<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DELPHI INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0021975
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
(708)506-3100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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JOHN R. SPRIESER, Senior Vice President-Finance
Delphi Information Systems, Inc.
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
(708)506-3100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies of communications to:
W. BRINKLEY DICKERSON, JR.
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606-6473
(312)876-1000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: /x/
<TABLE>
<CAPTION>
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Calculation of Registration Fee
<S> <C> <C> <C>
Title of each class of Proposed maximum Proposed maximum
securities Amount to offering price per aggregate offering Amount of
to be registered be registered share(1) price (1) registration fee
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Common Stock,
par value 714,280 $2,2188 $1,584,844.64 $546.50
$.10 per share shares
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<FN>
(1) Estimated solely for purposes of calculating the registration fee under
Rule 457(c) on the basis of the average of the high and low sale prices
reported on NASDAQ on August 31, 1995.
</TABLE>
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Subject to Completion, Issued September __, 1995
714,280 Shares
DELPHI INFORMATION SYSTEMS, INC.
COMMON STOCK
Par Value $.10 Per Share
--------------------------
This Prospectus relates to up to 714,280 shares (the "Shares") of Common
Stock, par value $.10 per share ("Common Stock"), of Delphi Information Systems,
Inc., a Delaware corporation (the "Company"), which may be offered and sold by
the selling stockholders named herein (the "Selling Stockholders") pursuant to
this Prospectus from time to time. The Shares have been acquired from the
Company under an Agreement and Plan of Reorganization and Merger dated as of
December 10, 1993, among the Company, Mountain Systems International, Inc.
("Mountain Systems"), MS International Acquisition Corporation and the
shareholders of Mountain Systems. The Company will receive no part of the
proceeds from the sale of the Shares.
The distribution of the Shares by the Selling Stockholders may be effected
by means of ordinary brokers' transactions on the National Association of
Security Dealers Automated Quotation System ("NASDAQ"), sales to securities
dealers acting as principal, or direct sales to purchasers. See "Plan of
Distribution."
The total expenses of this registration (excluding commissions, if any)
are estimated at $________. The Company will pay all such expenses. The
Company has agreed to indemnify the Selling Stockholders against certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
See "Selling Stockholders."
The Common Stock is traded as a national market security on NASDAQ under
the symbol "DLPH." The closing market price of the Common Stock on September
__, 1995, was $______.
PROSPECTIVE PURCHASERS OF THE SHARES SHOULD CAREFULLY CONSIDER THE
FACTORS SET FORTH UNDER "RISK FACTORS."
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is September ___, 1995.
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Stockholders. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any of the securities covered by this
Prospectus in any state to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the facts herein set forth since the date hereof; however, in
the event of any material adverse or fundamental change, this Prospectus will be
amended or supplemented to reflect such change.
RISK FACTORS
The Company's operations are subject to a number of risks, some of which
are summarized below. Accordingly, in addition to the other information in this
Prospectus, the following factors should be considered carefully in evaluating
an investment in the Shares:
OPERATING LOSSES. The Company has experienced losses in two of its last
three years. The Company attributes these losses primarily to a soft market for
insurance agency automation equipment by reason of the relatively lower
profitability of independent agencies during the last three years as compared
with earlier periods. The Company has taken steps to reduce costs, strengthen
its management and to improve its market share so as to be in a position to
achieve greater profitability as market conditions improve, but no assurances
can be given that those steps will achieve the intended results. Continued
operating losses could impair the Company's liquidity and jeopardize its ability
to continue in business.
VARIABILITY OF QUARTERLY RESULTS. The Company's revenues can fluctuate
from quarter to quarter depending upon, among other things, such factors as
overall trends in the economy, new product introductions by the Company and by
other software vendors, and customer buying patterns. Because the Company
typically ships systems within a short period after the orders are received and
therefore maintains a relatively small backlog, any weakening in customer demand
can have an almost immediate adverse impact on revenues and operating results.
Moreover, a substantial portion of the revenues for each quarter is attributable
to a limited number of orders and tends to be realized towards the end of the
quarter. Thus, even short delays or deferrals of sales near the end of a
quarter can cause quarterly revenues to fluctuate substantially.
ACQUISITIONS. The Company completed one substantial acquisition and
three smaller acquisitions during fiscal 1993 and completed one substantial
acquisition and one smaller acquisition during Fiscal 1994. Acquisitions
involve numerous risks, including difficulties in the assimilation of the
operations and products of the acquired companies, the diversion of management's
attention from other business concerns, risks of entering markets in which the
Company has no or limited direct prior experience, and potential loss of key
employees of the acquired company. In addition, acquisitions may involve
significant charges to earnings.
DEPENDENCE ON INSURANCE INDUSTRY. Virtually all of the Company's
products and services are directed to the property and casualty insurance
industry, primarily to independent agencies within that industry. As a result,
any decrease in commissions paid by the property and casualty insurance industry
to its independent agents could have an adverse impact on the business of the
Company.
COMPETITION. The market for automation systems for independent agents
is highly competitive and rapidly changing. The Company believes its principal
competition stems from independent companies that provide similar systems and
from insurance carriers that sponsor the development of automation systems for
agents and brokers with whom they have business relationships. Many of the
Company's actual and potential competitors have substantially greater financial,
marketing and technical resources than the Company. Furthermore, competitive
pressures could cause the Company's products to lose market acceptance or result
in price reductions that would adversely affect the Company's business.
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PRODUCT DEVELOPMENT AND CHANGING TECHNOLOGY. The Company's success will
depend in part on its ability to develop product enhancements and new products
that keep pace with continuing changes in computer hardware and software
technology and satisfy the needs of its customers. In addition, the Company
must address important computer technology trends, including the emergence of
industry standards for computer systems. There can be no assurance that the
Company will be successful in developing product enhancements and new products
to adequately address changing technologies, that it can introduce such products
to the marketplace on a timely basis, or that its new or enhanced products will
be successful in the marketplace.
PROPRIETARY RIGHTS. The Company regards its applications software as
proprietary and attempts to protect it with copyrights, trade secret laws and
restrictions on disclosure and transferring title. Despite these precautions,
it may be possible for third parties to copy aspects of the Company's products
or to obtain and use information the Company regards as proprietary without
authorization. Computer software generally is not patented, and existing
copyright laws afford only limited practical protection.
DEPENDENCE ON QUALIFIED PERSONNEL. The Company's success depends on
retaining the services of its current management, technical, sales and other
personnel and on its ability to continue to attract and retain qualified
employees. Competition for management, technical, sales and other qualified
personnel is intense. Although the Company provides incentives to retain its
employees, most personnel are employed at will and there can be no assurance
that the Company will be able to retain its employees or attract new qualified
personnel if required.
HARDWARE DISTRIBUTORSHIPS. A significant portion of the Company's
software is designed to operate on hardware supplied by International Business
Machines Corporation. The Company acts as a distributor for IBM and certain
other hardware manufacturers. Sales of hardware pursuant to these
distributorships as a part of a complete system or upgrades historically have
accounted for a significant percentage of the Company's operating profits.
Intense competition among hardware manufacturers has in recent periods adversely
affected revenues and, to a lesser extent, profit margins on certain items
distributed by the Company. In addition, delays in hardware shipments by the
manufacturer can delay recognition of revenues and profits from customer orders.
