender and cancellation of the option to
purchase 40,000 shares of Common Stock that was granted to him in fiscal 1994.
See "Report on Option Repricing" below.
(12) Represents severance payments made to Mr. Dunne in connection with the
termination of his employment with the Company.
</TABLE>
OPTION GRANTS
Set forth in the table below is information with respect to stock
options granted to the Named Officers during the fiscal year ended
March 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value at
- -------------------------------------------------------------------- Assumed Annual Rates of Stock Price
Appreciation for Option Term
-----------------------------------
Percent of
Options Total Options
Granted Granted to
(Number of Employees in Exercise or Expiration
Name Shares) Fiscal Year Base Price Date 5% 10%
---- ------ ----------- ---------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
M. Denis 300,000(1) 24% 1.00 10-05-04 $188,668 $478,123
Connaghan
David J. 50,000(2) 4% 1.00 07-01-97 31,444 79,687
Torrence
Gustavus J. -- -- -- -- -- --
Esselen
Terance A. 67,000(1) 5% 1.00 10-05-04 42,136 106,708
Kinninger
Jerry W. 65,000(1) 5% 1.00 10-05-04 40,878 103,593
Blalock
Daniel F. 40,000(1) 3% 1.00 10-05-04 25,156 63,750
Dunne
<FN>
(1) Options became exercisable to the extent of 25 percent of the shares covered
thereby on April 6, 1995 (six months from the date of grant), and become
exercisable to the extent of an additional 25 percent of the shares covered
thereby on April 6, 1996, April 6, 1997, and April 6, 1998.
(2) Option became exercisable to the extent of 25 percent of the shares covered
thereby on June 1, 1995, and becomes exercisable to the extent of an additional
25 percent of the shares covered thereby on January 1, 1996, June 1, 1996, and
January 1, 1997.
</TABLE>
-8-
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Set forth in the table below is information with respect to
unexercised options to purchase Common Stock of the Company that were held by
the Named Officers as of the end of fiscal 1995. None of the Named Officers
exercised any stock options during fiscal 1995.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised Options In-the-Money Options
at FY-End at FY-End
---------------------------------------------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. Denis -- -- 0 300,000 -- $56,400
Connaghan
David J. -- -- 0 50,000 -- 9,400
Torrence
Gustavus J. -- -- -- -- -- --
Esselen
Terance A. -- -- 0 67,000 -- 12,596
Kinninger
Jerry W. -- -- 0 65,000 -- 12,220
Blalock
Daniel F. -- -- 0 40,000 -- 7,520
Dunne
</TABLE>
REPORT ON REPRICING OF OPTIONS
On October 6, 1994, the Compensation Committee repriced options to
purchase an aggregate of 50,000 shares of Common Stock previously granted to Mr.
Torrence under the Company's 1983 Stock Incentive Plan (the "1983 Plan"),
options to purchase an aggregate of 67,000 shares of Common Stock previously
granted to Mr. Kinninger under the 1983 Plan, options to purchase an aggregate
of 65,000 shares of Common Stock previously granted to Mr. Blalock under the
1983 Plan, and options to purchase an aggregate of 40,000 shares of Common Stock
previously granted to Mr. Dunne under the 1983 Plan. The repricing was effected
by granting new options under the 1983 Plan in exchange for the surrender and
cancellation of the outstanding options. The exercise prices of the options
that were surrendered and cancelled ranged from $5.50 to $6.875 per share, and
the exercise price of the new options that were granted in exchange was $1.00
per share, which was the closing price of the Common Stock on the NASDAQ Market
on October 6, 1994.
Mr. Torrence's options were repriced pursuant to his Severance
Compensation Agreement, which is more fully described under "Employment and
Severance Agreements with Named Officers" below, as an inducement to him to
continue to provide consulting
-9-
<PAGE>
services to the Company for a period of two years following his resignation from
employment with the Company effective December 31, 1994. Messrs. Kinninger's,
Blalock's and Dunne's options were repriced for purposes of providing them with
continued incentive to remain in the Company's employ and improve its
profitability and the performance of the price of the Common Stock. The
Compensation Committee believes that stock options are a most desirable means of
providing such incentive, because their value to the optionee is directly linked
to increasing the value of the Common Stock to all holders thereof. The
Compensation Committee further believes that with the market value of the Common
Stock at $1.00 per share on October 6, 1994, the options previously held by
Messrs. Torrence, Kinninger, Blalock and Dunne were so far out of the money that
they no longer provided any such meaningful incentive.
Respectfully submitted,
Yuval Almog
Larry G. Gerdes
Set forth in the table below is information with respect to the
repricing on October 6, 1994, of options held by Messrs. Torrence, Kinninger,
Blalock and Dunne, which are the only stock options or stock appreciation rights
that the Company has ever repriced.
