Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington,D.C. 20549
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FORM S-8
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
(Address of principal executive offices including zip code)
DELPHI INFORMATION SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
(Full title of the plan)
JAMES A. HARSCH, Vice President, Administration
Delphi Information Systems, Inc.
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
(847)506-3100
(Name, address and telephone number, including area code,
of agent for service)
-----------------------------
Copies of communications to:
W. BRINKLEY DICKERSON, JR.
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606-6473
(312) 876-1000
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share price fee
----------- ------------ ---------- ------------- ------------
Common Stock,
par value
$.10 per share 6,000,000 $1.03125(1) $6,187,500(1) $1,875
shares
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(1) In accordance with Rule 457(h) of the General Rules and
Regulations under the Securities Act of 1933, this estimate is
made solely for the purpose of calculating the amount of the
registration fee and is based on the average of the high and low
prices of the Common Stock on the Nasdaq SmallCap Market on March
10, 1997.
<PAGE> 2
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by Delphi Information
Systems, Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(1) Annual Report on Form 10-K for the fiscal year ended March
31, 1996, as amended by Form 10-K405/A filed on July
29,1996;
(2) Quarterly Reports on Form 10-Q for the quarters ended June
30, September 30 and December 31, 1996; and
(3) The description of the Company's Common Stock, par value
$.10 per share, contained in the Company's Registration
Statement filed pursuant to Section 12 of the Securities
Exchange Act of 1934 (the "Exchange Act") and any amendments
and reports filed for the purpose of updating that
description.
All documents that shall be filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to
the filing of this registration statement and prior to the filing of a
post-effective amendment indicating that all securities offered under
the Delphi Information Systems, Inc. 1996 Stock Incentive Plan have
been sold or deregistering all securities then remaining unsold
thereunder shall be deemed to be incorporated herein by reference and
shall be deemed to be a part hereof from the date of filing thereof.
ITEM 6. 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
<PAGE> 3
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 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 8. EXHIBITS.
*4.1 Certificate of Incorporation, as amended.
4.2 Bylaws of the Company, as amended (incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement No. 33-14501 on Form S-1 effective July 1, 1987).
*4.3 Delphi Information Systems, Inc. 1996 Stock Incentive Plan.
*5 Opinion of Schiff Hardin & Waite.
23.1 Consent of Schiff Hardin & Waite (included in its opinion
filed as Exhibit 5 hereto).
*23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney. See page II-4 of this Registration
Statement.
-----------------------
*Filed herewith.
<PAGE> 4
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement: (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; (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 paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is on Form
S-3 or Form S-8, and 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.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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
<PAGE> 5
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
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 this registration statement
on Form S-8 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 this 7th day of
February 1997.
DELPHI INFORMATION SYSTEMS, INC.
By: JAMES A. HARSCH
-----------------------------------------
James A. Harsch
Vice President, Administration
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Joseph Oddo and James A. Harsch, 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 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
<PAGE> 6
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
--------- ----- ----
YUVAL ALMOG Director, Chairman February 7, 1997
------------------- of the Board
(Yuval Almog)
JOSEPH J. ODDO Director, Chairman February 7, 1997
------------------- of the Executive
(Joseph J. Oddo) Committee of the
Board (Acting
Principal Executive
Officer)
JAMES A. HARSCH Vice President, February 7, 1997
------------------- Administration
(James A. Harsch) and Chief Financial
Officer (Principal
Financial and
Accounting Officer)
WILLIAM R. BAUMEL Director February 7, 1997
-------------------
(William R. Baumel)
Director
-------------------
(M. Denis Connaghan)
LARRY G. GERDES Director February 7, 1997
-------------------
(Larry G. Gerdes)
<PAGE> 7
EXHIBIT INDEX
Page Number In
Exhibit Sequentially
Number Description Numbered Copy
------ ----------- -------------
*4.1 Certificate of Incorporation, as
amended.
4.2 Bylaws of the Company, as amended
(incorporated by reference to
Exhibit 3.2 to the Company's
Registration Statement No. 33-14501
on Form S-1 effective July 1,
1987).
*4.3 Delphi Information Systems, Inc.
1996 Stock Incentive Plan.
*5 Opinion of Schiff Hardin & Waite.
23.1 Consent of Schiff Hardin & Waite
(included in its opinion filed as
Exhibit 5 hereto).
*23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney. See page II-4
of this Registration Statement.
---------------------
* Filed herewith.
Exhibit 4.1
CERTIFICATE OF INCORPORATION
OF
DELPHI INFORMATION SYSTEMS, INC.
I
The name of this Corporation shall be:
DELPHI INFORMATION SYSTEMS, INC.
II
The address of the registered office of the Corporation
in the State of Delaware is 100 West Tenth Street in the City of
Wilmington, County of New Castle, and the name of its registered agent
at that address is The Corporation Trust Company.
III
The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under
the General Corporation Law of Delaware.
IV
The Corporation is authorized to issue two classes of
stock designated "Preferred Stock" and "common stock," respectively.
The total number of shares of Preferred Stock authorized to be issued
is two million (2,000,000) and each such share shall have a par value
of ten cents ($.10). The total number of shares of common stock
authorized to be issued is twelve million (12,000,000) and each such
share shall have a par value of ten cents ($.10).
The shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors is hereby
authorized, by filing a certificate pursuant to the applicable law of
the State of Delaware, to establish from time to time the number of
shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and
the qualifications, limitations or restrictions thereof, including but
not limited to the fixing or alteration of the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption price
or prices, and the liquidation preferences of any wholly unissued
series of shares of Preferred Stock, or any of them; and to increase
or decrease the number of shares of any series subsequent to the issue
of the shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease
shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
Subject to conversion or exchange as provided below,
ten million (10,000,000) shares of the common stock authorized above
are designated "Common Stock," two hundred twenty thousand (220,000)
shares of the common stock authorized above are designated "Series A
Common Stock" and one million seven hundred eighty thousand
(1,780,000) shares of the common stock authorized above are designated
"Series B Common Stock."
<PAGE> 9
The relative rights, preferences, powers,
qualifications, limitations and restrictions granted to or imposed
upon the Series A Common Stock or the holders thereof are as follows:
1. Dividends.
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When and as dividends or distributions are
declared on the Common Stock of the Corporation, whether payable in
cash, in property or in securities of the Corporation, or in
subscription or other rights to acquire securities of the Corporation,
the holders of the Series A Common Stock shall be entitled to and
shall receive equally, share for share, such dividends or
distributions.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, the
holders of the Series A Common Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets of
the Corporation to the holders of the Common Stock by reason of their
ownership thereof, an amount equal to $11.00 for each share of Series
A Common Stock then held by them plus any declared and unpaid
dividends, and no more. If upon the occurrence of such event the
assets and funds thus distributed among the holders of the Series A
Common Stock and those distributed to holders of shares of any class
or series of stock of the Corporation which ranks equal to the Series
A Common Stock in liquidation preference ("Parity Stock") shall be
insufficient to permit the payment to such holders of the full
aforesaid preferential amount and the payment of the preferential
amount of Parity Stock, then the entire assets of the Corporation
legally available for distribution shall be distributed among the
holders of the Series A Common Stock and the holders of the Parity
Stock in proportion to the shares of all such stock then held by them.
(b) A consolidation or merger of the Corporation
with or into any other corporation or corporations, or a sale of all
or substantially all of the assets of the Corporation, shall not be
deemed to be liquidation, dissolution or winding up within the meaning
of this Section 2.
3. Voting Rights.
-------------
Each holder of the Series A Common Stock shall be
entitled to the number of votes equal to the number of shares of
Common Stock into which such Series A Common Stock could be converted
and shall have voting rights and powers equal to the voting rights and
powers of the Common Stock. Except as provided in the last sentence
of this Section 3, the holders of the Series A Common Stock and the
<PAGE> 10
Common Stock shall vote together and not as separate classes. The
holders of the Series A Common Stock shall be entitled to notice of
any shareholders' meeting in accordance with law. Fractional voting
shall not, however, be permitted and any fractional voting rights
resulting from the above formula shall be rounded to the nearest whole
number (with one-half being rounded upward). The Corporation shall
not amend its Certificate of Incorporation without the approval, by
vote or written consent, of the holders of at least one-half (1/2) of
the outstanding shares of Series A Common Stock if such amendment
would change any of the rights, preferences, powers, qualifications,
limitations or restrictions provided for herein for the benefit of any
of the shares of Series A Common Stock.
4. Conversion.
----------
The holders of the Series A Common
Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) RIGHT TO CONVERT.
(i) Each share of Series A Common Stock
shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the headquarters office
of the Corporation or any transfer agent for the Series A Common
Stock, into fully paid and nonassessable shares of Common Stock at the
Conversion Rate (as hereinafter defined) in effect at the time of
conversion as provided herein.
(ii) The Series A Common Stock shall
automatically be converted into shares of Common Stock at the then
effective Conversion Rate immediately upon any of the following
events:
(A) The effectiveness of a registration
statement under the Securities Act of 1933, as amended,
covering the offer and sale of any of the Corporation's
securities (as that term is defined under the
Securities Act of 1933, as then in effect);
(B) The affirmative vote or written
consent of the holders of at least two-thirds (2/3) of
the outstanding shares of Series A Common Stock in
favor of such an automatic conversion; and
(C) The affirmative vote of a majority
of the members of the Board of Directors that the
Corporation agree to consolidate or merge with or into
another named corporation or corporations in a third-
party arm's-length transaction; or sell all or
substantially all of the assets of the Corporation to a
named corporation or corporations in a third-party
arm's-length transaction; provided, however, that if
such consolidation, merger or sale is not consummated
<PAGE> 11
within 180 days of such affirmative vote, the
conversion of the Series A Common Stock shall be null
and void and the shares of Common Stock into which the
Series A Common Stock had been converted shall
automatically be reconverted into shares of Series A
Common Stock on the 181st day after such affirmative
vote.