SHARES HELD BY DIRECTORS AND OFFICERS; CHARTER PROVISIONS. Upon
completion of this offering the directors and executive officers of the Company
will own or control Common Stock or Common Stock equivalents (options, warrants
and convertible securities) equal to a maximum of 33 percent of the outstanding
shares of Common Stock. The voting power represented by those shares might
enable the holders to determine whether various proposals submitted to
stockholders (including possible proposals to acquire the Company) are adopted
or defeated. The views of such holders on the desirability of such proposals
might not coincide with those of other stockholders. Certain charter provisions
could have the effect of delaying or preventing a change in control of the
Company. See "Description of Capital Stock--Preferred Stock." In addition, the
Company's charter eliminates the personal monetary liability of its directors
for breach of their duty of care.
MARKET FOR COMMON STOCK. The Company's Common Stock is traded on
NASDAQ's market system. Trading volume is small (an average of about ______
shares per month during fiscal 1995). The number of shares of Common Stock that
potentially may be offered in the market is substantial in relation to this
historical trading volume. The number of shares of Common Stock covered by this
Prospectus is 714,280. Additionally, there were outstanding at July 31, 1995,
options and warrants then exercisable to purchase an aggregate of ______ shares
of Common Stock at prices below the market price on that date. Furthermore, the
Company's optionees historically have sold all or a part of their optioned
shares promptly after exercise. The attempted disposition of all or a
substantial portion of these shares in the NASDAQ market within a short period
of time might substantially depress market prices.
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<PAGE>
THE COMPANY
The Company is a leading provider of automation systems and services for
independent property and casualty insurance agencies and brokerages
("independent agencies") in North America. The Company develops, markets and
supports computer applications software systems that automate independent
agencies, including the areas of sales management, policy and claims
administration, accounting, financial reporting, rating and electronic interface
with the computers of insurance carriers. The Company also provides proprietary
software and services that help insurance carriers rate and quote insurance
products and distribute such rating data to agencies with which the Company has
a relationship. In addition, the Company markets and supports the hardware
necessary to operate its proprietary software systems.
The Company's customer list includes over 90 percent of the largest 100
brokerages in North America. The Company's software operates on approximately
75,000 workstations and terminals at more than 4,500 customer sites representing
approximately two-thirds of all workstations and terminals installed in
independent agencies. The Company also provides insurance rating to more than
8,000 customers.
The Company is an IBM Industry Remarketer (IR) and markets systems that
operate on the UNIX-based IBM RISC System/6000, IBM AS/400, and SCO UNIX-based
microcomputer hardware platforms. The Company also supports earlier versions of
its software that operate on Wang and other IBM hardware platforms.
Delphi Systems, Inc., a California corporation, was founded in 1976. In
1983, the Company was formed and acquired all of the outstanding shares of
Delphi Systems, Inc. in an exchange offer. In June 1987, Delphi Systems, Inc.
was merged with and into the Company. The Company's executive offices are
located at 3501 Algonquin Road, Suite 500, Rolling Meadows, Illinois 60008. Its
telephone number is (708)506-3100.
SELLING STOCKHOLDERS
The Shares are to be offered for the account of Phil Frandsen and Brenda
Frandsen (the "Selling Stockholders") pursuant to a Registration Rights
Agreement between the Company and the Selling Stockholders dated as of December
10, 1993. The Selling Stockholders reside at 3814 East Mallory, Mesa, Arizona
85215. Their telephone number is (602) 832-5733. The Selling Stockholders are
former stockholders of Mountain Systems and received the Shares as a part of the
consideration paid by the Company to acquire Mountain Systems. The Selling
Stockholders will not own any shares of Common Stock following successful
completion of this offering. Brenda Frandsen is employed by the Company as
Vice President - Product Development and is compensated commensurately with
that position.
PLAN OF DISTRIBUTION
The Shares may be offered and sold by the Selling Stockholders pursuant to
this Prospectus from time to time directly by means of ordinary brokers'
transactions in accordance with the rules of NASDAQ, sales to securities dealers
acting as principal, or sales to purchasers, in each case at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. In connection therewith, brokerage commissions may be
paid or discounts allowed that will not exceed those customary in the types of
transactions involved. If any securities dealer purchases the Shares as
principal, it may resell the Shares by any of the methods of sale described
above.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock and 2,000,000 shares of Preferred Stock, par value $.10 per share
("Preferred Stock").
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COMMON STOCK
Holders of Common Stock of the Company are entitled to one vote for each
share held of record. The holder of Common Stock are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefor and subject to
any prior dividend rights of the holders of Preferred Stock. Holders of Common
Stock do not have cumulative voting rights in connection with the election of
directors. In the event of liquidation, dissolution, or winding up, holders of
the Company's Common Stock are entitled to share ratably among themselves in all
assets of the Company legally available for distribution and remaining after
payment of liabilities and preferential amounts payable with respect of the
Preferred Stock including the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock. See
"Description of Capital Stock - Preferred Stock." The Common Stock has no
preemptive or subscription rights, and there are no conversion or redemption
rights with respect to such shares. Each share of Common Stock is fully paid
and nonassessable. On July 31, 1995, there were 8,368,953 shares of Common
Stock issued and outstanding.
PREFERRED STOCK
The Board of Directors has the authority to issue Preferred Stock in one
or more series and to fix the rights, preferences, powers and restrictions,
including the liquidation preferences and the dividend, conversion, voting,
redemption (including sinking fund provisions) and other rights, as well as the
number of shares constituting any series and the designations of such series.
The Company currently has four series of Preferred Stock outstanding.
Pursuant to a Certificate of Designations filed with the Office of the
Secretary of State of Delaware on December 11, 1991, the Company designated
61,950 shares as Series B Preferred Stock. The Series B Preferred Stock is
entitled to an annual dividend of $5.085 per share in certain events described
in the Certificate of Designations of Series B Preferred Stock filed herewith
and incorporated herein by this reference. In the case of a liquidation,
dissolution, winding up, exercise of conversion rights or redemption of Series B
Preferred Stock, such dividends would be cumulative from December 16, 1994, and
would be payable in Common Stock based on the average daily closing price for
the Common Stock for the 30 trading days prior to such event. The Series B
Preferred Stock may be redeemed by payment of a redemption price of $100 in cash
plus dividends accrued from December 16, 1994, which are payable in Common
Stock. The Series B Preferred Stock is convertible into Common Stock at the
option of the holder and automatically converts into Common Stock on December
13, 1995. The number of shares of Common Stock issuable upon conversion of each
share of Series B Preferred Stock is determined by dividing $100 by the average
daily closing price of the Common Stock for the 30 trading days prior to
conversion (or, if greater, $6.00 per share). The holders of Series B Preferred
Stock have no voting rights, except with respect to those matters on which a
vote of the holders of Series B Preferred Stock is required by law and except
that approval of the holders of more than 66 2/3 percent of the shares of Series
B Preferred Stock is required for certain amendments to the Company's
Certificate of Incorporation, reclassifications, reacquisitions of junior shares
and increases in the authorized number of shares of Series B Preferred Stock.
As of July 31, 1995, there were 9,205 shares of Series B Preferred Stock issued
and outstanding.