REPRICING OF STOCK OPTIONS ON OCTOBER 6, 1994
<TABLE>
<CAPTION>
Number of Length of
Securities Original Term
Underlying Market Price of Exercise Price at Remaining at
Options Stock at Time Time of Date of
Repriced or of Repricing or Repricing or New Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David J. 10-06-94 50,000 $1.00 $6.875 $1.00 86 months
Torrence
Terance A. 10-06-94 52,000 1.00 5.75 1.00 72 months
Kinninger 10-06-94 10,000 1.00 6.75 1.00 83 months
10-06-94 5,000 1.00 6.75 1.00 92 months
Jerry W. 10-06-94 40,000 1.00 6.75 1.00 92 months
Blalock 10-06-94 25,000 1.00 5.50 1.00 113 months
Daniel F. 10-06-94 40,000 1.00 5.50 1.00 103 months
Dunne
</TABLE>
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH NAMED OFFICERS
Mr. Connaghan is employed pursuant to a letter agreement dated
June 17, 1994, as amended by a letter agreement dated July 7, 1994, under which
he is to receive an annual salary of not less than $200,000, with an annual
bonus target equal to 45 percent of annual base salary. The bonus is to be
earned upon Mr. Connaghan's achievement of all planned objectives agreed upon by
him and the Board of Directors. Pursuant to the letter agreement, Mr. Connaghan
was granted an option to purchase 300,000 shares of Common Stock at an exercise
price of $1.00 per share, which was the closing price of the Common Stock on the
NASDAQ Market on the date of grant, October 6, 1994. The option became
exercisable to the extent of 25 percent of the shares covered thereby after six
months from the date of grant and will become exercisable to the extent of an
additional 25 percent of
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<PAGE>
the shares covered thereby after 18 months from the date of grant, 30 months
from the date of grant and 42 months from the date of grant. Pursuant to the
letter agreement, Mr. Connaghan is to receive up to 12 months of salary
continuance if his employment is terminated by the Company without cause prior
to December 31, 1995.
Mr. Torrence entered into an employment agreement at the time he
joined the Company that provided for his employment as President and Chief
Executive Officer until June 30, 1993, and continuing thereafter until Mr.
Torrence's resignation or his termination by the Board of Directors. The
agreement provided for base salary of $195,000 per year, a one-time bonus of
$50,000, which was paid on March 31, 1992, and incentive compensation for the
fiscal year ending March 31, 1993, based on the Company's performance in
relation to its annual plan. Such incentive compensation was paid in the amount
of $97,500. Incentive compensation for subsequent years was to be established by
the Compensation Committee. Mr. Torrence's salary and benefits are to be
continued for up to one year following the termination of his employment by the
Company without cause, which includes resignation after reduction of duties.
Mr. Torrence resigned from his employment with the Company effective
December 31, 1994, following a reduction of his duties.
Mr. Torrence entered into a Severance Compensation Agreement with the
Company dated as of October 19, 1994, in connection with his resignation from
employment with the Company effective December 31, 1994. Pursuant to his
severance agreement, Mr. Torrence is to be paid $19,562 per month from January 1
through December 31, 1995, and remains eligible to participate in the Company's
medical, life insurance and long-term disability insurance plans at the
Company's expense until December 31, 1995. The agreement also provides that Mr.
Torrence be granted an option to purchase 50,000 shares of Common Stock under
the 1983 Plan, as described under "Report on Repricing of Options" above, which
became exercisable to the extent of 25 percent of the shares covered thereby on
June 1, 1995, and will become exercisable with respect to an additional 25
percent of the shares covered thereby on each of January 1, 1996, June 1, 1996,
and January 1, 1997, and will remain exercisable until July 1, 1997. In
consideration of the foregoing, Mr. Torrence agreed to provide consulting
services to the Company for up to 20 hours per month from January 1, 1995,
through December 31, 1996, and agreed not to compete during that period with the
Company and its subsidiaries in any business in which the Company and its
subsidiaries are currently engaged in any geographical area where the Company
and its subsidiaries are actively competing in any such business.
Mr. Esselen entered into an employment agreement with a subsidiary of
the Company in conjunction with the Company's acquisition of McCracken Computer,
Inc. in January 1991. This agreement provides that Mr. Esselen will serve in a
senior executive capacity for a term ending July 31, 1993, subject to renewal.
Mr. Esselen's annual salary is established at a minimum of $155,000 plus cost-
of-living increases. Upon termination of his employment without cause (which
includes resignation by reason of reduction of responsibilities, hindrance in
performance of duties, or breach by the Company), Mr. Esselen would be entitled
to continuation of his salary for a maximum of nine months.
Mr. Kinninger was employed pursuant to an agreement under which he was
to receive a starting base salary of $120,000 per year and incentive
compensation based upon the Company's performance in relation to its annual
plan. Such bonus was targeted at 25 percent of base salary and could increase
to a maximum of 30 percent of base salary. Had the Company been acquired, Mr.
Kinninger would have been guaranteed one year of
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<PAGE>
employment with a similar position and level of compensation or one year of
severance if no similar position was offered. Mr. Kinninger resigned from his
employment with the Company effective June 1, 1995.
The Company entered into an agreement with Mr. Janssen providing for
continuation of his salary and certain benefits until December 31, 1993,
following termination of his status as an executive officer of the Company. Mr.