(iii) The automatic conversion of Series A
Common Stock into shares of Common Stock pursuant to Section 4(a)(ii)
shall be effected by the surrender of the certificates representing
the shares to be converted at the headquarters office of the
Corporation or any transfer agent for the Series A Common Stock, in
such form and accompanied by such notice, affidavits, and other
documents, if any, as may be necessary to comply with the laws of the
State of Delaware and any other applicable law, and upon such
surrender the record holder of such shares, or such other person as
the record holder shall name, shall be entitled to become, and shall
be registered in the original stock ledger of the Corporation as, the
record holder of the number of shares of Common Stock issuable upon
such conversion, and the Series A Common Stock shall be converted into
fully paid and nonassessable Common Stock at the Conversion Rate in
effect at the time of conversion as provided herein, and thereupon
there shall be issued and delivered to such record holder or other
named person, as the case may be, promptly at such office or
designated place, a certificate or certificates for such number of
shares of Common Stock.
(iv) No fractional shares of Common Stock shall be
issued upon conversion of Series A Common Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the
fair market value for one share of the Corporation's Common Stock on
the date of conversion, as determined in good faith by the Board of
Directors of the Corporation.
(b) MECHANICS OF CONVERSION. Before any holder of
Series A Common Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation
or of any transfer agent for the Series A Common Stock, and shall give
written notice to the Corporation at such office of the election to
convert the same, and stating therein the name or names in which the
holder wishes the certificate or certificates for shares of Common
Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series
A Common Stock or to such holder's nominee or nominees a certificate
or certificates for the number of shares of Common Stock to which the
holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Series A Common Stock to
be converted, and the person or persons entitled to receive the shares
<PAGE> 12
of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common
Stock on such date.
(c) CONVERSION RATE AND PRICE. The Series A Common
Stock shall be convertible into the number of shares of Common Stock
(the "Conversion Rate") which results from dividing the Conversion
Price per share in effect at the time of conversion into $11.00 for
each share of Series A Common Stock being converted; the initial
Conversion Price per share for the Series A Common Stock shall be
$11.00. The Conversion Price shall be subject to adjustment as
hereinafter provided.
(d) ADJUSTMENT FOR COMBINATIONS OR CONSOLIDATIONS OF
COMMON STOCK. In the event the Corporation, at any time or from time
to time after the original issue date of the Series A Common Stock
(hereinafter referred to as the "Original Issue Date"), effects a
subdivision or combination of its outstanding Common Stock into a
greater or lesser number of shares, then and in each such event the
Conversion Price shall be decreased or increased, respectively,
proportionately.
(e) ADJUSTMENT FOR CERTAIN DIVIDENDS AND
DISTRIBUTIONS. In the event the Corporation at any time or from time
to time after the Original Issue Date shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the maximum number
of shares (as set forth in the instrument relating thereto without
regard to any provisions contained therein for a subsequent adjustment
to such number) of Common Stock issuable in payment of such dividend
or distribution shall be deemed to be issued and outstanding as of the
time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date, by
multiplying the Conversion Price by a fraction,
(i) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed
to be issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed
to be issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution;
provided, however, that if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date
<PAGE> 13
and thereafter the Conversion Price shall be adjusted pursuant to this
Section 4(e) as of the time of actual payment of such dividends or
distributions.
(f) ADJUSTMENTS FOR RECLASSIFICATIONS AND FOR OTHER
DIVIDENDS AND DISTRIBUTIONS. In the event the Corporation at any time
or from time to time after the Original Issue Date shall effect a
reclassification of its Common Stock (other than one resulting in the
issue of additional shares of Common Stock) or shall make or issue, or
fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution to its
stockholders payable in securities of the Corporation other than
shares of Common Stock, then and in each such event provision shall be
made so that the holders of Series A Common Stock shall receive, upon
conversion thereof, the securities of the Corporation which they would
have received had their Series A Common Stock been converted into
Common Stock on the date of such event.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Rate
pursuant to this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with
the terms hereof and shall prepare and furnish to each holder of
Series A Common Stock a certificate 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 holders of at least two-thirds (2/3) of
the outstanding shares of Series A Common Stock, furnish or cause to
be furnished to all holder of Series A Common Stock a like certificate
setting forth (i) such adjustments and readjustments, (ii) the
Conversion Rate 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 Series A Common Stock.
(h) NOTICES OF RECORD DATE. In the event of any
setting by the Corporation of a record date for determining the
holders of any class of securities who are entitled to receive any
dividend (other than a cash dividend) or other distribution or any
right to subscribe for, purchase or acquire any shares of stock or
other securities of the Corporation, the Corporation shall mail to
each holder of Series A Common Stock at least twenty (20) days prior
to such record date, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution
or right.
(i) 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 A Common
Stock pursuant hereto.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
The Corporation shall at all times reserve and keep available out of
<PAGE> 14
its authorized but unissued shares of Common Stock solely for the
purpose of effecting the conversion of the shares of the Series A
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 A 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
A 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.
(k) NOTICES. Any notice required by the provisions of
this Section 4 to be given to the holders of shares of the Series A
Common Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his
address appearing on the books of the Corporation.
The shares of Series B Common Stock may be issued from time
to time in one or more subseries. The Board of Directors is hereby
authorized, by filing a certificate or certificates pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such subseries and to
fix the powers, preferences and rights of the shares of each subseries
of Series B Common Stock and the qualifications, limitations or
restrictions thereof, including but not limited to the fixing or
alteration of the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation
preferences of each subseries of Series B Common Stock.
V
The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws
of the Corporation.
VI
In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized
to make, repeal, alter, amend and rescind the Bylaws of the
Corporation.
VII
Election of directors at an annual or special meeting of
shareholders need not be by written ballot.
VIII
<PAGE> 15
Special meetings of the shareholders of the Corporation for
any purpose or purposes may be called at any time by the Board of
Directors or by a committee of the Board of Directors which has been
duly designated by the Board of Directors and whose powers and
authority, as provided in a resolution of the Board of Directors or in
the Bylaws of the Corporation, include the power to call such
meetings, but such special meetings may not be called by any other
person or persons; provided, however, that if and to the extent that
any special meeting of stockholders may be called by any other person
or persons specified in any provisions of the Certificate of
Incorporation or any amendment thereto or any certificate filed under
Section 151(g) of the General Corporation Law of Delaware (or its
successor statute as in effect from time to time hereunder), then such
special meeting may also be called by the person or persons, in the
manner, at the times and for the purposes so specified.
IX
The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute,
and all rights conferred on stockholders herein are granted subject to
this reservation.
X
The name and mailing address of the incorporator of the
Corporation is:
Mr. Richard R. Janssen
c/o Alan J. Barton, Esq.
Paul, Hastings, Janofsky & Walker
1299 Ocean Avenue, Fifth Floor
Santa Monica, California 90401
THE UNDERSIGNED, being the incorporator hereinbefore named,
for the purpose of forming a corporation to do business both within
and without the State of Delaware and in pursuance of the General
Corporation Law of Delaware, does make and file this Certificate,
hereby declaring and certifying that it is his act and deed and that
the facts herein stated are true, and accordingly has hereunto set his
hand this 17th day of August, 1983.
/s/ Richard R. Janssen
--------------------------------
Richard R. Janssen, Incorporator
<PAGE> 16
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
DELPHI INFORMATION SYSTEMS, INC.
DELPHI INFORMATION SYSTEMS, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, at
a meeting duly held on June 30, 1986, adopted resolutions proposing
and declaring advisable the following amendment to the Certificate of
Incorporation of said Corporation as follows:
"RESOLVED, that, subject to stockholder approval at the
Annual Meeting, the Certificate of Incorporation of this Corporation
be amended by adding an Article XI thereto which shall be and read 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 the law, (iii) under
<PAGE> 17
Section 174 of the General Corporation Law, or
(iv) for any transaction from which the director
derives an 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 XI
becomes effective."
SECOND: That the aforementioned amendment was duly adopted
by the vote of a majority of the outstanding stock of the Corporation
entitled to vote thereon in accordance with the applicable provisions
of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said DELPHI INFORMATION SYSTEMS, INC.
has caused its corporate seal to be hereunto affixed and this
Certificate to be signed by Walter F. Bauer, its Chairman of the
Board, and Michael E. McConnell, its Secretary, on this 24th day of
October, 1986.
DELPHI INFORMATION SYSTEMS, INC.
By /s/ Walter F. Bauer
-------------------------------
Walter F. Bauer,
Chairman of the Board
ATTEST:
/s/ Michael E. McConnell
-------------------------------
Michael E. McConnell, Secretary
(Corporate Seal)
<PAGE> 18
CERTIFICATE OF OWNERSHIP
MERGING
DELPHI SYSTEMS, INC.
and
DELPHI PERSONNEL SERVICES, INC.
into
DELPHI INFORMATION SYSTEMS, INC.
(Pursuant to Section 253 of the
General Corporation Law of Delaware)
Delphi Information Systems, Inc., a corporation incorporated on
the 22nd day of August, 1983, pursuant to the provisions of the
General Corporation Law of the State of Delaware, does hereby certify
that this corporation owns all the capital stock of Delphi Systems,
Inc., a corporation incorporated under the laws of the State of
California, and Delphi Personnel Services, Inc., a corporation
incorporated under the laws of the State of California, and that this
corporation, by a resolution of its board of directors duly adopted by
unanimous written consent effective as of April 23, 1987, determined
to and did merge into itself said Delphi Systems, Inc. and Delphi
Personnel Services, Inc., which resolution is in the following words,
to wit:
WHEREAS this corporation lawfully owns all the outstanding
stock of Delphi Systems, Inc., a corporation organized and
existing under the laws of California, and Delphi Personnel
Services, Inc., a corporation organized and existing under the
laws of California, and
WHEREAS this corporation desires to merge into itself the
said Delphi Systems, Inc. and Delphi Personnel Services, Inc. and
to be possessed of all the estate, property, rights, privileges
and franchises of said corporations.