Pursuant to a Certificate of Designations filed with the Office of the
Secretary of State of Delaware on December 21, 1993, the Company designated
75,000 shares as Series C Preferred Stock. The holders of Series C Preferred
Stock are entitled to receive noncumulative dividends only when declared by the
Board of Directors. Upon liquidation, dissolution or winding up of the Company,
the holders of Series C Preferred Stock are entitled to receive, prior to any
distribution to holders of the Common Stock, $100 per share, as adjusted, or
such lesser proportion of the Company's assets and funds if such assets and
funds are insufficient to pay such preferential amount. Each holder of shares
of the Series C Preferred Stock is entitled to the number of votes equal to the
number of shares of Common Stock into which the shares of Series C Preferred
Stock could be converted and has voting rights and powers equal to the voting
rights and powers of the Common Stock. Each share of
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Series C Preferred Stock can be converted, at the option of the holder thereof,
at any time into the number of shares of Common Stock determined by dividing
$100 by the conversion price. The conversion price is $3.05, subject to
antidilution adjustments. The Series C Preferred Stock will automatically
convert into Common Stock at the then applicable conversion price upon the
earlier of (a) consent of the holders of two-thirds of the Series C Preferred
Stock or (b) the date all of the shares of Series C Preferred Stock are
registered with the Securities and Exchange Commission (the "Commission"). No
additional consideration is required to be paid at the time of conversion. As
of July 31, 1995, there were 36,268 shares of Series C Preferred Stock issued
and outstanding.
Pursuant to a Certificate of Designations filed with the Office of the
Secretary of State of Delaware on May 20, 1994, the Company designated 16,577
shares as Series D Preferred Stock. The Series D Preferred Stock ranks on a
parity with the Series C Preferred Stock. The holders of Series D Preferred
Stock are entitled to receive noncumulative dividends only when declared by the
Board of Directors. Upon liquidation, dissolution or winding up of the Company,
the holders of Series D Preferred Stock are entitled to receive, prior to any
distribution to holders of the Common Stock, $226.20 per share, as adjusted, or
such lesser proportion of the Company's assets and funds if such assets and
funds are insufficient to pay such preferential amount. Each holder of shares
of the Series D Preferred Stock is entitled to the number of votes equal to the
number of shares of Common Stock into which the shares of Series D Preferred
Stock could be converted and has voting rights and powers equal to the voting
rights and powers of the Common Stock. Each share of Series D Preferred Stock
can be converted, at the option of the holder thereof, at any time into the
number of shares of Common Stock determined by dividing $226.20 by the
conversion price. The conversion price is $4.35, subject to antidilution
adjustments. The Series D Preferred Stock will automatically convert into
Common Stock at the then applicable conversion price upon the earlier of (a)
consent of the holders of two-thirds of the Series D Preferred Stock or (b) the
date all of the shares of Series D Preferred Stock are registered with the
Commission. No additional consideration is required to be paid at the time of
conversion. As of July 31, 1995, there were 16,356 shares of Series D Preferred
Stock issued and outstanding.
Pursuant to a Certificate of Designations filed with the Office of the
Secretary of State of Delaware on August 7, 1995, the Company designated
67,851 shares as Series E Preferred Stock. The holders of Series E Preferred
Stock are entitled to receive a cumulative 6 percent annual dividend from the
date of issuance, payable in shares of Common Stock. Upon liquidation,
dissolution or winding up of the Company, and subject to the prior
preferences of the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock, the holders of Series E Preferred Stock are
entitled to receive, prior to any distribution to holders of the Common
Stock, $84.745 per share, as adjusted, plus any cumulative annual dividends
then accrued (payable in shares of Common Stock), or such lesser proportion
of the Company's assets and funds if such assets and funds are insufficient
to pay such preferential amount. The holders of Series E Preferred Stock
have no voting rights, except with respect to those matters on which a vote
of the holders of Series E Preferred Stock is required by law and except that
approval of the holders of 66 2/3 percent of the shares of Series E Preferred
Stock is required for certain amendments to the Company's Certificate of
Incorporation, reclassifications, reacquisitions of junior shares and
increases in the authorized number of shares of Series E Preferred Stock. The
Series E Preferred Stock is convertible into shares of Common Stock at the
option of the holder not earlier than June 30, 1996, and will automatically
convert into shares of Common Stock on December 30, 1998. Each share of
Series E Preferred Stock is convertible into the number of shares of Common
Stock determined by dividing $84.745, plus any accrued and unpaid dividends
on the Series E Preferred Stock at the time of conversion, by a conversion
price equal to the average of the closing prices of the Common Stock for the
30 trading days immediately prior to the conversion. The conversion price is
subject to a minimum of $8.00 per share and a maximum of $4.00 per share, as
adjusted for certain events. No additional consideration is required to be
paid at the time of the conversion. AS OF JULY 31, 1995 THERE WERE 63,426
SHARES OF SERIES E PREFERRED STOCK ISSUED AND OUTSTANDING.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Chemical Trust
Company of California.
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TRADEMARKS
Certain product names mentioned in this Prospectus are trademarks of other
corporations. UNIX is a registered trademark of Unix System Laboratories, Inc.
RISC System/6000 and AS/400 are registered trademarks of International Business
Machines Corporation. Wang is a registered trademark of Wang Laboratories, Inc.
SCO is a registered trademark of The Santa Cruz Operation, Inc.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files annual, quarterly and other reports and other information with
the Commission. Such reports and other information may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York,
New York 10048, and copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
ADDITIONAL INFORMATION
The Company has filed with the Commission in Washington, D.C., a
Registration Statement under the Securities Act of 1933 relating to the Shares
offered hereby. This Prospectus, which is part of said Registration Statement,
does not contain all the information set forth in the Registration Statement,
certain items of which are contained in exhibits and schedules thereto. For
further information with respect to the Company and the Shares, reference is
hereby made to such Registration Statement, exhibits and schedules. Statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete and, in each such instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified by such reference.
Copies of the Registration Statement, together with exhibits and schedules
thereto, may be inspected without charge at the Commission's principal office in
Washington, D.C., and copies of it or any part thereof may be obtained from such
office upon payment of prescribed charges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995; (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995; and
(iii) the description of the Common Stock contained in Company's Registration
Statement filed pursuant to Section 12 of the Exchange Act and any amendments
and reports filed for the purpose of updating that description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Shares made hereby shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be 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 other subsequently filed document, as the
case may be, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statements 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 to whom this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents (without exhibits)
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<PAGE>
incorporated by reference into this Prospectus. Requests for such copies should
be directed to Delphi Information Systems, Inc., Attention: Corporate Secretary,
3501 Algonquin Road, Suite 500, Rolling Meadows, Illinois 60008, telephone
(708)506-3100.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock being registered
hereby are being passed upon for the Company by Schiff Hardin & Waite, Chicago,
Illinois.
EXPERTS
The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995 incorporated by reference in this Prospectus has been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, is incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in
giving said report.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses to be
incurred in connection with the secondary offering of the Common Stock
registered hereby, other than brokerage fees. The Company will bear all of such
costs.
Registration fee under Securities Act of 1993................. $546.50
Legal fees and expenses....................................... *
Transfer Agent's fees......................................... *
Accounting fees............................................... *
Miscellaneous................................................. *
Total......................................................... $ *
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* To be provided by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law grants to the Company
the power to indemnify its directors, officers, employees and agents against
liability arising out of their respective capacities as directors, officers,
employees or agents. Article XI of the Company's Certificate of Incorporation
provides for the limitation of personal liability of the directors of the
Company as follows:
ARTICLE XI
* * * *
A director shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director; provided that this sentence shall not eliminate or limit the
liability of a director (i) for any breach of his duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law, or (iv) for
any transaction from which the director derives any improper personal
benefit. This Article XI shall not eliminate or limit the liability of a
director for any act or omission occurring prior to the date when this
Article becomes effective.
Article VII of the Company's Bylaws provides that the Company shall
indemnify any person who is serving as a director, officer, employee or agent of
the Company or of another entity at the request of the Company against
judgments, fines, settlements and other expenses incurred in such capacity if
such person acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the best interests of the Company and, with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
In the event of an action or suit by or in the right of the Company, no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
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misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application 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 such expenses as the court shall deem proper.