Janssen has agreed to provide consulting services and to refrain from engaging
in competition with the Company for a specified period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Almog and
Gerdes. None of the executive officers of the Company serves on the board of
directors of another company in any instance where an executive officer of the
other company serves on the Board of Directors.
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors (the "Committee")
is pleased to present its report on executive compensation. The Committee
reviews and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers and key employees of the Company
and grants options to purchase the Company's Common Stock. This report
documents the components of the Company's executive officer compensation
programs and describes the bases upon which compensation is determined by the
Committee with respect to the executive officers of the Company, including the
executive officers that are named in the Summary Compensation Table in this
proxy statement (the "Named Executives").
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION PHILOSOPHY. The compensation philosophy of the Company
is to endeavor to directly link executive compensation to continuous
improvements in corporate performance and increases in stockholder value. The
Committee has adopted the following objectives as guidelines for compensation
decisions:
- Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
- Be willing to compensate executive officers in recognition of
superior individual performance, new responsibilities or new
positions within the Company.
- Take into account historical levels of executive compensation and
the overall competitiveness of the market for high quality
executive talent.
-12-
<PAGE>
- Implement a balance between short- and long-term compensation to
complement the Company's annual and long-term business objectives
and strategy and encourage executive performance in furtherance
of the fulfillment of those objectives.
- Provide variable compensation opportunities based on the
performance of the Company, encourage stock ownership by
executives and align executive remuneration with the interests of
stockholders.
COMPENSATION PROGRAM COMPONENTS. The Committee regularly reviews the
Company's compensation program to ensure that pay levels and incentive
opportunities are competitive with the market and reflect the performance of the
Company. The particular elements of the compensation program for executive
officers are further explained below.
BASE SALARY. The Company's base pay levels are largely determined by
evaluating the responsibilities of the position held and the experience of
the individual and by comparing the salary scale with companies of similar
size and complexity. Actual base salaries are kept within a competitive
salary range for each position that is established through job evaluation
and market comparisons and approved by the Committee as reasonable and
necessary.
ANNUAL INCENTIVES. The Company also regularly awards cash bonuses to
certain salaried employees (including the Named Executives) of the Company.
Bonuses are based on various factors, including prior year profitability,
management development and the procurement and assimilation of
acquisitions. The Company did not award a bonus to any Named Executive for
fiscal 1995.
STOCK OPTION PROGRAM. The Committee strongly believes that by
providing those persons who have substantial responsibility over the
management and growth of the Company with an opportunity to increase their
ownership of the Company's stock, the interests of stockholders and
executives will be closely aligned. Therefore, the Company's key employees
(including the Named Executives) are eligible to receive either incentive
stock options or nonqualified stock options as the Committee may determine
from time to time, giving them the right to purchase shares of the
Company's Common Stock at an exercise price equal to 100% of the fair
market value of the Common Stock at the date of grant. The number of stock
options granted to executive officers is based on competitive practices.
PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATION. The compensation
of the President and CEO since he joined the Company in July 1994 has been
chiefly determined under his employment contract described elsewhere in this
proxy statement. His cash bonus is determined by the Committee.
The factors that currently predominate in the evaluation of the
President and CEO are his performance in relation to (a) strengthening the
Company's management team, (b) upgrading the Company's products and broadening
its product lines, and (c) installing the disciplines necessary to achieve
consistent profitability.
SUMMARY. After its review of all existing programs, the Committee
continues
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<PAGE>
to believe that the total compensation program for executives of the Company is
focused on increasing values for stockholders and enhancing corporate
performance. The Committee currently believes that the compensation of
executive officers is properly tied to stock appreciation through the Company's
1983 Stock Incentive Plan. The Committee believes that executive compensation
levels at the Company are competitive with the compensation programs provided by
other corporations with which the Company competes. The foregoing report has
been approved by all members of the Committee.
Respectfully submitted,
Yuval Almog
Larry G. Gerdes
PERFORMANCE GRAPH
Rules promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934 (the "Exchange Act") require
that the Company include in this proxy statement a line-graph presentation
comparing cumulative stockholder returns for the last five fiscal years with the
NASDAQ National Market System stock index and either a nationally recognized
industry index or an index of peer group companies selected by the Company. The
Company chose the NASDAQ Computer & Data Processing Index for purposes of this
comparison. The following graph assumes the investment of $100 on March 31,
1990, and the reinvestment of dividends (rounded to the nearest dollar).
[GRAPH]
<TABLE>
<CAPTION>
NASDAQ U.S. NASDAQ COMPUTER AND DATA "DELPHI INFORMATION SYSTEMS, INC.