NOW, THEREFORE, BE IT RESOLVED, that this corporation merge
into itself, and it does hereby merge into itself said Delphi
Systems, Inc. and Delphi Personnel Services, Inc. and assumes all
of their liabilities and obligations; and
FURTHER RESOLVED, that the Chairman of the Board or the
President or a Vice President, and the Secretary or Treasurer of
this corporation be and they hereby are directed to make and
execute, under the corporate seal of this corporation, a
certificate of ownership setting forth a copy of the resolution,
to merge said Delphi Systems, Inc. and Delphi Personnel Services,
Inc. and assume their liabilities and obligations, and the date
of adoption thereof, and to file the same in the office of the
<PAGE> 19
Secretary of the State of Delaware, and a certified copy thereof
in the office of the Recorder of Deeds of New Castle County; and
FURTHER RESOLVED, that the officers of this corporation be
and they hereby are authorized and directed to do all acts and
things whatsoever, whether within or without the State of
Delaware, which may be in anywise necessary or proper to effect
said merger.
IN WITNESS WHEREOF, said corporation has caused this certificate
to be signed by its Chairman of the Board and attested by its
secretary, and its corporate seal to be affixed, the 30th day of
April, 1987.
DELPHI INFORMATION SYSTEMS, INC.
By:/s/ Walter F. Bauer
------------------------------
Walter F. Bauer, Chairman
ATTEST:
/s/ M.E. McConnell
--------------------------------
Secretary
(Seal)
<PAGE> 20
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
DELPHI INFORMATION SYSTEMS, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
state of Delaware, does hereby certify:
First: That at a meeting of the board of directors of
DELPHI INFORMATION SYSTEMS, INC., resolutions were duly adopted
setting forth a proposed amendment to the certificate of incorporation
of said corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is as follows:
Resolved, that Article IV of the Certificate of
Incorporation of this corporation be amended in its entirety to read
as follows:
The Corporation is authorized to issue two
classes of stock designated "Preferred Stock"
and "Common Stock," respectively. The total
number of shares of Preferred Stock authorized
to be issued is two million (2,000,000) and each
such share shall have a par value of ten cents
($.10). The total number of shares of Common
Stock authorized to be issued is twelve million
(12,000,000) and each such share shall have a
par value of ten cents ($.10).
The shares of Preferred Stock may be issued from
time to time in one or more series. The Board
of Directors is hereby authorized, by filing a
certificate pursuant to the applicable law of
the State of Delaware, to establish from time to
time the number of shares to be included in each
such series, and to fix the designation, powers,
preferences and rights of the shares of each
such series and the qualifications, limitations
or restrictions thereof, including but not
limited to the fixing or alteration of the
dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of
redemption (including sinking fund provisions),
the redemption price or prices, and the
liquidation preferences of any wholly unissued
series of shares of Preferred Stock, or any of
them; and to increase or decrease the number of
shares of any series subsequent to the issue of
the shares of that series, but not below the
number of shares of such series then
<PAGE> 21
outstanding. In case the number of shares of
any series shall be so decreased, the shares
constituting such decrease shall resume the
status which they had prior to the adoption of
the resolution originally fixing the number of
shares of such series.
Second: That thereafter, pursuant to resolution of its
board of directors, a special meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance with
Section 222 of the General Corporation Law of the state of Delaware at
which meeting the necessary number of shares as required by statute
were voted in favor of the amendment.
Third: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of
the state of Delaware.
Fourth: That the capital of said corporation shall not be
reduced under or by reason of said amendment.
In witness whereof, said Corporation has caused this
certificate to be signed by Walter F. Bauer, its Chairman of the
Board, and M.E. McConnell, its secretary, this 28th day of May, 1987.
DELPHI INFORMATION SYSTEMS, INC.
By:/s/ Walter F. Bauer
---------------------------------
Walter F. Bauer Chairman
ATTEST:
By:/s/ M.E. McConnell
-------------------------------
M.E. McConnell
Secretary
<PAGE> 22
CERTIFICATE OF DESIGNATIONS
of
SERIES C 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 1, 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 he designated as "Series C
Preferred Stock" (the "Series C Preferred Stock") and the number of
shares constituting the Series C Preferred Stock shall be 75,000.
2. Dividends.
---------
(a) Subject to the prior preferences and other rights of
any capital stock of the Corporation ranking senior to the Series C
Preferred Stock, the holders of the Series C Preferred Stock shall be
entitled to receive dividends only when, as, and if declared by the
Board of Directors and such dividends shall be non-cumulative. No
dividends (other than those payable solely in the Common Stock of the
Corporation) shall be paid on any Common Stock or Series A or Series D
<PAGE> 23
Preferred Stock of the Corporation during any fiscal year of the
Corporation unless a dividend (including the amount of any dividends
paid pursuant to the above provisions of this Section 2) is paid with
respect to all outstanding shares of Series C Preferred Stock in an
amount for each such share of Series C Preferred Stock equal to or
greater than the dividends paid on each share of Series A and Series D
Preferred Stock and Common Stock. The equivalency of dividends on the
Series A, Series C and Series D Preferred Stock shall be determined by
dividing the dividends paid on one share of each series by the number
of shares of Common Stock into which such share could then be
converted and comparing the quotients, and the equivalency of
dividends on the Series C Preferred Stock and the Common Stock shall
be determined by dividing the dividends paid on one share of Series C
Preferred Stock by the number of shares of Common Stock into which
such share could then be converted and comparing the quotient with the
dividends paid on one share of Common Stock.
(b) 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 C Preferred Stock shall be entitled to a proportionate share of
any such distribution as though the holders of the Series C Preferred
Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Series C Preferred
Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
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 C Preferred Stock, the
holders of the Series C Preferred Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock by
reason of their ownership thereof, the amount of $100.00 per share (as
adjusted for any stock dividends, combinations or splits with respect
to such shares) plus all declared but unpaid dividends on such share
for each share of Series C 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, B, C and D Preferred Stock shall be
insufficient to permit the payment to such holders of each such series
the full preferential amount to which they are respectively entitled,
then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the
<PAGE> 24
Series A, B, C, and D Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled to receive.
(b) After payment to the holders of the Series C 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 C Preferred Stock, the entire
remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the
Common Stock and the holders of Series A, C and D Preferred Stock in
proportion to the shares of Common Stock then held by them and the
shares of Common Stock which they have the right to acquire upon
conversion of the shares of Series A, C and D Preferred Stock then
held by them.
(c) For purposes of this Section 3, (i) any acquisition of
the Corporation by means of merger or other form of corporate
reorganization in which outstanding shares of the Corporation are
exchanged for securities or other consideration issued, or caused to
be issued, by the acquiring corporation or its subsidiary (other than
a mere reincorporation transaction) or (ii) a sale of all or
substantially all of the assets of the Corporation, shall be treated
as a liquidation, dissolution or winding up of the Corporation and
shall entitle the holders of Series A, C and D Preferred Stock and
Common Stock to receive at the closing in cash, securities or other
property (valued as provided in Section 3(d) below) amounts as
specified in Sections 3(a) and 3(b) above.
(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.
-------------
(a) Each holder of shares of the Series C Preferred Stock
shall be entitled to the number of votes equal to the number of shares
of Common Stock into which such shares of Series C Preferred Stock
could be converted and shall have voting rights and powers equal to
the voting rights and powers of the Common Stock (except as otherwise
expressly provided herein or as required by law, voting together with
the Common Stock as a single class) and shall be entitled to notice of
any stockholders' meeting in accordance with the Bylaws of the
Corporation. Fractional votes shall not, however, be permitted and
any fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Series C Preferred Stock
held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
<PAGE> 25
5. Conversion.
----------
The holders of the Series C Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series C Preferred
Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, 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 $100.00 by the Conversion Price applicable to
such share, determined as hereinafter provided, in effect on the date
the certificate is surrendered for conversion. The price at which
shares of Common Stock shall be deliverable upon conversion of shares
of the Series C Preferred Stock (the "Series C Conversion Price")
shall initially be an amount which is equal to 60% of the avenge of
the closing prices of the Common Stock in the NASDAQ National Market
System, as reported by THE WALL STREET JOURNAL, for those trading days
which occur within a period of 120 calendar days ending on the date
preceding the date of the first issuance of Series C Preferred Stock.
Such initial Series C Conversion Price shall be adjusted as
hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share or Series C Preferred
Stock shall automatically be converted into shares of Common Stock at
the then-effective Series C Conversion Price, upon the earlier of (i)
the date specified by vote or written consent or agreement of holders
of at least two-thirds (2/3) of the shares of such series then
outstanding, or (ii) the date all of the shares of Common Stock into
which the Series C Preferred may be converted are registered with the
United States Securities and Exchange Commission.
(c) MECHANICS OF CONVERSION.
(i) Before any holder of Series C 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. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to
such holder of Series C Preferred Stock, a certificate or certificates
for the number of shares of Common Stock to which he shall be entitled
as aforesaid. 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 C Preferred Stock to be converted, and the person
or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
<PAGE> 26
(d) ADJUSTMENTS TO SERIES C CONVERSION PRICE FOR CERTAIN
DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Section
5(d), the following definitions apply:
(1) "OPTIONS" shall mean rights, options, or
warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities (defined below).
(2) "ORIGINAL ISSUE DATE" shall mean the date on
which a share of Series C Preferred Stock was first issued.