The Company has entered into indemnification agreements with its directors
that would require the Company, subject to any limitations on the maximum
permissible indemnification that may exist at law, to indemnify a director for
claims that arise because of his capacity as a director.
ITEM 16. EXHIBITS.
4.1 Certificate of Incorporation, as amended (incorporated by reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1991).
4.2 Certificate of Designations of Series B Preferred Stock filed with
the Secretary of State of the State of Delaware on December 11,
1991 (incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated December 16, 1991).
4.3 Certificate of Designations of Series C Preferred Stock filed with
the Secretary of State of the State of Delaware on December 21,
1993 (incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated December 23, 1993).
4.4 Certificate of Designations of Series D Preferred Stock filed with
the Secretary of State of the State of Delaware on May 20, 1994
(incorporated by reference to Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995).
*4.5 Certificate of Designations of Series E Preferred Stock filed with
the Secretary of State of the State of Delaware on August 7, 1995.
4.6 Bylaws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form S-1
(No. 33-14501) effective July 1, 1987).
*4.7 Registration Rights Agreement dated as of December 10, 1993.
**5 Opinion of Schiff Hardin & Waite regarding legality.
23.1 Consent of Schiff Hardin & Waite (included in its opinion filed as
Exhibit 5 hereto).
23.2 Consent of Independent Public Accountants.
24 Power of Attorney. See page II-4 of this Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement:
-----------------------
*Filed herewith
**To be filed by amendment
II-2
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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
(iii) 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 Statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(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.
(4) 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 that is
incorporated by reference in this 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rolling Meadows, State of Illinois, on September 1,
1995.
DELPHI INFORMATION SYSTEMS, INC.
By /S/ M. Denis Connaghan
-----------------------------------------
M. Denis Connaghan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints M.
Denis Connaghan and John R. Sprieser, and each of them, with full power to act
without the other, such person's true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign this Registration Statement and any
and all amendments thereto (including post-effective amendments), and to file
the same (with exhibits and schedules thereto) and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing necessary or desirable to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorneys-in-fact, or any
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Yural Almog August 29, 1995
-----------------------
(Yuval Almog) Director, Chairman of the Board
/s/ M. Denis Connaghan Director, President and
----------------------- Chief Executive Officer August 29, 1995
(M. Denis Connaghan) (Principal Executive Officer)
/s/ John R. Sprieser Senior Vice President-Finance
----------------------- (Principal Financial Officer) August 29, 1995
(John R. Sprieser)
/s/ Michael J. Marek Corporate Controller
----------------------- (Principal Accounting Officer) August 29, 1995
(Michael J. Marek)
/s/ Larry G. Gerdes
-----------------------
(Larry G. Gerdes) Director August 29, 1995
/s/ Richard R. Janssen
-----------------------
(Richard R. Janssen) Director August 29, 1995
-----------------------
(Donald L. Lucas) Director August 29, 1995
<PAGE>
INDEX OF EXHIBITS
Sequentially
Exhibit Description Number Page
------- ----------- ------------
4.1 Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1991).
4.2 Certificate of Designations of Series B Preferred
Stock filed with the Secretary of State of the State
of Delaware on December 11, 1991 (incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated December 16, 1991).
4.3 Certificate of Designations of Series C Preferred
Stock filed with the Secretary of State of the State
of Delaware on December 21, 1993 (incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated December 23, 1993).
4.4 Certificate of Designations of Series D Preferred
Stock filed with the Secretary of State of the State
of Delaware on May 20, 1994 (incorporated by reference
to Exhibit 3.4 to the Company's Annual Report on Form
10-K for the fiscal year ended March 31, 1995).
*4.5 Certificate of Designations of Series E Preferred
Stock filed with the Secretary of State of the State
of Delaware on August 7, 1995.
4.6 Bylaws of the Company, as amended (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (No. 33-14501)
effective July 1, 1987).
*4.7 Registration Rights Agreement dated as of December
10, 1993.
**5 Opinion of Schiff Hardin & Waite regarding legality.
23.1 Consent of Schiff Hardin & Waite (included in its
opinion filed as Exhibit 5 hereto).
*23.2 Consent of Independent Public Accountants.
24 Power of Attorney. See page II-4 of this
Registration Statement.
------------
* Filed herewith
** To be filed by amendment
II-5
<PAGE>
EXHIBIT 4.5
CERTIFICATE OF DESIGNATIONS
OF
SERIES E PREFERRED STOCK
OF
DELPHI INFORMATION SYSTEMS, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Delphi Information Systems, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Corporation"), DOES HEREBY CERTIFY:
That, pursuant to authority vested in the Board of Directors of the
Corporation by its Certificate of Incorporation, and pursuant to the provisions
of Section 151 of the General Corporation Law, the Board of Directors of the
Corporation on December 29, 1993 adopted the following resolution providing for
the issuance of a series of preferred Stock:
RESOLVED, that pursuant to the authority expressly vested in the
Board of Directors of the Corporation (hereinafter called the "Board
of Directors" or the "Board") by the Certificate of Incorporation of
the Corporation, a series of Preferred Stock, par value $.10 per share
(the "Preferred Stock"), of the Corporation be, and it hereby is,
created, and that the designation and amount thereof and the powers,
designations, preferences and relative, participating, optional and
other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
1. DESIGNATION AND AMOUNT.
The shares of such series shall be designated as "Series E Preferred Stock"
(the "Series E Preferred Stock") and the number of shares constituting the
Series E Preferred Stock shall be 67,851. The Series E Preferred Stock shall be
junior to the Corporation's Series A Preferred Stock (the "Series A Preferred
Stock"), the Corporation's Series B Preferred Stock (the "Series B Preferred
Stock"), the Corporation's Series C Preferred Stock (the "Series C Preferred
Stock") and the Corporation's Series D Preferred Stock (the "Series D Preferred
Stock") in all respects.
2. DIVIDENDS.
<PAGE>
(a) In the event of the exercise of the Conversion Rights (as defined
in Section 5 below), or any liquidation, dissolution or winding up of the
Corporation (within the meaning of Section 3 below), or redemption of the Series
E Preferred Stock pursuant to Section 6 (each a "Dividend Event"), subject to
the prior preferences and other rights of any capital stock of the Corporation
ranking senior to the Series E Preferred Stock with respect to dividends, the
holders of the Series E Preferred Stock shall be entitled to receive an annual
dividend, in an amount per share (as adjusted proportionately for stock
dividends, stock splits, combinations and similar corporate events) equal to
$5.085 (the "Annual Dividend Amount"), on a cumulative basis for the period from
the original issuance of the Series E Preferred Stock to the Dividend Event (pro
rated for any partial year), payable in shares of Common Stock, par value $.10
(the "Common Stock") of the Corporation.
Such dividends on the Series E Preferred Stock shall be cumulative and shall
rank prior to the Common Stock and any other shares of the capital stock of the
Corporation that are junior to the Series E Preferred Stock so that if such
dividends in respect of any previous or current annual dividend period shall not
have been paid or declared and a sum sufficient for the payment thereof set
apart, the deficiency shall first be fully paid before any dividend or other
distribution shall be paid or declared and set apart for the Common Stock. The
number of shares of Common Stock payable shall be determined by dividing the
aggregate accrued but unpaid Annual Dividend Amounts by the average of the daily
closing price per share of Common Stock, as reported on the NASDAQ National
Market system, for the 30 trading days immediately prior to the Dividend Event
and then multiplying that quotient by the number of shares of Series E Preferred
Stock outstanding as of the date of the Dividend Event. If the total number of
shares of Common Stock payable as a dividend to any holder of Series E Preferred
Stock shall include a fraction, such number shall be rounded downward to the
nearest whole share and the fraction shall be settled in cash. In the event
that a dividend is paid at any time on the Common Stock, a like dividend shall
be accrued on the shares of Common Stock that, upon the occurrence of a Dividend
Event, shall be or become payable as a dividend pursuant to this Section 2(a),
which amount shall be paid when such Common Stock is or becomes payable as a
dividend.