MARKET INDEX PROCESSING SERVICES INDEX COMMON STOCK"
<S> <C> <C> <C>
3/31/90 100.00 100.00 100.00
3/31/91 114.20 134.19 119.15
3/31/92 145.58 198.21 121.28
3/31/93 167.39 221.56 123.40
3/31/94 180.71 227.02 68.08
3/31/95 200.90 306.74 20.21
</TABLE>
-14-
<PAGE>
CERTAIN INTERESTS AND TRANSACTIONS
The Company issued convertible promissory notes in the aggregate
principal amount of $1,375,000 as of March 15, 1994, and issued an additional
$125,000 in the first quarter of fiscal 1995. These notes, which are due
March 15, 1998, and bear interest at the prime rate, are convertible at the
option of the holder into shares of Common Stock at a per share conversion price
of $2.00, subject to certain anti-dilution provisions, for a total of 750,000
shares of Common Stock. A total of $1,165,000 of the $1,375,000 promissory
notes outstanding were issued to related parties, including $1,000,000 to Coral
Group, of which Mr. Almog is the managing partner, $50,000 to Mr. Gerdes, and
$115,000 to foundations and trusts associated with, and family members of, Mr.
Lucas.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who beneficially own more than ten percent of a registered
class of the Company's equity securities to file reports of securities ownership
and changes in such ownership with the SEC. Officers, directors and more-than-
ten-percent beneficial owners also are required by rules promulgated by the SEC
to furnish the Company with copies of all Section 16(a) reports they file.
Based solely upon a review of the copies of such forms furnished to
the Company or written representations that no Form 5 filings were required, the
Company believes that during the period from April 1, 1994, through March 31,
1995, its officers, directors and more-than-ten-percent beneficial owners filed
in a timely manner all reports required to be filed pursuant to Section 16(a),
except that: Mr. Connaghan failed to file his initial Section 16(a) report on
Form 3 in a timely manner; Mr. Gerdes failed to file a Form 5 report with
respect to one transaction in a timely manner; Mr. Janssen failed to file a Form
5 report with respect to one transaction in a timely manner; Mr. Torrence failed
to file a Form 4 report with respect to one transaction in a timely manner and
failed to file a Form 5 report with respect to one transaction in a timely
manner; and Mr. Dunne failed to file a Form 5 report with respect to two
transactions in a timely manner.
AMENDMENT OF 1989 STOCK PURCHASE PLAN
On June 8, 1989, the Board of Directors adopted, subject to
stockholder approval, the Company's 1989 Stock Purchase Plan (the "1989 Plan")
authorizing the granting of options to purchase up to 200,000 shares of Common
Stock. The 1989 Plan was initially approved by the stockholders of the Company
on August 18, 1989. The 1989 Plan is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code").
The 1989 Plan is intended to advance the interests of the Company and
its stockholders by strengthening the Company's ability to attract and retain
employees who have the training, experience and ability to enhance the
profitability of the Company and to reward employees of the Company and its
subsidiaries upon whose judgment, effort and initiative the successful conduct
and development of their business largely depend.
-15-
<PAGE>
PROPOSED AMENDMENTS
At the Meeting, the stockholders are being asked to approve amendments
to the 1989 Plan that were adopted by the Board of Directors on July 14, 1995,
(i) increasing the number of shares of Common Stock authorized to be issued and
sold thereunder from a total of 200,000 shares to a total of 1,800,000 shares
and (ii) providing that the term of options granted thereunder on August 1,
1994, may be extended from one year to not more than 15 months, as determined by
the Board of Directors in its sole discretion. The 1989 Plan, as so amended, is
attached to this Proxy Statement as Exhibit A, and the following description of
the 1989 Plan is qualified in its entirety by reference thereto.
The Board of Directors has historically granted options under the 1989
Plan for a term of one year, which is the maximum term permitted under the 1989
Plan. At the beginning of the 1994-1995 plan year (August 1, 1994, to July 31,
1995), there were only 142,942 shares of Common Stock still available for
issuance and sale under the 1989 Plan. Employees elected to be granted options
to purchase an aggregate of 405,164 shares under the 1989 Plan for the 1994-1995
plan year. Consequently, there are not sufficient shares available under the
Plan to permit employees to exercise their options for the maximum number of
shares that each is eligible to purchase and has elected to purchase.
The Board of Directors has amended the 1989 Plan to permit the term of
options granted thereunder on August 1, 1994, to be extended from one year to
not more than 15 months (I.E., the options would remain exercisable beyond July
31, 1995, until not later than October 31, 1995), at the discretion of the Board
of Directors, so as to permit employees to exercise those options for the
maximum number of shares that each is eligible to purchase and has elected to
purchase, provided that the stockholders approve the proposed amendments to the
1989 Plan at the Meeting. In addition to providing sufficient shares to permit
employees to exercise their options for the maximum number of shares that each
is eligible to purchase and has elected to purchase for the 1994-1995 plan year,
the Board of Directors believes that the proposed amendments would provide for
sufficient shares under the 1989 Plan to permit the continued operation thereof
for another three to five years.
DESCRIPTION AND TERMS OF PLAN
All employees of the Company and its subsidiaries, except for certain
part-time employees, are eligible to elect to be granted options under the 1989
Plan. The purchase price of optioned stock is the lesser of (i) 85 percent of
the fair market value of the Common Stock on the date of grant or (ii) 85
percent of its fair market value on the date of exercise of the option. The
market value of the Common Stock on June 30, 1995, was $2.25 per share, which
was the closing price of the Common Stock on the NASDAQ Market on that date.