(3) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares (other than Common Stock and
Series A, B, C or D Preferred Stock) or other securities
convertible into or exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued (or, pursuant to Section
5(d)(iii), deemed to be issued) by the Corporation after the
Original Issue Date, other than shares of Common Stock issued or
issuable:
(A) upon conversion of shares of Series A,
B, C or D Preferred Stock;
(B) to officers, directors or employees of,
or consultants to, the Corporation pursuant to stock option
or stock purchase plans or agreements on terms approved by
the Board of Directors;
(C) as a dividend or distribution on Series
C Preferred Stock;
(D) for which adjustment of the Series C
Conversion Price is made pursuant to Section 5(e);
(E) upon exercise of warrants to purchase
250,000 shares of Common Stock issued to The Insurance
Company of North America; or
(F) upon exercise of warrants to purchase
75,000 shares of Common Stock issued to Silicon Valley
flank.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. Any provision
herein to the contrary notwithstanding, no adjustment in the
Conversion Price for Series C Preferred Stock shall be made in respect
of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to Section 5(d)(v)
<PAGE> 27
hereof) for an Additional Share of Common Stock issued or deemed to be
issued by the Corporation is less than the Series C Conversion Price
in effect on the date of, and immediately prior to, such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time to time
after the original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders
of any class of securities then entitled to receive any such Options
or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) of
Common Stock issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue
or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustments in the Series C
Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the
Corporation, or decrease or increase in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Series C Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange
under such Convertible Securities (provided, however, that no
such adjustment of the Series C Conversion Price shall affect
Common Stock previously issued upon conversion of the Series C
Preferred Stock);
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series C
Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and
any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(A) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of
<PAGE> 28
Common Stock issued were the shares of Common Stock, if
any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities
and the consideration received therefor or was the
consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon
such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus
the additional consideration, if any, actually received by
the Corporation upon such conversion or exchange, and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at
the time of issue of such Options, and the consideration
received by the Corporation for the Additional Shares of
Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the
Corporation (determined pursuant to Section 5(d)(v)) upon
the issue of the Convertible Securities with respect to
which such options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Series C Conversion
Price to an amount which exceeds the lower of (a) the Series C
Conversion Price on the original adjustment date (prior to
adjustment), or (b) the Series C Conversion Price that would have
resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date;
and
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue
thereof, no adjustment of the Series C Conversion Price shall be
made until the expiration or exercise of all such options.
whereupon such adjustment shall be made in the same manner
provided in clause (3) above.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation, at
any time after the Original Issue Date, shall issue Additional Shares
of Common Stock (including Additional Shares of Common Stock deemed to
be issued pursuant to Section 5(d)(iii)) without consideration or for
a consideration per share less than the Series C Conversion Price in
effect on the date of and immediately prior to such issue, then and in
such event, the Conversion Price for such Series C Preferred Stock
shall be reduced, concurrently with such issue, to a price (calculated
to the nearest cent) at which such Additional Shares were sold or at
which Additional Shares are issuable.
<PAGE> 29
(v) DETERMINATION OF CONSIDERATION. For purposes of
this Section C.4(d), the consideration received by the Corporation for
the issue of any Additional Shares of Common Stock shall be computed
as follows:
(1) CASH AND PROEPRTY. Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the
Corporation excluding amounts paid or payable for accrued
interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the
Board; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities
or other assets of the Corporation for consideration which
covers both, the proportion of such consideration so
received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for
additional shares of Common Stock deemed to have been issued
pursuant to Section 5(d)(iii), relating to Options and
Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the
issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without
regard to any provision contained therein designed to
protect against dilution) payable to the Corporation upon
the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options
for Convertible Securities and the conversion or exchange
of such Convertible Securities by
(B) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed
to protect against dilution) issuable upon the exercise of
such Options or conversion or exchange of such Convertible
Securities.
<PAGE> 30
(e) ADJUSTMENTS TO CONVERSION PRICES FOR STOCK DIVIDENDS
AND FOR COMBINATIONS OR SUBDIVISIONS OF COMMON STOCK. In the event
that the Corporation at any time or from time to time after the
Original Issue Date shall declare or pay, without consideration, any
dividend on the Common 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 C Conversion 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, without consideration, any
dividend on the Common 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.
(f) ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION. If
the Common Stock issuable upon conversion of the Series C Preferred
Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for in Section 5(e)
above or a merger or other reorganization referred to in Section 3(c)
above), the Series C Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series C
Preferred Stock shall be convertible into, in lieu of the number of
shares of Common Stock which the holders would otherwise have been
entitled to receive, a number of shares of such other class or classes
of stock equivalent to the number of shares of Common Stock that would
have been subject to receipt by the holders upon conversion of the
Series C Preferred Stock immediately before that change.
(g) 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 C Preferred Stock against impairment.
(h) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of any Conversion Price pursuant to
<PAGE> 31
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 C 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 the
holder of Series C Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Series C Conversion Price 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 C Preferred Stock.
(i) 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 the 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 C Preferred
Stock:
(i) 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
(ii) 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).
(j) 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 C Preferred
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 such conversion.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
<PAGE> 32
authorized but unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the shares of the Series C Preferred
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 C Preferred 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
C Preferred 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.
(l) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of any share or shares of Series C Preferred
Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of Series C Preferred
Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the
conversion 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 (as determined by reference to the stock price quoted in
THE WALL STREET JOURNAL or as reported on NASDAQ for the day
immediately prior to such conversion).
(m) NOTICES. Any notice required by the provisions of this
Section 5 to be given to the holders of shares of Series C Preferred
Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address
appearing on the books of the Corporation.
6. Restrictions and Limitations.
----------------------------
(a) So long as any shares of Series C Preferred Stock
remain outstanding, the Corporation shall not, without the vote or
written consent by the holders of at least sixty-six and two-thirds
(66-2/3) of the then outstanding shares of the Series C Preferred
Stock, voting as a single class:
(i) Redeem, purchase or otherwise acquire for value
(or pay into or set aside for a sinking fund for such purpose) any
share or shares of Series C Preferred Stock otherwise than by
conversion in accordance with Section 5 hereof;
(ii) Redeem, purchase or otherwise acquire (or pay into
or set aside for sinking fund for such purpose) any of the Common
Stock; provided, however, that this restriction shall not apply to the
<PAGE> 33
repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for the
Company or any subsidiary pursuant to agreements under which the
Company has the option to repurchase such shares at cost or at cost
plus interest at a rate not to exceed nine percent (9%) per annum upon
the occurrence of certain events, such as the termination of
employment, provided further, however, that the total amount applied
to the repurchase of shares of Common Stock shall not exceed $100,000
during any twelve (12) month period;
(iii) Authorize or issue, or obligate itself to
issue, any other equity security (including any security convertible
into or exercisable for any equity security) senior to or on a parity
with the Series C Preferred Stock as to voting rights, conversion
rights (including antidilution), dividend rights, redemption rights,
or liquidation preferences; provided however, that this restriction
shall not apply to equity securities issued in connection with the
company's acquisition of eighty percent (80%) or more of the shares or
assets of another corporation and which have been approved by the
Company's Board of Directors.
(iv) Effect any sale, lease, assignment, transfer, or
other conveyance of all or substantially all of the assets of the
Corporation or any of its subsidiaries, or any consolidation or merger
involving the Corporation or any of its subsidiaries, or any
reclassification or other change of any stock, or any recapitalization
of the Corporation if such action is substantially prejudicial to the
holders of Series C Preferred Stock;
(b) The Corporation shall not amend its Certificate of
Incorporation or Bylaws without the approval, by vote or written
consent, by the holders of 66-2/3% of the Series C Preferred Stock if
such amendment would change any of the rights, preferences or
privileges provided for herein for the benefit of any shares of Series
C Preferred Stock. Without limiting the generality of the preceding
sentence, the Corporation will not amend its Certificate of
Incorporation or Bylaws without the approval of the holders of 66-2/3%
of the Series C Preferred Stock if such amendment would:
(i) Reduce the dividend rates on the Series C Preferred
Stock provided for herein, or if cumulative, make such dividends
noncumulative, or defer the date from which dividends will accrue, or
cancel accrued and unpaid dividends, or change the relative seniority
rights of the holders of the Series C Preferred Stock as to the
payment of dividends in relation to the holders of any other capital
stock of the Corporation;
(ii) Reduce the amount payable to the holders of the
Series C Preferred Stock upon the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, or change
the relative seniority of the liquidation preferences of the holders
<PAGE> 34
of the Series C Preferred Stock to the rights upon liquidation of the
holders of any other capital stock of the Corporation;
(iii) Make the Series C Preferred Stock redeemable
at the option of the Corporation; or
(iv) Cancel or modify the Conversion Rights of the
Series C Preferred Stock provided for in Section 5 hereof.
7. No Reissuance of Series C Preferred Stock.
-----------------------------------------
No share or shares of Series C Preferred Stock acquired by the
Corporation by reason 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 this 13th day of December, 1993.
/s/ David J. Torrence
----------------------------
David J. Torrence
President
Attest:
/s/ Daniel F. Dunne
--------------------------------
Daniel F. Dunne
Secretary
<PAGE> 35
AMENDED CERTIFICATE OF DESIGNATIONS
of
SERIES D 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, no shares of the Corporation's Series D Preferred
Stock, par value $.10 per share (the "Series D Preferred Stock"), have
been issued; and
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 May __, 1994 adopted
the following resolution providing for the Amended Certificate of
Designations of Series D 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, the Corporation's Certificate of
Designations of Series D Preferred Stock, par value $.10 per share
(the "Series D Preferred Stock"), of the Corporation be, and it hereby
is, amended and restated to read as follows:
1. Designation and Amount.
----------------------
The shares of such series shall be designated as Series D
Preferred Stock (the "Series D Preferred Stock") and the number of
shares constituting the Series D Preferred Stock shall be 16,577.
2. Dividends.
---------
(a) Subject to the prior preferences and other rights of
any capital stock of the Corporation ranking senior to the Series D
Preferred Stock, the holders of the Series D Preferred Stock shall be
entitled to receive dividends only when, as, and if declared by the
<PAGE> 36
Board of Directors and such dividends shall be noncumulative. No
dividends (other than those payable solely in the Common Stock of the
Corporation) shall be paid on any Common Stock of the Corporation
during any fiscal year of the Corporation unless a dividend (including
the amount of any dividends paid pursuant to the above provisions of
this Section 2) is paid with respect to all outstanding shares of
Series D Preferred Stock in an amount for each such share of Series D
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 D Preferred Stock could then be converted.