(b) No dividends (other than those payable solely in the Common Stock
of the Corporation) shall be paid on any Common Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
any other capital stock of the Corporation during any fiscal year of the
Corporation unless a dividend (including the amount of any dividends paid
currently pursuant to the provisions of Section 2(a)) is paid with respect to
all outstanding shares of Series E Preferred Stock in an amount for each such
share of Series E Preferred Stock equal to or greater than the aggregate amount
of such dividends for all shares of Common Stock into which each such share of
Series E Preferred Stock could then be converted (or, if such payment date is
prior to June 30, 1996 for all shares of Common Stock into which each share of
Series E Preferred Stock would be convertible on such later date).
(c) In the event the Corporation shall declare a distribution (other
than any distribution described in Section 3) payable in securities of other
persons, evidences of indebtedness issued by the Corporation or other persons,
assets (excluding cash dividends) or options or rights to purchase any such
securities or evidences of indebtedness, then, in each such case the holders of
the Series E Preferred Stock shall be entitled to a proportionate share of any
such distribution as though the holders of the Series E Preferred Stock were the
holders of the number of shares of Common Stock of the Corporation into which
their respective shares of Series E Preferred Stock are convertible (inclusive
of Common Stock payable as a dividend) as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such
<PAGE>
distribution (or, if such record date is prior to June 30, 1996, for all shares
of Common Stock into which each share of Series E Preferred Stock would be
convertible on such later date).
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and subject to the prior
preferences and other rights of any capital stock of the Corporation ranking
senior to the Series E Preferred Stock, the holders of the Series E Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or funds of the Corporation to the holders of the Common
Stock or any other Series or class of stock which is junior to the Series E
Preferred Stock by reason of their ownership thereof, the amount of $84.745 per
share (as adjusted for any stock dividends, combinations or splits with respect
to such shares), plus (i) the Annual Dividend Amounts then accrued (payable in
shares of Common Stock pursuant to Section 2(a) hereof), and (ii) any other
declared but unpaid dividends on such shares for each share of Series E
Preferred Stock then held by them. If upon the occurrence of such event, the
assets and funds thus distributed among the holders of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock shall be insufficient to permit
the payment to such holders of Series A Preferred Stock, the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock of the preferential
amount due to them and to such holders of Series E Preferred Stock of the full
aforesaid preferential amount due to them, then the entire assets and funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock and the Series D Preferred Stock in proportion to
the preferential amount each such holder is otherwise entitled to receive; after
payment to the holders of the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred Stock of the
preferential amount due to them, then the entire remaining assets and funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of the Series E Preferred Stock.
(b) After payment to the holders of the Series E Preferred Stock of
the amounts set forth in Section 3(a) above, and subject to the prior
preferences and other rights of any capital stock of the Corporation ranking
senior to the Series E Preferred Stock, the entire remaining assets and funds of
the Corporation legally available for distribution, if any, shall be distributed
among the holders of (i) the Common Stock, (ii) any other Series or class of
stock which is junior to the Series E Preferred Stock, and (iii) the Series A
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
in accordance with the respective terms and provisions thereof.
(c) For purposes of this Section 3, (i) any acquisition of the
Corporation by means of merger or consolidation with or into another corporation
or other form of corporate reorganization in which outstanding shares of the
Corporation are exchanged for cash, securities or other consideration issued, or
caused to be issued, by the acquiring corporation or its parent or subsidiary
and (ii) any sale of all or substantially all of the assets of the Corporation,
shall, at the option of the holders of the Series E Preferred Stock, be treated
as a liquidation, dissolution or winding up of the Corporation and each holder
of Series E Preferred Stock shall have the right to exercise the Conversion
Rights prior to any such event as provided in Section 5(a);
-3-
<PAGE>
(d) Whenever the distribution provided for in this Section 3 shall be
payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.
4. VOTING RIGHTS: RESTRICTIONS AND LIMITATIONS.
(a) The holders of Series E Preferred Stock shall have no voting
rights, except for those matters on which a vote of the holders of Series E
Preferred Stock is required by law and except as set out below.
(b) Without limiting the rights of the holders of Series E Preferred
Stock to vote as a class, as required by law, the Corporation shall not, without
first obtaining the approval of holders of greater than sixty-six and two-thirds
percent (66 2/3%) of such shares of Series E Preferred Stock outstanding:
(i) amend or repeal any provision of, add any provision to, or
take any corporation action otherwise altering the Corporation's Certificate of
Incorporation or Bylaws which would alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of, the
holders of Series E Preferred Stock so as to affect such holders adversely;
(ii) reclassify any Common Stock or any other Series or class of
stock which is junior to the Series E Preferred Stock into shares having any
preference or priority as to dividends or assets superior to or on a parity with
the Series E Preferred Stock;
(iii) apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock or any other Series or class of stock
which is junior to the Series E Preferred Stock, except upon conversion of any
convertible security in accordance with its terms or repurchases from employees
of the Corporation upon termination of employment or pursuant to the
Corporation's rights of first refusal; or
(iv) increase the number of shares of Series E Preferred Stock
beyond those authorized by this Certificate of Designations or issue any shares
of Series E Preferred Stock to any person other than pursuant to the Agreement
for Purchase and Sale of Stock dated as of December 30, 1993 among the
Corporation, The Continental Corporation, Pacific Insurance Company and
Insurnet, Incorporated (a copy of which is on file at the offices of the
Corporation); or
(v) issue any shares of any capital stock having any preference
or priority as to dividends or assets superior to or on a parity with the Series
E Preferred Stock (other than the issuance of up to 16,577 shares of Series D
Preferred Stock in exchange, on a share for share basis, for the outstanding
Series A Preferred Stock, which shares of Series A Preferred Stock will then be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue and other than up to 75,000 shares of Series C Preferred
Stock) or amend the existing terms of any outstanding preferred stock so as to
add any terms having such a preference or priority.