Options granted under the 1989 Plan may have terms of any duration from three
months to one year, except that the term of options granted thereunder on August
1, 1994, may be extended from one year to not more than 15 months, as determined
by the Board of Directors in its sole discretion, and provided that all options
granted to employees pursuant to any particular offering under the 1989 Plan
must be for the same term. No options may be granted under the 1989 Plan more
than 10 years after the date of adoption of the 1989 Plan by the Board of
Directors, and no option granted under the 1989 Plan may be transferred by the
optionee.
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<PAGE>
Employees may elect to have up to 10 percent of their compensation
withheld from payroll and applied to the purchase of Common Stock under the 1989
Plan. The maximum number of shares that an employee may elect to be granted an
option to purchase is that number 85 percent of the fair market value of which
on the date of grant is equal to 10 percent of his compensation. Certain
additional limitations imposed by Section 423 of the Code also apply, including
the limitation that the right of any optionee to purchase stock under all
employee stock purchase plans of the Company and its subsidiaries may not accrue
at a rate that exceeds $25,000 of fair market value (determined at the time of
grant) for each calendar year in which the option is outstanding at any time.
The maximum number of shares of Common Stock that could have been subject to
options granted under the 1989 Plan to the Named Officers and certain groups
during fiscal 1995 is as follows: Mr. Connaghan, 17,391 shares; Mr. Torrence,
19,130 shares; Mr. Esselen, 14,913 shares; Mr. Kinninger, 11,304 shares; Mr.
Blalock, 12,609 shares; Mr. Dunne, 11,304 shares; all current executive officers
as a group, 96,901 shares; all current directors who are not executive officers
as a group, 0 shares; each nominee for election as a director other than Mr.
Connaghan, 0 shares; each associate of a director, executive officer or nominee
for election as a director, 0 shares.
The 1989 Plan is to be administered by the Board of Directors,
provided that the Board of Directors may delegate its authority to administer
the 1989 Plan to a committee of not less than three directors. The Board of
Directors has authority, among other things, to make adjustments in the option
price and the number and kind of shares covered by options granted under the
1989 Plan, as may be equitably required as a result of stock splits or other
changes affecting the Common Stock.
The 1989 Plan may be amended from time to time by the Board of
Directors, but without further approval by the stockholders no such amendment
shall (i) increase the number of shares of Common Stock covered by the 1989 Plan
(except for adjustments as provided above), (ii) permit the granting of options
under the 1989 Plan to persons other than employees of the Company or any
subsidiary, (iii) cause options issued under the 1989 Plan to fail to meet the
requirements of Section 423 of the Code or (iv) cause Rule 16b-3 under the
Exchange Act (or any successor rule to the same effect) or cease to be
applicable to the 1989 Plan.
PLAN BENEFITS
Set forth in the table below are the maximum number of shares of
Common Stock that each of the Named Officers (except Messrs. Torrence,
Kinninger, Blalock and Dunne who are no longer employed by the Company), all
current executive officers of the Company as a group, all current directors who
are not executive officers of the Company as a group, and all current employees
(including all current officers who are not executive officers) of the Company
as a group, are eligible to acquire pursuant to options that they may elect to
be granted under the 1989 Plan during fiscal 1996, assuming that the option
price per share will be $1.9125 (which is 85 percent of $2.25, the closing price
of the Common Stock on the NASDAQ Market on June 30, 1995).
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<PAGE>
Maximum Number of Shares
Name and Position or Group That May Be Acquired
-------------------------- --------------------
M. Denis Connaghan, President 10,471
and Chief Executive Officer
Gustavus J. Esselsen, Executive 8,967
Vice President
All Current Executive Officers 30,896
as a Group
All Current Directors Who Are 0
Not Executive Officers as
a Group
All Current Employees (Including 819,988
All Current Officers Who Are
Not Executive Officers) as a
Group
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences applicable to employees and the
Company with respect to options granted under the 1989 Plan are, in general,
determined under Sections 421 and 423 of the Code. An option granted under the
1989 Plan will not result in any taxable income to the optionee when it is
granted or exercised. If the stock acquired upon exercise is held more than two
years from the date of grant of the option and more than one year from the date
of the transfer of the stock to the optionee pursuant to the exercise, the
optionee will be taxed on the sale of such stock at long-term capital gains
rates (currently taxed at the same rate as ordinary income up to an effective
rate of 28% with a marginal rate of 33%), except to the extent that the optionee
realizes ordinary income under Section 423(c) of the Code in an amount equal to
the lesser of (i) the excess of the fair market value of the stock at the time
of its disposition over the option price paid by the optionee or (ii) the excess
of the fair market value of the stock at the time the option was granted over
the option price, computed as if the option had been exercised at that time.
If an employee should die owning stock acquired under the 1989 Plan,
he will be deemed to have disposed of his shares on the date of his death and
will realize ordinary income to the extent of the ordinary income component
described in the preceding paragraph, but no capital gain will result until the
time of a subsequent sale of the stock, when the amount of gain will typically
be equal to the excess of the selling price over the fair market value of the
stock on the date of his death or the alternative valuation date for federal
estate tax purposes.