(b) 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 D Preferred Stock shall be entitled to a proportionate share of
any such distribution as though the holders of the Series D Preferred
Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Series D Preferred
Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
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 senior class of
preferred stock of the Corporation which the Board of Directors may
designate or authorize from time to time ("Senior Preferred Stock"),
if any, (i) the holders of the Series D Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders
of any junior class of preferred stock which the Board may designate
or authorize from time to time that is to be junior in liquidation to
any of the Series D Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, any Senior Preferred Stock or any Parity
Preferred Stock (as defined below) ("Junior Preferred Stock"), if any,
or to holders of Common Stock, by reason of their ownership thereof,
the amount of $226.20 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all declared
but unpaid dividends on such share for each share of Series D
Preferred Stock then held by them; (ii) the holders of the Series B
Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets or surplus funds of the
Corporation to holders of Junior Preferred Stock, if any, or to
holders of Common 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 all declared
<PAGE> 37
but unpaid dividends on such share for each share of Series B
Preferred Stock then held by them; (iii) the holders of the Series C
Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets or surplus funds of the
Corporation to holders of Junior Preferred Stock, if any, or to
holders of Common Stock, by reason of their ownership thereof, the
amount of $100.00 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all declared
but unpaid dividends on such share for each share of Series C
Preferred Stock then held by them; and (iv) the holders of any other
class or series of preferred stock which the Board may designate or
authorize from time to time that is to rank on parity in liquidation
with the Series D Preferred Stock, the Series B Preferred Stock or the
Series C Preferred Stock ("Parity Preferred Stock"), if any, shall be
entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to holders of
Junior Preferred Stock, if any, or to holders of Common Stock, by
reason of their ownership thereof, the amount per share specified in
the certificate of designations of such Parity Preferred Stock (as
adjusted for any stock dividends, combinations or splits with respect
to such shares) plus all declared but unpaid dividends on such share
for each share of Parity Preferred Stock then held by them. If upon
the occurrence of such event and after distributions to holders of
Senior Preferred Stock, if any, in accordance with the terms set forth
in the instrument or instruments designating or authorizing Senior
Preferred Stock, if any, the assets and funds thus distributed among
the holders of the Series B, C and D Preferred Stock and Parity
Preferred Stock, if any, shall be insufficient to permit the payment
to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the
Series B, C and D Preferred Stock and Parity Preferred Stock, if any,
in proportion to the preferential amount each such holder is otherwise
entitled to receive.
(b) After payment to the holders of Series B, C and D
Preferred Stock and Parity Preferred Stock, if any, of the amounts set
forth in Section 3(a) above, holders of Junior Preferred Stock, if
any, shall receive such amounts as they are entitled to receive as set
forth in the instrument or instruments designating such Junior
Preferred Stock.
(c) After payment to the holders of Senior Preferred Stock,
if any, and Series B, C and D Preferred Stock and Parity Preferred
Stock, if any, and the holders of Junior Preferred Stock of the
amounts set forth in Section 3(a) and (b) above, the entire remaining
assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the
Senior Preferred Stock, if any, (if so provided in the instrument or
instruments designating or authorizing such Senior Preferred Stock),
the holders of Series C and D Preferred Stock and Parity Preferred
Stock, if any, (if so provided in the instrument or instruments
<PAGE> 38
designating such Parity Preferred Stock) in proportion to the shares
of Common Stock which they have the right to acquire upon conversion
of the shares of Series C and D Preferred Stock and Parity Preferred
Stock, if any, then held by them, holders of Junior Preferred Stock,
if any, (if so provided in the instrument or instruments designating
such Junior Preferred Stock) and the holders of Common Stock in
proportion to the shares of Common Stock then held by such holders.
(d) For purposes of this Section 3, (i) any acquisition of
the Corporation by means of merger or other form of corporate
reorganization in which outstanding shares of the corporation are
exchanged for securities or other consideration issued, or caused to
be issued, by the acquiring corporation or its subsidiary (other than
a mere reincorporation transaction) or (ii) a sale of all or
substantially all of the assets of the Corporation, shall be treated
as a liquidation, dissolution or winding up of the Corporation and
shall entitle holders of Senior Preferred Stock, if any, holders of
Series B, C and D Preferred Stock and Parity Preferred Stock, if any,
holders of Junior Preferred Stock, (if so provided in the instrument
or instruments designating such Parity Preferred Stock) and holders of
Common Stock to receive at the closing in cash, securities or other
property (valued as provided in Section 3(e) below) amounts as
specified in Sections 3(a) and 3(b) above.
(e) 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.
-------------
Each holder of shares of the Series D Preferred Stock shall
be entitled to the number of votes equal to the number of shares of
Common Stock into which such shares of Series D Preferred Stock could
be converted and shall have voting rights and powers equal to the
voting rights and powers of the Common Stock (except as otherwise
expressly provided herein or as required by law, voting together with
the Common Stock as a single class) and shall be entitled to notice of
any stockholders' meeting in accordance with the Bylaws of the
Corporation. Fractional votes shall not, however, be permitted and
any fractional voting rights resulting from the above formula (after
aggregating all shares into which shares of Series D Preferred Stock
held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
5. Conversion.
----------
The holders of the Series D Preferred Stock shall have
conversion rights as follows (the "Conversion Rights");
<PAGE> 39
(a) RIGHT TO CONVERT. Each share of Series D Preferred
Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, 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 $226.20 by the Conversion Price applicable to
such share, determined as hereinafter provided, in effect on the date
the certificate is surrendered for conversion. The price at which
shares of Common Stock shall be deliverable upon conversion of shares
of the Series D Preferred Stock (the "Series D Conversion Price")
shall initially be $2.00 per share of Common Stock. Such initial
Series D Conversion Price shall be adjusted as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Series D Preferred
stock shall automatically be converted into shares of Common Stock at
the then effective Series D Conversion Price, upon the earlier of (i)
the date specified by vote or written consent or agreement of holders
of at least two-thirds (2/3) of the shares of such series then
outstanding, or (ii) the date all of the shares of Common Stock into
which the Series D Preferred may be converted are registered with the
United States Securities and Exchange Commission under the Securities
Act of 1933, as amended.
(c) MECHANICS OF CONVERSION. Before any holder of Series D
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.
The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series D Preferred Stock, a
certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid. 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 D Preferred Stock to be
converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon 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 SERIES D CONVERSION PRICE FOR CERTAIN
DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this section
5(d), the following definitions apply:
(1) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible securities (defined below).
<PAGE> 40
(2) "ORIGINAL ISSUE DATE" shall mean the date on
which a share of Series D Preferred Stock was first issued.
(3) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares (other than Common Stock and Series
D Preferred Stock) or other securities convertible into or
exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to Section
5(d)(iii), deemed to be issued) by the Corporation after the Original
Issue Date, other than shares of Common Stock issued or issuable;
(A) upon conversion of shares of Series A,
B, C or D Preferred Stock or shares of Senior Preferred Stock, Parity
Preferred Stock or Junior Preferred Stock, if any;
(B) to officers, directors or employees of,
or consultants to, the Corporation pursuant to stock option or stock
purchase plans or agreements on terms approved by the Board of
Directors;
(C) as a dividend or distribution on Series
D Preferred Stock;
(D) for which adjustment of the Series
D Conversion Price is made pursuant to Section 5(e);
(E) upon exercise of warrants to purchase
250,000 shares of Common Stock issued to The Insurance Company of
North America; or
(F) upon exercise of warrants to
purchase 75,000 shares of Common Stock issued to Silicon Valley Bank.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. Any provision
herein to the contrary notwithstanding, no adjustment in the
Conversion Price for Series D Preferred Stock shall be made in respect
of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to section 5(d)(v)
hereof) for an Additional Share of Common Stock issued or deemed to be
issued by the Corporation is less than the Conversion Price for such
series of Preferred Stock in effect on the date of, and immediately
prior to, such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time to time
after the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders
of any class of securities then entitled to receive any such Options
or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any
<PAGE> 41
provisions contained therein designed to protect against dilution) of
Common Stock issuable upon the exercise of such Options or, in the
case of Convertible Securities and options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue
or, in case such a record date shall have been fixed, as of the close
of business on such record date, provided that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustments in the Series D
Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the Corporation,
or decrease or increase in the number or shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Series D Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities (provided,
however, that no such adjustment of the Series D Conversion Price
shall affect Common Stock previously issued upon conversion of the
Series D Preferred Stock);
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible Securities
which shall not have been exercised, the Series D conversion Price
computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock
issued were the shares of Common Stock, if any, actually issued upon
the exercise of such options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of
all such options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the
issue for all such Convertible Securities which were actually
converted or exchanged plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange;
and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such
<PAGE> 42
Options, and the consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been then issued was
the consideration actually received by the Corporation for the issue
of such options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation (determined pursuant
to Section 5(d)(v) upon the issue of the Convertible Securities with
respect to which such options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the affect of increasing the Series D Conversion
Price to an amount which exceeds the lower of (a) the Series D
Conversion Price on the original adjustment date (prior to
adjustment), or (b) the Series D Conversion Price that would have
resulted from any issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date.
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no
adjustment of the Series D Conversion Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment
shall be made in the same manner provided in clause (3) above.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation, at
any time after the Original Issue Date, shall issue Additional Shares
of Common Stock (including Additional Shares of Common Stock deemed to
be issued pursuant to Section 5(d)(iii)) without consideration or for
a consideration per share less than the Conversion Price with respect
to the Series D Preferred Stock in effect on the date of and
immediately prior to such issue, then and in such event, the
Conversion Price for such Series D Preferred Stock shall be reduced,
concurrently with such issuer to a price (calculated to the nearest
cent) at which such Additional Shares were sold or at which Additional
Shares are issuable.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this Section C.4(d), the consideration received by the Corporation for
the issue of any Additional Shares of Common Stock shall be computed
as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued
dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board; and
<PAGE> 43
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, the
proportion of such consideration so received, computed as provided in
clauses (A) and (B) above, as determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for additional
shares of Common Stock deemed to have been issued pursuant to Section
5(d)(iii), relating to Options and Convertible Securities shall be
determined by dividing:
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount
of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein designed to
protect against dilution) payable to the Corporation upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein designed to protect against
the dilution) issuable upon the exercise of such Options or conversion
or exchange of such Convertible Securities.