-4-
<PAGE>
5. CONVERSION.
The holders of the Series E Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series E Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after June 30,
1996, or at any time upon any liquidation, dissolution or winding up of the
Corporation within the meaning of Section 3 above, or upon the occurrence of any
of the events specified in Section_3(c) above, at the office of the Corporation
or any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (L) $84.745,
plus (1) an amount equal to the Annual Dividend Amounts then accrued and unpaid
thereon which are payable in shares of Common Stock pursuant to Section 2(a)
hereof, and (2) any other declared but unpaid dividends on such shares by (M)
the Series E Conversion Price applicable to such share, determined as
hereinafter provided, in effect on the date the certificate is surrendered for
conversion pursuant to this Section 5(a) or automatically converted pursuant to
Section 5(b), as the case may be. The price at which shares of Common Stock
shall be deliverable upon conversion of shares of the Series E Preferred Stock
(the "Series E Conversion Price") shall be based upon the average of the daily
closing price per share, as reported on the NASDAQ National Market System, for
the thirty (30) trading days immediately prior to the date the certificate is
surrendered for conversion; PROVIDED, HOWEVER, the maximum number of shares of
Common Stock into which each share of Series E Preferred Stock may be converted
at any time (the "Maximum Conversion Rate") is (P) $84.745 plus (1) an amount
equal to the Annual Dividend Amounts then accrued and unpaid thereon which are
payable in shares of Common Stock pursuant to Section 2(a) hereof, and (2) any
other declared but unpaid dividends on such shares divided by (Q) the Maximum
Conversion Rate Trigger Price, determined as hereinafter provided, on the date
the certificate is surrendered for conversion pursuant to this Section 5(a) or
automatically converted pursuant to Section 5(b), as the case may be; FURTHER
PROVIDED, that the minimum number of shares of Common Stock into which each
share of Series E Preferred Stock may be converted at any time (the "Minimum
Conversion Rate") is (s) $84.745 plus (1) an amount equal to the Annual Dividend
Amounts then accrued and unpaid thereon which are payable in shares of Common
Stock pursuant to Section 2(a) hereof, and (2) any other declared but unpaid
dividends on such shares divided by (r) the Minimum Conversion Rate Trigger
Price, as determined as hereinafter provided, on the date the certificate is
surrendered for conversion pursuant to this Section 5(a) or automatically
converted pursuant to Section 5(b), as the case may be. The "Maximum Conversion
Rate Trigger Price," as used herein, shall initially be $4.00, and shall be
subject to adjustment as hereinafter provided. The "Minimum Conversion Rate
Trigger Price," as used herein, shall initially be $8.00, and shall be subject
to adjustment as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Series E Preferred Stock, if
not theretofore converted, shall automatically be converted on December 30, 1998
(the "Automatic Conversion Date") into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (X) $84.745
plus (1) an amount equal to the Annual Dividend Amounts then accrued and unpaid
thereon which are payable in shares of Common Stock pursuant to Section 2(a)
hereof, and (2) any other declared but unpaid dividends on such shares by (Y)
the average of the daily closing price per share, as reported on the NASDAQ
National Market System, for the thirty (30) trading days immediately prior to
the Automatic Conversion Date, but not in excess of the Maximum Conversion Rate
and not below the Minimum Conversion Rate.
-5-
<PAGE>
(c) MECHANICS OF CONVERSION. In the case of any conversion pursuant
to Section 5(a) hereof, before any holder of Series E Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice to the Corporation at such office that he elects to convert the same and
shall state therein the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. In the case of a
conversion Pursuant to Section 5(b) hereof, the certificate for the shares of
Common Stock to be issued shall be registered in the name of the holder or in
such other name or names as the holder otherwise notifies the Corporation. The
Corporation shall, as soon as practicable after any conversion, issue and
deliver at such office to such holder of Series E Preferred Stock, a certificate
or certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid and in payment of any dividends payable in Common Stock,
together with any other dividends to which such holder shall be entitled. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of surrender of the shares of Series E Preferred Stock to
be converted, in the case of a conversion pursuant to Section 5(a) hereof, and
on the Automatic Conversion Date, in the case of a conversion pursuant to
Section 5(b) hereof, and the person or persons entitled to receive the shares of
Common Stock issuable upon any such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on such date.
(d) ADJUSTMENTS TO TRIGGER PRICES FOR STOCK DIVIDENDS; COMBINATIONS
OR SUBDIVISIONS OF COMMON STOCK. In the event that the Corporation at any time
or from time to time after the date on which the Series E Preferred Stock is
first issued shall declare or pay any dividend on the Common Stock (or on any
other series or class of stock which is junior to the Series E Preferred Stock)
payable in Common Stock or in any right to acquire Common Stock for no
consideration, or shall effect a subdivision of the outstanding shares of Common
Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or in the event the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the Series E
Conversion Price, the Maximum Conversion Rate Trigger Price and the Minimum
Conversion Rate Trigger Price in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate. In the event that the Corporation shall declare
or pay any dividend on the Common Stock (or on any other series or class of
stock which is junior to the Series E Preferred Stock) payable in any right to
acquire Common Stock for no consideration, then the Corporation shall be deemed
to have made a dividend payable in Common Stock in an amount of shares equal to
the maximum number of shares issuable upon exercise of such rights to acquire
Common Stock.
In the event the Corporation makes any adjustment to the number of
shares issuable upon conversion of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock or the Series D Preferred Stock
and is not otherwise required by the preceding terms of this Section 5(d) to
make corresponding adjustments to the Series E Conversion Price, the Maximum
Conversion Rate Trigger Price and the Minimum Conversion Rate Trigger Price,
then the Series E Conversion Price, the Maximum Conversion Rate Trigger Price
and the Minimum Conversion Rate Trigger Price in effect immediately prior to
such adjustment shall, concurrently with the effectiveness of such adjustment,
be proportionately decreased or increased, as appropriate; provided, however
that no such adjustment pursuant to the terms of this sentence shall reduce the
-6-
<PAGE>
Maximum Conversion Rate Trigger Price to an amount less than $3.50 and provided
further that no such adjustment shall be required as a result of the issuance of
the shares of Series C Preferred Stock and Series D Preferred Stock permitted by
Section 4(b)(v).
(e) NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series E Preferred Stock against impairment.
(f) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series E Conversion Price, the Trigger Price
(and Maximum Conversion Rate and Minimum Conversion Rate) pursuant to this
Section 5, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series E Preferred Stock a certificate executed by the
Corporation's President or Chief Financial Officer setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of a holder of Series E Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series E Conversion Price, the Maximum Conversion Rate
Trigger Price, the Minimum Conversion Rate Trigger Price and Maximum Conversion
Rate and Minimum Conversion Rate for the Series E Preferred Stock at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the conversion of the
Series E Preferred Stock.
6. REDEMPTION.
(a) All, or any part, of the Series E Preferred Stock may be redeemed
at any time after the day on which such shares are first issued, by payment in
cash of $84.745 per share plus (1) an amount equal to the Annual Dividend
Amounts then accrued and unpaid thereon and (2) any other declared but unpaid
dividends on such shares.
(b) The Corporation shall, not less than 30 nor more than 60 days
prior to the date for the redemption of the Series E Preferred Stock (the
"Redemption Date"), give written notice (the "Redemption Notice") to each holder
of record of Series E Preferred Stock. The Redemption Notice shall state:
(i) The total number of shares of Series E Preferred Stock being
redeemed;
(ii) The number of shares of Series E Preferred Stock held by the
holder which the Corporation intends to redeem;
(iii) The Redemption Date and the amount payable pursuant to
Section 6(a) (the "Applicable Redemption Price"); and
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(iv) The time and manner in, and place at which, the holder is to
surrender to the Corporation its certificate or certificates representing the
shares of Series E Preferred Stock to be redeemed.
(c) On or before the Redemption Date, each holder of Series E
Preferred Stock to be redeemed, unless the holder has exercised its right to
convert the shares to be redeemed as provided in Section 5 prior to the giving
of the Redemption Notice, shall surrender the certificate or certificates
representing such shares to the Corporation, in the manner and at the place
designated in the Redemption Notice, and thereupon the Applicable Redemption
Price for such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be cancelled and retired.
(d) If the Redemption Notice is duly given, and if on the Redemption
Date the Applicable Redemption Price is paid or made available for payment,
then, notwithstanding that the certificates evidencing any of the shares of
Series E Preferred Stock have not been surrendered, the dividends with respect
to such shares shall cease to accrue after the Redemption Date and all rights
with respect to such shares shall forthwith after the Redemption Date cease and
terminate, except only for the right of the holders to receive the Applicable
Redemption Price without interest upon surrender of their certificates therefor
as aforesaid.
(e) If less than all outstanding shares of Series E Preferred Stock
are to be redeemed, the number of shares redeemed from each holder shall be pro
rated based on the number of shares held by such holder and the number of shares
then outstanding.