If stock acquired under the 1989 Plan is sold, exchanged or otherwise
disposed of before the end of the required holding periods described above, the
optionee will usually realize ordinary income at the time of disposition equal
to the excess of the amount received on disposition over the option price paid
by the optionee.
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<PAGE>
To the extent that an employee of the Company or any subsidiary
realizes ordinary income in the circumstances described in the preceding
paragraph, the Company or its subsidiary would be entitled to a corresponding
deduction in the year in which the disposition occurs, provided, among other
things, that such income meets the test of reasonableness and is an ordinary and
necessary business expense. Otherwise, no deduction is allowable to the Company
or any subsidiary with respect to options granted under the 1989 Plan.
RECOMMENDATION AND VOTE
Approval of the amendments to the 1989 Plan requires the affirmative
vote of a majority of the shares represented in person or by proxy at the
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE COMPANY'S 1989 STOCK PURCHASE PLAN.
OTHER BUSINESS
At the date of this Proxy Statement, the Company has no knowledge of
any business other than that described above that will be presented at the
Meeting. If any other business should come before the Meeting, the proxies will
be voted in the discretion of the proxy holders.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the Company's
next annual meeting of stockholders must be received by the Company at its
principal executive offices on or before March 31, 1996, to be included in the
Company's proxy statement and form of proxy relating to that meeting.
By Order of the Board of Directors,
/s/ John R. Sprieser
John R. Sprieser,
Secretary
July 28, 1995
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<PAGE>
EXHIBIT A
DELPHI INFORMATION SYSTEMS, INC.
1989 STOCK PURCHASE PLAN
(AS AMENDED EFFECTIVE JULY 14, 1995)
Section 1. PURPOSE
This Employee Stock Purchase Plan (the "Plan") is intended to advance the
interests of Delphi Information Systems, Inc. (the "Company") and its
stockholders by strengthening the Company's ability to attract and retain
employees who have training, experience and ability to enhance the profitability
of the Company and to reward employees of the Company and its subsidiaries upon
whose judgment, initiative and effort the successful conduct and development of
their business largely depend. It is further intended that options issued
pursuant to this Plan shall constitute options issued pursuant to an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").
Section 2. ADMINISTRATION
The Plan shall be administered by the Board of Directors, which may from
time to time delegate all or any part of its authority under the Plan to a
committee of not less than three Directors appointed by the Board of Directors.
The members of the committee shall be "disinterested persons" within the meaning
of that term in Rule 16b-3 of the Securities and Exchange Commission (or any
successor rule to the same effect). To the extent of such delegation,
references in the Plan to the Board of Directors shall also refer to the
committee. The majority of the committee shall constitute a quorum, and the
action of a majority of the members of the committee present at any meeting at
which a quorum is present, or acts unanimously approved in writing, shall be the
acts of the committee.
The interpretation and construction by the Board of Directors of any
provision of the Plan or of any option granted under it shall be final. The
Board of Directors may establish any policies or procedures which in the
discretion of the Board are relevant to the operation and administration of the
Plan and may adopt rules for the administration of the Plan. No member of the
Board of Directors or any committee to which it may have delegated its authority
under the Plan shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under it.
Section 3. ELIGIBILITY
All employees (as defined below) of the Company or of any subsidiary of the
Company who are employed by the Company or by a subsidiary of the Company for 1
month or more on the date of any grant of options pursuant to the Plan shall be
offered options under the Plan to purchase the Company's Common Stock, par value
$0.10 per share ("Common Stock"), except that no employee shall be granted an
option under the Plan if, immediately after the option was granted, such
employee would own stock processing 5 percent or more of the total combined
voting power or value of all classes of stock of the Company or of any
subsidiary of the Company. For purposes of this paragraph, stock ownership of
an individual shall be determined under the rules of Section 425(d) of the Code,
and stock which the employee may purchase under outstanding options shall be
treated as owned by the employee.
<PAGE>
For purposes of the Plan, the term "employee" shall not include an employee
whose customary employment is less than 20 hours per week. For purposes of the
Plan, the term "subsidiary" shall mean any corporation which the Company
controls, through one or more intermediaries, by ownership or 50 percent or more
of such corporation's outstanding voting securities.
Section 4. STOCK
The stock subject to the options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. The aggregate number of
shares which may be purchased under the Plan shall not exceed 1,800,000 shares
of Common Stock. In the event that the number of shares subject to options to
be granted pursuant to any offering under the Plan exceeds the number of shares
available to be purchased under the Plan, the shares available to be purchased
shall be allocated on a pro rata basis among the options to be granted.
Section 5. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be evidenced by agreements in
such form as the Board of Directors shall from time to time approve, provided
that all employees granted such options shall have the same rights and
privileges (except as otherwise provided in subparagraphs (a) and (e) below),
and provided further that such options shall comply with and be subject to the
following terms and conditions;
(a) NUMBER OF SHARES. Each option granted hereunder shall state the
number of shares to which it pertains, which number shall be specified, prior to
the date of granting of such option, by the employee to whom such option is
offered, in accordance with uniform policies and procedures established by the
Board of Directors; provided, however, that the number of shares to which any
option may pertain shall not exceed a maximum number to be computed in
accordance with the following formula:
An eligible employee may elect to be granted an option to purchase up
to the number of shares, 85 percent of the fair market value of which
on the date of grant of the option is equal to 10 percent of the basic
compensation (as hereinafter defined) earned by the employee. If the
number of shares computed in accordance with the foregoing includes a
fraction, such number shall be rounded down to the next whole number.