(e) ADJUSTMENTS TO CONVERSION PRICES FOR STOCK DIVIDENDS
AND FOR COMBINATION OR SUBDIVISION OF COMMON STOCK. In the event that
this Corporation at any time or from time to time after the Original
Issue Date shall declare or pay, without consideration, any dividend
on the Common 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 Conversion
Price for the Series D Preferred Stock 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 this corporation shall declare or pay, without
consideration, any dividend on the Common 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.
<PAGE> 44
(f) ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION.
If the Common Stock issuable upon conversion of the Series D Preferred
Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for in Section 5(e)
above or a merger or other reorganization referred to in Section B(c)
above), the Series D Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series D
Preferred Stock shall be convertible into, in lieu of the number of
shares of Common Stock which the holders would otherwise have been
entitled to receive, and number of shares of such other class or
classes of stock equivalent to the number of shares of Common Stock,
that would have been subject to receipt by the holders upon conversion
of the Series D Preferred Stock immediately before that change.
(g) 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 D Preferred Stock against impairment.
(h) CERTIFICATES AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of any Conversion Price 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 D 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 the
holder of Series D Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price for the Series D
Preferred Stock at the time in affect, 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 D Preferred
Stock.
(i) NOTICES OF RECORD, ETC. 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 the class or series of its
stock any additional shares of stock or any class or series or other
<PAGE> 45
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 D 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).
(j) 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 A Preferred
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 such conversion.
(k) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. 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 affecting the conversion of the shares of the Series D Preferred
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 D Preferred 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
D Preferred 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.
(l) FRACTIONAL SHARES. No fractional share shall be issued
upon the conversion of any share or shares of Series D Preferred
Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of Series D Preferred
Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the
<PAGE> 46
conversion 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 (as determined by reference to the stock price quoted in
THE WALL STREET JOURNAL or as reported on NASDAQ for the day
immediately prior to such conversion).
(m) NOTICES. Any notice required by the provisions of this
Section 5 to be given to the holders of shares of Series D Preferred
Stock shall be deemed given it deposited, in the United States mail,
postage prepaid, and addressed to each holder of record at his address
appearing on the books of the Corporation.
6. Restrictions and Limitations.
----------------------------
(a) So long as any shares of Series D Preferred Stock
remain outstanding, the Corporation shall not, without the vote or
written consent by the holders of at least sixty-six and two-thirds
(66-2/3) of the then outstanding shares of the Series D Preferred
Stock, voting as a single class:
(i) Redeem, purchase or otherwise acquire for value
(or pay into or set aside for a sinking fund for such purpose) any
share or shares of Series D Preferred Stock otherwise than by
conversion in accordance with Section 5 hereof;
(ii) Redeem, purchase or otherwise acquire (or pay into
or set aside for sinking fund for such purpose) any of the Common
Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for the
Corporation or any subsidiary pursuant to agreements under which the
Corporation has the option to repurchase such shares at cost or at
cost plus interest at a rate not to exceed nine percent (9%) per annum
upon the occurrence of certain events, such as the termination of
employment, provided further, however, that the total amount applied
to the repurchase of shares of Common Stock shall not exceed $100,000
during any twelve (12) month period;
(iii) Authorize or issue, or obligate itself to
issue, any other equity security (including any security convertible
into or exercisable for any equity security) senior to or on a parity
with the Series D Preferred Stock (including any Senior Preferred
Stock or Parity Preferred Stock) as to voting rights, conversion
rights (including antidilution), dividend rights, redemption rights,
or liquidation preferences; provided however, that this restriction
shall not apply to equity securities issued in connection with the
Corporation's acquisition of eighty percent (80%) or more of the
shares or assets of another corporation and which have been approved
by the Corporation's Board of Directors; or
<PAGE> 47
(iv) Effect any sale, lease, assignment, transfer, or
other conveyance of all or substantially all of the assets of the
Corporation or any of its subsidiaries, or any consolidation or merger
involving the Corporation or any of its subsidiaries, or any
reclassification or other change of any stock, or any recapitalization
of the Corporation if such action is substantially prejudicial to the
holders of Series D Preferred Stock.
(b) The Corporation shall not amend its Certificate of
Incorporation or Bylaws without the approval, by vote or written
consent, by the holders of 66-2/3% of the Series D Preferred Stock if
such amendment would change any of the rights, preferences or
privileges provided for herein for the benefit of any shares of Series
D Preferred Stock. Without limiting the generality of the preceding
sentence, the Corporation will not amend its Certificate of
Incorporation or Bylaws without the approval of the holders of 66-2/3%
of the Series D Preferred Stock if such amendment would;
(i) Reduce the dividend rates on the Series D
Preferred Stock provided for herein, or if cumulative, make such
dividends noncumulative, or defer the date from which dividends will
accrue, or cancel accrued and unpaid dividends, or change the relative
seniority rights of the holders of the Series D Preferred Stock as to
the payment of dividends in relation to the holders of any other
capital stock of the Corporation;
(ii) Reduce the amount payable to the holders of the
Series D Preferred Stock upon the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation, or change
the relative seniority of the liquidation preferences of the holders
of the Series D Preferred Stock to the rights upon liquidation of the
holders of any other capital stock of the Corporation;
(iii) Make the Series A Preferred Stock redeemable
at the option of the Corporation; or
(iv) Cancel or modify the Conversion Rights of the
Series D Preferred Stock provided for in Section 3 hereof.
7. No Reissuance of Series D Preferred Stock.
-----------------------------------------
No share or shares of Series D Preferred Stock acquired by
the Corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued, and all such shares will be canceled,
retired and eliminated from the shares which the Corporation shall be
authorized to issue.
<PAGE> 48
IN WITNESS WHEREOF, this Amended Certificate of
Designation is executed on behalf of the Corporation by its President
and attested by its Secretary as of this 20th day of May, 1994.
/s/ David J. Torrence
----------------------------------
David J. Torrence
President
Attest:
/s/ Daniel F. Dunne
-------------------------------------
Daniel F. Dunne
Secretary
<PAGE> 49
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
DELPHI INFORMATION SYSTEMS, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
First: That, at a meeting of the board of directors of
DELPHI INFORMATION SYSTEMS, INC., resolutions were duly adopted
setting forth a proposed amendment to the certificate of incorporation
of said corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment is as follows:
Resolved, that Article IV of the Certificate of
Incorporation of this corporation be amended in its entirety to read
as follows:
The Corporation is authorized to issue two
classes of stock designated "Preferred Stock"
and "Common Stock," respectively. The total
number of shares of Preferred Stock authorized
to be issued is two million (2,000,000) and each
such share shall have a par value of ten cents
($.10). The total number of shares of Common
Stock authorized to be issued is fifty million
(50,000,000) and each such share shall have a
par value of ten cents ($.10).
The shares of Preferred Stock may be issued
from time to time in one or more series. The
Board of Directors is hereby authorized, by
filing a certificate pursuant to the applicable
law of the State of Delaware, to establish from
time to time the number of shares to be included
in each such series, and to fix the designation,
powers, preferences and rights of the shares of
each such series and the qualifications,
limitations or restrictions thereof, including
but not limited to the fixing or alteration of
the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of
redemption (including sinking fund provisions),
the redemption price or prices, and the
liquidation preferences of any wholly unissued
series of shares of Preferred Stock, or any of
them; and to increase or decrease the number of
shares of any series subsequent to the issue of
the shares of that series, but not below the
number of shares of such series then
<PAGE> 50
outstanding. In case the number of shares of
any series shall be so decreased, the shares
constituting such decrease shall resume the
status which they had prior to the adoption of
the resolution originally fixing the number of
shares of such series.
Second: That thereafter, pursuant to resolution of its
board of directors, a special meeting of the stockholders of said
corporation was duly called and held upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware,
at which meeting the necessary number of shares as required by statute
were voted in favor of the amendment.
Third: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
Fourth: That the capital of said corporation shall not be
reduced under or by reason of said amendment.
In witness whereof, said corporation has caused this
certificate to be signed by M. Denis Connaghan, its President and
Chief Executive Officer, and John R. Sprieser, its Senior Vice
President-Finance and Secretary, this 17th day of March 1995.
DELPHI INFORMATION SYSTEMS, INC.
By:/s/ M. Denis Connaghan
-----------------------
M. Denis Connaghan
President and Chief
Executive Officer
ATTEST:
By:/s/ John R. Sprieser
-----------------------------
John R. Sprieser
Senior Vice President-Finance
and Secretary
<PAGE> 51
CERTIFICATE OF
OWNERSHIP AND MERGER
MERGING
COMPUSULT, INC.
CONTINENTAL SYSTEMS, INC.
DELPHI ACQUISITION CORPORATION
INSURNET, INCORPORATED
MS INTERNATIONAL ACQUISITION CORPORATION
REDSHAW, INC.
AND
SPECIALTY PROGRAM SERVICES, INC.
INTO
DELPHI INFORMATION SYSTEMS, INC.
Pursuant to Section 253 of the Delaware General Corporation
Law, Delphi Information Systems, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Corporation was incorporated on August 22,
1983, pursuant to the laws of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding
shares of the stock of Compusult, Inc., a corporation incorporated on
October 26, 1989, pursuant to the laws of the State of Arizona;
Continental Systems, Inc., a corporation incorporated on October 22,
1980, pursuant to the laws of the State of Michigan; Delphi
Acquisition Corporation, a corporation incorporated on July 30, 1985,
pursuant to the laws of the State of California; Insurnet,
Incorporated, a corporation incorporated on October 1, 1980, pursuant
to the laws of the State of Delaware; MS International Acquisition
Corporation, a corporation incorporated on November 15, 1993, pursuant
<PAGE> 52
to the laws of the State of Delaware; Redshaw, Inc., a corporation
incorporated on November 12, 1963, pursuant to the laws of the
Commonwealth of Pennsylvania; and Specialty Program Services, Inc., a
corporation incorporated on October 4, 1984, pursuant to the laws of
the State of Michigan (collectively, the "Subsidiaries").