7. MISCELLANEOUS.
(a) ISSUE TAXES. The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series E Preferred Stock or on payment of any
dividend payable in shares of Common Stock pursuant hereto; provided, however,
that the Corporation shall not be obligated to pay any transfer taxes resulting
from any transfer request by any holder in connection with any conversion or
income taxes or taxes measured by income of a holder of Series E Preferred
Stock.
(b) RESERVATION OF STOCK. The Corporation shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the shares of the Series E
Preferred Stock and to pay any dividend payable in shares of Common Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series E Preferred Stock
and to pay any dividend payable in shares of Common Stock; and if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
E Preferred Stock and to pay any dividend payable in shares of Common Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to this Certificate.
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(c) FRACTIONAL SHARES. No fractional share shall be issued upon the
conversion of any share or shares of Series E Preferred Stock or payment of any
dividend payable in shares of Common Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series E Preferred Stock by a holder thereof or payable as a dividend to a
holder of more than one share of Series E Preferred Stock shall be aggregated
for purposes of determining whether the conversion or payment would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion or payment would result in the issuance of a fraction of a share
of Common Stock, the Corporation shall, in lieu of issuing any fractional share,
pay the holder otherwise entitled to such fraction a sum in cash equal to the
fair market value of such fraction on the date of conversion or payment (as
determined by reference to the average of the high and low stock price quoted in
THE WALL STREET JOURNAL or as reported on NASDAQ for the day immediately prior
to such conversion or payment).
(d) PARTIAL CONVERSION OR REDEMPTION. In the event some but not all
of a holder's shares represented by any certificate for Series E Preferred Stock
are converted or redeemed, the Corporation shall execute and deliver to such
holder a certificate or certificates registered in such holder's name or such
name or names as such holder directs, for the number of shares of Series E
Preferred Stock which was not converted or redeemed.
(e) NOTICES. Any notice required by the provisions of this
Certificate of Designations to be given to the holders of shares of Series E
Preferred Stack shall be deemed given if deposited in the United States
Certified first class or express mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation.
(f) NOTICES OF RECORD DATE. In the event that the Corporation shall
propose at any time: (i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus; (ii)
to offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights;
(iii) to effect any reclassification or recapitalization of its Common Stock
outstanding involving a change in the Common Stock; or (iv) to merge or
consolidate with or into any other corporation, or sell, lease or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; then, in
connection with each such event, the Corporation shall send to the holders of
Series E Preferred Stock:
(1) at least twenty (20) days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and (iv)
above, at least twenty (20) days' prior written notice of the date when the same
shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
8. NO REISSUANCE OF PREFERRED STOCK.
No share or shares of Series E Preferred Stock, Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
acquired by the Corporation by reason
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of redemption, purchase, conversion or otherwise shall be reissued, and all such
shares shall be canceled, retired and eliminated from the shares which the
Corporation shall be authorized to issue.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its President and attested by its Secretary as of July 24,
1995.
/s/ M. Denis Connaghan
---------------------------------------
President
Attest:
/s/ John R. Sprieser
-----------------------------
Secretary
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 10, 1993 between DELPHI
INFORMATION SYSTEMS, INC., a Delaware corporation (the "Company"), and Phil
Frandsen and Brenda Frandsen (each a "Holder" and collectively the "Holders").
1. INTRODUCTION. Pursuant to an Agreement and Plan of Reorganization and
Merger dated as of the date hereof among the Company, Mountain Systems
International, Inc., MS International Acquisition Corporation and the Holders
(the "Merger Agreement"), the Board of Directors of the Company has authorized
the grant of certain registration rights to the Holders on the terms and
conditions set forth herein.
2. REGISTRATION UNDER SECURITIES ACT.
2.1 REGISTRATION ON FORM S-3.
(a) REGISTRATION. The Company will file within one year after
the date of closing of the transactions described in the Merger Agreement (the
"Closing Date") a Form S-3 with respect to 50% of the Registrable Shares held by
the Holders on the date of filing so as to permit the Holders to sell such
shares from time to time in NASDAQ transactions; provided that the Company is
eligible to file Form S-3. The shares so registered on Form S-3 shall be
allocated among the Holders in such proportions as they shall unanimously
determine and so advise the Company. The Company will use its best efforts to
make such Form S-3 effective as soon after filing as possible. The Company will
use its best efforts to keep such Form S-3 effective for six months to the
extent necessary to accommodate the Holder's intended sales, with the
understanding that there may be periods of time during such six-month period
when sales may have to be suspended temporarily until disclosure of pending
transactions. The Company will notify each Holder in writing if any such
suspension should become necessary and will make the supplemental disclosure
necessary to enable such Holder to resume selling at the earliest time
reasonably deemed consistent with the best interests of the Company and its
stockholders generally.
(b) EXPENSES. The Company shall bear all Registration Expenses
associated with the Form S-3 registration and the Holders shall pay brokerage
fees and dealer discounts applicable to shares sold by them and fees and
disbursements of any legal counsel or accountants retained by them.
2.2 REGISTRATION PROCEDURES. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Shares
under the Securities Act as provided in Section 2.1, the Company shall, as
expeditiously as possible:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration (including such audited
financial statements as may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its best efforts to cause
such registration statement to become and remain effective; provided, however,
that the Company may discontinue any registration of its securities which are
not Registrable Shares at any time prior to the effective date of the
registration statement relating thereto; provided further that before filing
such registration statement or any amendments thereto, the Company will furnish
to the counsel selected by the Holder(s) copies of all such documents proposed
to be filed, which documents will be subject to the review of such counsel;
<PAGE>
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until the earlier of such time as all of such securities have been disposed of
in accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or the period of time specified
in Section 2.1;
(iii) furnish to each seller of Registrable Shares covered
by such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such seller may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by such seller;
(iv) use its best efforts to register or qualify all
Registrable Shares covered by such registration statement under such other
securities laws or blue sky laws of such jurisdictions as any seller thereof
shall reasonably request, to keep such registrations or qualifications in effect
for so long as such registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv) be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable Shares
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Registrable
Shares;
(vi) notify each seller of Registrable Shares covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the Company's discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(vii) notify the Holders and their counsel (A) when any
post-effective amendment to any registration statement becomes effective and
when any further amendment of
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or supplement to the prospectus shall be filed with the SEC, (B) of any request
or proposed request by the SEC for an amendment or supplement to any
registration statement, to the related prospectus, to any document incorporated
by reference in any of the foregoing or for any additional information, (C) of
the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or any order directed to the related prospectus or any
document incorporated therein by reference or the initiation or threat of any
stop order proceeding or of any challenge to the accuracy or adequacy of any
document incorporated by reference in such prospectus, and (D) of receipt by the
Company of any notification with respect to the suspension of the qualification
of the shares for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose.
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and all other applicable
securities regulations of other government agencies.
The Company may require each seller of Registrable Shares as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Holders agree that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in subdivision (vi{of this
Section 2.2, the Holders will forthwith discontinue their disposition of
Registrable Shares pursuant to the registration statement relating to such
Registrable Shares until the Holders' receipt of the copies of the supplemented
or amended prospectus contemplated by subdivision (vi) of this Section 2.2 and,
if so directed by the company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in the Holders'
possession of the prospectus relating to such Registrable Shares current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the period mentioned in paragraph (ii) of this Section 2.2 shall be
extended by the length of the period from and including the date when each
seller of any Registrable Shares covered by such registration statement shall
have received such notice to the date on which each such seller has received the
copies of the supplemented or amended prospectus contemplated by paragraph (vi)
of this Section 2.2.