For purposes of this paragraph, the term "basic compensation" is the
yearly cash compensation of the employee (assuming equal payments over
a 12-month period) excluding, without limitation, any bonuses or
awards under the Company's management incentive program or its Cash
Option Profit Sharing Plan, but including any quotas set in connection
with any sales incentive compensation plan, to be determined as of the
pay period immediately preceding a date 30 days prior to the date of
grant of such option.
Notwithstanding the above, the Board of Directors shall, in its discretion,
have the authority to exclude, with respect to all employees, any other form of
compensation from the definition of "basic compensation," provided such
exclusion shall comply with Section 423(b)(5) of the Code. In addition, the
Board of Directors shall, in determining the number of shares subject to an
option, have the authority, prior to the date of grant of such option, to adjust
the percentage to a percentage from 1 percent to 10 percent, both inclusive.
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Further, the Board of Directors may, in its discretion, prior to any offering
pursuant to the Plan, set a maximum aggregate number of shares (subject to
Section 4 of the Plan) which may be purchased under options granted pursuant to
the offering. In the event employees elect to purchase shares in excess of such
maximum number, the number of shares purchased by employees under each such
option shall be reduced on a pro rata basis.
(b) OPTION PRICE. Each option shall state the option price, which shall be
an amount equal to 85 percent of the fair market value of the shares of Common
Stock on the date of the granting of the option or 85 percent of the fair market
value of such stock on the exercise date (as defined in Section 5(d) of the
Plan), whichever is less. During such time as the Common Stock is quoted as a
National Market Issue on the National Association of Securities Dealers
Automated Quotation System, the fair market value per share shall be the closing
price of the Common Stock as quoted by NASDAQ on the last trading day before the
day the option is granted. If the Common Stock is listed on a national
securities exchange or exchanges, such fair market value shall be the highest
closing price of the Common Stock on such securities exchange or exchanges on
the day the option is granted or, if no sale of the Common Stock shall have been
made on any securities exchange on that day, on the next preceding day on which
there was a sale of such stock. Subject to the foregoing, the Board of
Directors shall have full authority and discretion in fixing the option price.
(c) MEDIUM AND TIME OF PAYMENT. The option price shall be payable in full
in United States dollars, pursuant to uniform policies and procedures
established by the Board of Directors, not later than the exercise date (as
defined in Section 5(d) of the Plan) of such option. The funds required for
such payment shall be derived by regular withholding from an employee's
compensation in approximately equal installments over the term of the option.
Any funds withheld from an employee's compensation in excess of the actual
option price shall be refunded to the employee. No interest shall accrue on the
employee funds held by the Company. An employee shall have the right at any
time to terminate the withholding from his compensation of amounts to be paid
toward the option price, or to decrease the amount so withheld, by submitting a
written request to the Company. An employee shall have the right to cancel his
option in whole or in part and to obtain a refund of amounts withheld from his
compensation by the Company by submitting a written request to the Company which
must be received by the Company prior to the exercise date. Such amounts shall
thereafter be paid to the employee within a reasonable period of time. No
interest shall accrue on such amounts.
(d) TERM OF OPTION. The date on which the Common Stock to which an option
pertains is to be purchased by the optionee (the "exercise date") shall be the
last day of the term of the option, except as otherwise provided in the Plan.
The Board of Directors shall establish the term of each option granted
hereunder, which shall not be more than 1 year or less than 3 months from the
date of grant; PROVIDED, HOWEVER, (i) that options granted hereunder on August
1, 1994, may have a term of up to 15 months from the date of grant, as
determined by the Board of Directors in its sole discretion, and (ii) that all
options granted to employees pursuant to any offering hereunder must be for the
same term. Except to the extent an option has been cancelled by the optionee
prior to the exercise date, it shall be deemed automatically exercised on the
exercise date to the extent of payments received from the optionee.
(e) ACCRUAL LIMITATION. No option shall permit the rights of an optionee
to purchase stock under all "employee stock purchase plans" (as defined in the
Code) of the Company
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to accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined at the time the option is granted) for each calendar year in which
the option is outstanding at any time. For purposes of this Section 5(e) -- (i)
the right to purchase stock under an option accrues when the option (or any
portion thereof) first becomes exercisable during the calendar year, (ii) the
right to purchase stock under an option accrues at the rate provided in the
option, but in no case may such rate exceed $25,000 of fair market value of such
stock (determined at the time such option is granted) for any one calendar year
and (iii) a right to purchase stock which has accrued under an option granted
pursuant to the Plan may not be carried over to any other option.