THIRD: That, pursuant to the following resolution, which
was duly adopted by the Board of Directors of the Corporation in
accordance with the By-laws of the Corporation and the laws of the
State of Delaware on June 12, 1995, the Corporation determined to
merge into itself, and did so merge into itself, the Subsidiaries:
BE IT HEREBY RESOLVED by the Board of Directors
of Delphi Information Systems, Inc., a Delaware
corporation (the `Corporation'), that Compusult,
Inc., an Arizona corporation; Continental
Systems, Inc., a Michigan corporation; Delphi
Acquisition Corporation, a California
corporation; Insurnet, Incorporated, a Delaware
corporation; MS International Acquisition
Corporation, a Delaware corporation; Redshaw,
Inc., a Pennsylvania corporation; and Specialty
Program Services, Inc., a Michigan corporation,
be merged with and into the Corporation pursuant
to the following Plan of Merger, which is hereby
adopted by the Board of Directors of the
Corporation:
`1. This Plan of Merger provides for the
merger (the Merger) of the following wholly-
owned subsidiaries (the Subsidiaries) of Delphi
Information Systems, Inc., a Delaware
corporation (the Corporation), with and into the
Corporation, which shall be the surviving
corporation of the Merger:
Compusult, Inc., an Arizona corporation
Continental Systems, Inc., a Michigan corporation
Delphi Acquisition Corporation, a California corporation
Insurnet, Incorporated, a Delaware corporation
MS International Acquisition Corporation, a Delaware
corporation
Redshaw, Inc., a Pennsylvania corporation
Specialty Program Services, Inc., a Michigan corporation
<PAGE> 53
2. The outstanding capital stock of each
of the Subsidiaries is as follows:
COMPUSULT, INC. The outstanding capital stock
of Compusult, Inc. consists of 3,000 shares of
common stock, all of which are owned by the
Corporation.
CONTINENTAL SYSTEMS, INC. The outstanding
capital stock of Continental Systems, Inc.
consists of 250 shares of common stock, all of
which are owned by the Corporation.
DELPHI ACQUISITION CORPORATION. The
outstanding capital stock of Delphi Acquisition
Corporation consists of 1,000 shares of common
stock, all of which are owned by the
Corporation.
INSURNET, INCORPORATED. The outstanding capital
stock of Insurnet, Incorporated consists of
8,000 shares of common stock and 8,000 shares of
preferred stock, all of which are owned by the
Corporation.
MS INTERNATIONAL ACQUISITION CORPORATION. The
outstanding capital stock of MS International
Acquisition Corporation consists of 1,000 shares
of common stock, all of which are owned by the
Corporation.
REDSHAW, INC. The outstanding capital stock of
Redshaw, Inc. consists of 1,000 shares of common
stock, all of which are owned by the
Corporation.
SPECIALTY PROGRAM SERVICES, INC. The
outstanding capital stock of Specialty Program
Services, Inc. consists of 1,000 shares of
common stock, all of which are owned by the
Corporation.
3. Pursuant to the Merger, all of the
outstanding shares of capital stock and other
securities of each of the Subsidiaries, all of
which are owned by the Corporation, shall be
extinguished and each of the Subsidiaries shall
cease to exist.
4. The Certificate of Incorporation and
By-laws of the Corporation (as in effect
immediately prior to the date specified in
<PAGE> 54
paragraph 6 hereof), and the directors and
officers of the Corporation immediately prior to
the date specified in paragraph 6 hereof, shall
be unchanged by the Merger.
5. This Plan of Merger may be amended or
abandoned by the Board of Directors of the
Corporation at any time prior to the filing of
Articles of Merger with the Corporation
Commission of the State of Arizona, a
Certificate of Ownership and Merger with the
Secretary of State of the State of California, a
Certificate of Ownership and Merger with the
Secretary of State of the State of Delaware, a
Certificate of Merger with the Department of
Commerce of the State of Michigan, or Articles
of Merger with the Department of State of the
Commonwealth of Pennsylvania.
6. The Merger shall become effective on
June 30, 1995.'
FOURTH: The Merger shall become effective on the date
specified in paragraph 6 of the Plan of Merger set forth above.
FIFTH: Anything herein or elsewhere to the contrary
notwithstanding, the Plan of Merger may be amended or terminated and
abandoned by the Board of Directors of the Corporation at any time
prior to the date of filing of this Certificate of Ownership and
Merger with the Secretary of State.
<PAGE> 55
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Ownership and Merger to be signed by M. Denis
Connaghan, its President and Chief Executive Officer, and attested by
John R. Sprieser, its Secretary, this 12th day of June 1995.
DELPHI INFORMATION SYSTEMS, INC.
By: /s/ M. Denis Connaghan
--------------------------------
M. Denis Connaghan
President and Chief Executive
Officer
ATTEST:
By: /s/ John R. Sprieser
---------------------------
John R. Sprieser
Secretary
<PAGE> 56
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
<PAGE> 57
Stock") and the Corporation's Series D Preferred Stock (the "Series D
Preferred Stock") in all respects.
2. Dividends.
---------
(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 he 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
<PAGE> 58
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
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
<PAGE> 59
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 he 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);
(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.
<PAGE> 60
(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 Instrument,
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.
5. Conversion.
----------
<PAGE> 61
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
<PAGE> 62
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.
(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 he 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 OR 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 shalt be combined or consolidated,
<PAGE> 63
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 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
<PAGE> 64
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
(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 he 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.
<PAGE> 65
(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 or 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.
(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
<PAGE> 66
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 Stock 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
<PAGE> 67
(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 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.
<PAGE> 68
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
<PAGE> 69
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
DELPHI INFORMATION SYSTEMS, INC., a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify:
First: That, at a meeting of the board of directors of
DELPHI INFORMATION SYSTEMS, INC., resolutions were duly adopted
setting forth a proposed amendment to the certificate of incorporation
of said corporation and declaring said amendment to be advisable,
subject to approval by the stockholders of said corporation at the
1996 annual meeting thereof. The resolution setting forth the proposed
amendment is as follows:
Resolved, that the first paragraph of Article IV of the
Certificate of Incorporation of this corporation be amended to read in
its entirety as follows:
The Corporation is authorized to issue two
classes of stock designated "Preferred Stock"
and "Common Stock," respectively. The total
number of shares of Preferred Stock authorized
to be issued is two million (2,000,000) and each
such share shall have a par value of ten cents
($.10). The total number of shares of Common
Stock authorized to be issued is seventy-five
million (75,000,000) and each such share shall
have a par value of ten cents ($.10).
Second: That thereafter, pursuant to resolution of its
board of directors, the 1996 annual meeting of the stockholders of
said corporation was duly called and held upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of said amendment.
Third: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
Fourth: That the capital of said corporation shall not be
reduced under or by reason of said amendment.
<PAGE> 70
In witness whereof, said corporation has caused this
certificate to be signed by Joseph Oddo, the Chairman of the Executive
Committee of its Board of Directors, and James A. Harsch, its Senior
Vice President-Finance and Secretary, this 5th day of December 1996.
DELPHI INFORMATION SYSTEMS, INC.
By: /s/ Joseph Oddo
----------------------------
Joseph Oddo
Chairman of Executive
Committee of Board of Directors
ATTEST:
By: /s/ James A. Harsch
---------------------------
James A. Harsch
Senior Vice President-Finance
and Secretary
<PAGE> 71
EXHIBIT 4.3
DELPHI INFORMATION SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
<PAGE> 72
DELPHI INFORMATION SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
Table of Contents
-----------------
Page
----
1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . 74
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 74
3. SHARES AND PERFORMANCE UNITS AVAILABLE UNDER THE PLAN . . . 76
4. OPTION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 77
5. APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . 79
6. RESTRICTED SHARES . . . . . . . . . . . . . . . . . . . . . 80
7. DEFERRED SHARES . . . . . . . . . . . . . . . . . . . . . . 81
8. PERFORMANCE SHARES AND PERFORMANCE UNITS . . . . . . . . . . 82
9. TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . 83
10. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 84
11. FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . 84
12. WITHHOLDING TAXES . . . . . . . . . . . . . . . . . . . . . 84
PARTICIPATION BY DIRECTORS, OFFICERS AND OTHER KEY EMPLOYEES OF
OR CONSULTANTS TO A LESS-THAN-80-PERCENT SUBSIDIARY . . . . 85
CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES
OF ABSENCE . . . . . . . . . . . . . . . . . . . . . . . . . 85
15. FOREIGN PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 85
16. ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . 86
17. AMENDMENTS AND OTHER MATTERS . . . . . . . . . . . . . . . . 86
<PAGE> 73
DELPHI INFORMATION SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Plan is to attract and
retain directors, officers and other key employees of and consultants
to Delphi Information Systems, Inc. (the "Corporation") and its
Subsidiaries and to provide such persons with incentives and rewards
for superior performance.
2. DEFINITIONS. (a) As used in this Plan:
"APPRECIATION RIGHT" means a right granted pursuant to
Section 5 of this Plan, including a Free-Standing Appreciation Right
and a Tandem Appreciation Right.
"BASE PRICE" means the price to be used as the basis for
determining the Spread upon the exercise of a Free-Standing
Appreciation Right.
"BOARD" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITTEE" means a committee of not less than two "Non-
Employee Directors" (as defined in Rule 16b-3(b)(3)(i) under Section
16(b) of the Exchange Act) appointed by and serving at the pleasure of
the Board.