2.3 HOLDBACK AGREEMENTS. Each Holder agrees, if so required by the
underwriter managing any underwritten offering of the Company's securities, not
to effect any public sale or distribution of any securities of the Company
during the seven days prior to and the 180 days (or such longer period as the
managing underwriter may reasonably require for the Company's officers and all
holdback agreements entered into with holders of Common Stock) after any
underwritten registration has become effective (the "Holdback"); provided, that
such Holder shall not be subject to the Holdback beyond the expiration of this
Agreement.
2.4 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Holders of Registrable
Shares registered under such registration statement and up to one designated
counsel and one designated accounting firm to represent the interests of the
Holders, at the expense of the Holders, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its
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books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such Holders'
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
3. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
MERGER AGREEMENT: As defined in Section 1 of this Agreement.
CLOSING DATE: As defined in Section 2.1(a) of this Agreement.
COMMISSION: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
COMMON STOCK: The common stock, $0.10 par value, of the Company.
COMPANY: As defined in the introductory paragraph of this Agreement.
HOLDER OR HOLDERS: As defined in the introductory paragraph to this
Agreement.
PERSON: A corporation, an association, a partnership, an
organization, business, an individual, a governmental or political subdivision
thereof or a governmental agency.
REGISTRABLE SHARES: (a) Any shares of Common Stock received by
Holders pursuant to Section 1.2 of the Merger Agreement, and (b) any additional
shares of Common Stock receivable or received by the Holders upon the payment of
stock dividends thereon and (c) any securities issued or issuable with respect
to the Common Stock referred to in the foregoing subdivision by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
excepting any of the aforementioned shares which, in the opinion of Jones, Day,
Reavis & Pogue (or if such firm is not counsel to the Company, counsel to the
Holders), may at the time of proposed sale or registration be sold pursuant to
Rule 144(k) of the Securities Act or any exemption to the same effect which
permits such shares to be freely sold. Any particular Registrable Shares shall
cease to be Registrable Shares when (i) a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) they may be distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act; provided that if
pursuant to Rule 144, the Holders may sell less than all of the Registrable
Shares at any one time, such shares of Common Stock which the Company has not
agreed to register pursuant to this Registration Rights Agreement may be sold or
deemed eligible for sale by the Holders prior to such shares of Common Stock
which the Company has agreed to register hereunder, or (iii) three years shall
have expired since the Closing Date.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration, filing and National Association of Securities Dealers, Inc. fees,
all fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery
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expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
required by or incident to such performance and compliance, but excluding
transfer taxes, if any, and fees and disbursements of legal counsel and
accountants, if any, retained by the Holders.
SECURITIES ACT: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as of
the same shall be in effect at the time. References to a particular section of
the Securities Act of 1933 shall include a reference to the comparable section,
if any, of any such similar Federal statute.
4. RULE 144. The Company shall timely file the reports required to be
filed by it under the Securities Exchange Act of 1934 (including but not limited
to the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) (1) of Rule 144 adopted by the Commission under the Securities
Act) and the rules and regulations adopted by the Commission thereunder and will
take such further action as any Holder of Registrable Shares may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Shares are held by a nominee for the beneficial owner thereof, the beneficial
owner thereof may, at its election, be treated as the Holder of such Registrable
Shares for purposes of any request or other action by any Holder or the Holders
pursuant to this Agreement. If the beneficial owner of any Registrable Shares
so elects, the Company may require assurances reasonably satisfactory to it of
such owner's beneficial Ownership of such Registrable Shares.
7. INDEMNIFICATION.
(a) INDEMNIFICATION OF HOLDERS. In each case of a registration of
shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Holders, from and against any and all losses,
claims, damages and liabilities (including reasonable expenses of counsel)
(collectively, "Claims"), arising out of any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such shares were registered under the Securities Act, any prospectus or
preliminary prospectus contained in that statement or any amendment or
supplement to any such statement or prospectus (including, in each case,
documents incorporated by reference), or arising from any omission or alleged
omission to state a material fact, except for Claims arising from (i) any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any of the Holders
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<PAGE>
furnished to the Company in writing by any of the Holders expressly
for use therein, or (ii) the fact that any Holder sold Registrable Shares to
a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of such prospectus, as amended or
supplemented.
(b) NOTICE AND DEFENSE OF CLAIMS. If any third party shall notify
Holders with respect to any matter which may give rise to a Claim for
indemnification against the Company, then the Holders shall notify the Company
thereof promptly (and in any event within 30 days after receiving any written
notice from a third party of any such matter). Once the Holders have given
notice of the matter to the Company, the Holders may defend against the matter
in any manner they reasonably may deem appropriate. In the event the Company
notifies the Holders at any time after the Holders have given notice of the
matter that the Company is assuming the defense thereof, however, (A) the
Company will defend the Holders against the matter with counsel of its choice
reasonably satisfactory to the Holders, (B) the Holders may retain separate co-
counsel at their sole cost and expense (except that the Company will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Holders conclude reasonably that the counsel the Company has selected has a
conflict of interest), (C) the Holders will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Company (not to be unreasonably withheld), and (D) the
Company will not consent to the entry of any judgment with respect to the
matter, or enter into any settlement which does not include a provision whereby
the plaintiff or claimant in the matter releases the Holders from all liability
with respect thereto, without the written consent of the Holders (not to be
withheld unreasonably).
8. FORM S-3 COVENANT. The Company represents and warrants to the Holders
that since the end of the Company's last fiscal year, the Company and its
subsidiaries have neither failed to pay any dividend or sinking fund payment on
any preferred stock nor defaulted on any installment payment on borrowed money
or rental payment under any long term lease, which defaults in the aggregate are
material to the financial position of Delphi and its subsidiaries. The Company
shall use its best efforts to remain eligible to use Form S-3 as a registration
statement until all registration rights granted under Section 2.1 of this
Agreement lapse.
9. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be deemed to have been given if delivered, or five days
after mailing by certified or registered mail, return receipt requested, first
class postage prepaid, or one business day after the time dispatched by
telecopy; in every case addressed as follows:
(a) If to the Company:
Delphi Information Systems, Inc.
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Attention: Chief Financial Officer
Telephone: (708) 506-3100
Telecopy: (708) 590-8280
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(b) If to a Holder:
To the address set forth in, or pursuant to the provisions of,
the Merger Agreement or at such address as the party addressed
may from time to time designate in writing to the other parties
in like manner. Any communication dispatched by telecopy shall
be confirmed by letter.
10. MISCELLANEOUS.
(a) REMEDIES. With respect to the breach of any obligation of the
Company under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will, to the extent permitted by applicable law, be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of such breach and hereby agrees, to the extent permitted by
applicable law, to waive the defense in any action for specific performance of
such an obligation that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Without the written consent of the
Holders of the then outstanding Registrable Shares, the Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders of Registrable Shares hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the Holders of the Company's
securities under any agreements previously entered into by the Company.
(c) ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent Holder of any Registrable Shares.
(d) DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
(e) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Illinois without reference to the principles of conflicts of laws.
(f) COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, and may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts shall
together constitute one and the same instrument.
(g) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the Company and each other party hereto and supersedes
all prior agreements and understandings related to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
DELPHI INFORMATION SYSTEMS, INC.
By: /s/ David J. Torrence
---------------------------------------------
David J. Torrence
President
/s/ Phil Frandsen
---------------------------------------------
Phil Frandsen
/s/ Brenda Frandsen
---------------------------------------------
Brenda Frandsen
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 24, 1995
included in Delphi Information Systems, Inc.'s Form 10-K for the year ended
March 31, 1995 and to all references to our firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, Illinois
September 6, 1995