(f) TERMINATION OF EMPLOYMENT. In the event that an optionee shall cease
to be employed by the Company or any subsidiary of the Company for any reason
(including death) before the exercise date, such optionee's right to have his
option exercised shall be terminated. Any amounts withheld from the optionee's
compensation for purposes of the Plan shall be refunded. No interest shall
accrue on such amount.
(g) TRANSFER OF OPTION. No option shall be transferrable by an optionee.
(h) ADJUSTMENTS. The Board of Directors may make or provide for such
adjustments in the option price and in the number or kind of shares of the
Common Stock or other securities covered by outstanding options as the Board of
Directors in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of optionees
that would otherwise result from (i) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (ii) any merger, consolidation, separation, reorganization,
partial or complete liquidation, issuance of rights or warrants to purchase
stock, or (iii) any other corporate transaction or event having an effect
similar to any of the foregoing. The Board of Directors may also make or
provide for such adjustments in the number or kind of shares of the Common Stock
or other securities which may be sold under the Plan as the Board of Directors
in its sole discretion, exercised in good faith, may determine is appropriate to
reflect any transaction or event described in clause (i) of the preceding
sentence.
The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell or transfer all or any part of
its business or assets.
(i) RIGHTS AS A STOCKHOLDER. An optionee shall have no rights as a
stockholder with respect to any Common Stock covered by his option until the
exercise date following payment in full. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date of such exercise, except as provided in Section 5(h) of the Plan.
(j) NONDISTRIBUTION PURPOSE. Unless the Common Stock subject to options
under the Plan is registered under the Securities Act of 1933, as amended (the
"Securities Act"), each option under the Plan shall be granted on the condition
that the purchases of stock thereunder shall be not with a view to resale or
distribution or any participation therein. Resales of such stock without
registration under the Securities Act may not be made unless, in the opinion of
counsel for the Company, such resale is permissible under the Securities Act and
any other applicable law, regulation or rule of any governmental agency.
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(k) OTHER PROVISIONS. The option agreements authorized under the Plan
shall contain such other provisions as the Board of Directors of the Company
shall deem advisable, provided that no such provisions may in any way be in
conflict with the terms of the Plan.
Section 6. TERM OF PLAN
Options shall be granted pursuant to the Plan within a period of 10 years
from the date the Plan is adopted by the Board of Directors.
Section 7. AMENDMENT OF THE PLAN
The Plan may be amended from time to time by the Board of Directors of the
Company, but without further approval of the stockholders, no such amendment
shall increase the aggregate number of shares of Common Stock that may be issued
and sold under the Plan (except that adjustments authorized by the last sentence
of the first paragraph of Section 5(h) of the Plan shall not be limited by this
provision) or change the designations in Section 3 of the class of employees
eligible to receive options. Furthermore, the Plan may not, without further
approval of the stockholders, be amended in any manner that would cause options
issued under it to fail to meet the requirements applicable to "employee stock
purchase plans" as defined in Section 423 of the Code or cause Rule 16b-3 of the
Securities and Exchange Commission (or any successor rule to the same effect) to
cease to be applicable to the Plan.
Section 8. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan shall be used for general corporate purposes.
Section 9. APPROVAL OF STOCKHOLDERS
The Plan shall not take effect until approved by the holders of a majority
of the votes cast by the holders of Common Stock at a meeting at which a quorum
representing a majority of the outstanding Common Stock is present in person or
by proxy, which approval must occur within the period of 12 months before and 12
months after the date the Plan is adopted by the Board of Directors.
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PROXY
SOLICITED BY THE BOARD OF DIRECTORS
DELPHI INFORMATION SYSTEMS, INC.
3501 ALGONQUIN ROAD
ROLLING MEADOWS, ILLINOIS 60008
The undersigned hereby appoints M. Denis Connaghan and John Sprieser, and
each of them, as proxies, with power of substitution and revocation, acting
by a majority of those present and voting (or if only one is present and
voting, then that one) to vote the stock of Delphi Information Systems, Inc.
(the "Company") that the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on August 29, 1995, and at any adjournment
or postponement thereof, with all the powers that the undersigned would
possess if present, with respect to the following:
(Continued and to be signed and dated on the reverse side.)
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FOLD AND DETACH HERE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING ITEMS.
1. Election of Directors:
Election of Yuval Almog, M. Denis Connaghan, Larry G. Gerdes, Richard R.
Janssen and Donald L. Lucas as directors until the next annual meeting of
stockholders and until their successors are elected and qualified.
FOR WITHHOLD
AUTHORITY
to vote for all
nominees
/ / / /
/ / Withhold authority to vote for following nominee(s):
_______________________________________________________________________________
2. Approval of amendment of the Company's 1989 Stock Purchase Plan to
increase the aggregate number of shares of Common Stock of the Company
available for issuance and sale thereunder and extend the term of options
granted thereunder on August 1, 1994.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion upon such other matters as may properly come before
the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH ITEM.
Please sign exactly as names appear on
this Proxy. Joint owners should each
sign. Trustees, executors, etc. should
indicate the capacity in which they are
signing.
______________________________________
Signed
________________________________, 1995
Dated
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES
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FOLD AND DETACH HERE