"COMMON SHARES" means (i) shares of the Common Stock, par
value $.10 per share, of the Corporation and (ii) any security into
which Common Shares may be converted by reason of any transaction or
event of the type referred to in Section 10 of this Plan.
"DATE OF GRANT" means the date specified by the Board on
which a grant of Option Rights, Appreciation Rights or Performance
Shares or Performance Units or a grant or sale of Restricted Shares or
Deferred Shares shall become effective, which shall not be earlier
than the date on which the Board takes action with respect thereto.
"DEFERRAL PERIOD" means the period of time during which
Deferred Shares are subject to deferral limitations under Section 7 of
this Plan.
"DEFERRED SHARES" means an award pursuant to Section 7 of
this Plan of the right to receive Common Shares at the end of a
specified Deferral Period.
<PAGE> 74
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended from time to time.
"FREE-STANDING APPRECIATION RIGHT" means an Appreciation
Right granted pursuant to Section 5 of this Plan that is not granted
in tandem with an Option Right or similar right.
"INCENTIVE STOCK OPTION" means an Option Right that is
intended to qualify as an "incentive stock option" under Section 422
of the Code or any successor provision thereto.
"LESS-THAN-80-PERCENT SUBSIDIARY" means a Subsidiary with
respect to which the Corporation directly or indirectly owns or
controls less than 80 percent of the total combined voting or other
decision-making power.
"MANAGEMENT OBJECTIVES" means the achievement or
performance objectives established pursuant to this Plan for
Participants who have received grants of Performance Shares or
Performance Units or, when so determined by the Board, Restricted
Shares.
"MARKET VALUE PER SHARE" means the fair market value of the
Common Shares as determined by the Board from time to time.
"NONQUALIFIED OPTION" means an Option Right that is not
intended to qualify as a Tax-Qualified Option.
"OPTIONEE" means the person so designated in an agreement
evidencing an outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the
exercise of an Option Right.
"OPTION RIGHT" means the right to purchase Common Shares
from the Corporation upon the exercise of a Nonqualified Option or a
Tax-Qualified Option granted pursuant to Section 4, or a Replacement
Option Right granted pursuant to Section 17(c), of this Plan.
"PARTICIPANT" means a person who is selected by the Board
to receive benefits under this Plan and (i) is at that time a director
or an officer (including officers who are also directors) or other key
employee of or a consultant to the Corporation or any Subsidiary or
(ii) has agreed to commence serving in any such capacity.
"PERFORMANCE PERIOD" means, in respect of a Performance
Share or Performance Unit, a period of time established pursuant to
Section 8 of this Plan within which the Management Objectives relating
thereto are to be achieved.
<PAGE> 75
"PERFORMANCE SHARE" means a bookkeeping entry that records
the equivalent of one Common Share awarded pursuant to Section 8 of
this Plan.
"PERFORMANCE UNIT" means a bookkeeping entry that records a
unit equivalent to $1.00 awarded pursuant to Section 8 of this Plan.
"REPLACEMENT OPTION RIGHT" means an Option Right granted
pursuant to Section 17(c) of this Plan in exchange for the surrender
and cancellation of an option to purchase shares of another
corporation that is acquired by the Corporation or a Subsidiary by
merger or otherwise.
"RESTRICTED SHARES" means Common Shares granted or sold
pursuant to Section 6 of this Plan as to which neither the substantial
risk of forfeiture nor the restrictions on transfer referred to in
Section 6 hereof has expired.
"SPREAD" means, in the case of a Free-Standing Appreciation
Right, the amount by which the Market Value per Share on the date when
the Appreciation Right is exercised exceeds the Base Price specified
therein or, in the case of a Tandem Appreciation Right, the amount by
which the Market Value per Share on the date when the Appreciation
Right is exercised exceeds the Option Price specified in the related
Option Right.
"SUBSIDIARY" means a corporation, partnership, joint
venture, unincorporated association or other entity in which the
Corporation has a direct or indirect ownership or other equity
interest; PROVIDED, HOWEVER, for purposes of determining whether any
person may be a Participant for purposes of any grant of Incentive
Stock Options, "Subsidiary" means any corporation in which the
Corporation owns or controls directly or indirectly more than 50
percent of the total combined voting power represented by all classes
of stock issued by such corporation at the time of the grant.
"TANDEM APPRECIATION RIGHT" means an Appreciation Right
granted pursuant to Section 5 of this Plan that is granted in tandem
with an Option Right or any similar right granted under any other plan
of the Corporation.
"TAX-QUALIFIED OPTION" means an Option Right that is
intended to qualify under particular provisions of the Code, including
but not limited to an Incentive Stock Option.
(b) As used in this Plan, the terms "employed" and
"employment" shall be deemed to refer to service as a nonemployee
director or as a consultant, as well as to a traditional employment
relationship, as the case may be.
3. SHARES AND PERFORMANCE UNITS AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 10 of this Plan, the
<PAGE> 76
aggregate number of Common Shares covered by outstanding awards,
except Replacement Option Rights, granted under this Plan and issued
or transferred upon the exercise or payment thereof, and the aggregate
number of Performance Units granted under this Plan, shall not exceed
6,000,000. Common Shares issued or transferred under this Plan may be
Common Shares of original issuance or Common Shares held in treasury
or a combination thereof.
(b) Subject to adjustment as provided in Section 10 of this
Plan, the aggregate number of Common Shares covered by Replacement
Option Rights granted under this Plan during any calendar year shall
not exceed five percent of the Common Shares outstanding on January 1
of that year.
(c) For the purposes of this Section 3:
(i) Upon payment in cash of the benefit provided by any
award granted under this Plan, any Common Shares that were
covered by that award shall again be available for issuance or
transfer hereunder.
(ii) Common Shares covered by any award granted under
this Plan shall be deemed to have been issued or transferred, and
shall cease to be available for future issuance or transfer in
respect of any other award granted hereunder, at the earlier of
the time when they are actually issued or transferred or the time
when dividends or dividend equivalents are paid thereon;
PROVIDED, HOWEVER, that Restricted Shares shall be deemed to have
been issued or transferred at the earlier of the time when they
cease to be subject to a substantial risk of forfeiture or the
time when dividends are paid thereon.
(iii) Performance Units that are granted under this
Plan, but are not earned by the Participant at the end of the
Performance Period, shall be available for future grants of
Performance Units hereunder.
4. OPTION RIGHTS. The Board may from time to time
authorize grants to Participants of Option Rights upon such terms and
conditions as the Board may determine in accordance with the following
provisions:
(a) Each grant shall specify the number of Common Shares to
which it pertains.
(b) Each grant shall specify an Option Price per Common
Share, which shall be equal to or greater than the Market Value
per Share on the Date of Grant; PROVIDED, HOWEVER, that the
Option Price per Common Share of a Replacement Option Right may
be less than the Market Value per Share on the Date of Grant.
<PAGE> 77
(c) Each grant shall specify the form of consideration to
be paid in satisfaction of the Option Price and the manner of
payment of such consideration, which may include (i) cash in the
form of currency or check or other cash equivalent acceptable to
the Corporation, (ii) nonforfeitable, unrestricted Common Shares
that are already owned by the optionee and have a value at the
time of exercise that is equal to the Option Price, (iii) any
other legal consideration that the Board may deem appropriate,
including but not limited to any form of consideration authorized
under Section 4(d) below, on such basis as the Board may
determine in accordance with this Plan and (iv) any combination
of the foregoing.
(d) On or after the Date of Grant of any Nonqualified
Option, the Board may determine that payment of the Option Price
may also be made in whole or in part in the form of Restricted
Shares or other Common Shares that are subject to risk of
forfeiture or restrictions on transfer. Unless otherwise
determined by the Board on or after the Date of Grant, whenever
any Option Price is paid in whole or in part by means of any of
the forms of consideration specified in this Section 4(d), the
Common Shares received by the Optionee upon the exercise of the
Nonqualified Option shall be subject to the same risks of
forfeiture or restrictions on transfer as those that applied to
the consideration surrendered by the optionee; PROVIDED, HOWEVER,
that such risks of forfeiture and restrictions on transfer shall
apply only to the same number of Common Shares received by the
optionee as applied to the forfeitable or restricted Common
Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a broker on the
date of exercise of some or all of the Common Shares to which the
exercise relates.
(f) Successive grants may be made to the same Participant
regardless of whether any Option Rights previously granted to the
Participant remain unexercised.
(g) Each grant may specify a period or periods of
continuous employment of the Optionee by the Corporation or any
Subsidiary that are necessary before the Option Rights or
installments thereof shall become exercisable, and any grant may
provide for the earlier exercise of the Option Rights in the
event of a change in control of the Corporation or other similar
transaction or event.
(h) Option Rights granted pursuant to this Section 4 may be
Nonqualified Options or Tax-Qualified Options or combinations
thereof.
<PAGE> 78
(i) On or after the Date of Grant of any Nonqualified
Option, the Board may provide for the payment to the Optionee of
dividend equivalents thereon in cash or Common Shares on a
current, deferred or contingent basis, or the Board may provide
that any dividend equivalents shall be credited against the
Option Price.
(j) No Option Right granted pursuant to this Section 4 may
be exercised more than 10 years from the Date of Grant.
(k) Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Corporation by any officer
thereof and delivered to and accepted by the Optionee and shall
contain such terms and provisions as the Board may determine
consistent with this Plan.
5. APPRECIATION RIGHTS. The Board may also authorize
grants to Participants of Appreciation Rights. An Appreciation Right
shall be a right of the Participant to receive from the Corporation an
amount, which shall be determined by the Board and shall be expressed
as a percentage (not exceeding 100 percent) of the Spread at the time
of the exercise of an Appreciation Right. Any grant of Appreciation
Rights under this Plan shall be upon such terms and conditions as the
Board may determine in accordance with the following provisions:
(a) Any grant may specify that the amount payable upon the
exercise of an Appreciation Right may be paid by the Corporation
in cash, Common Shares or any combination thereof and may (i)
either grant to the Participant or reserve to the Board the right
to elect among those alternatives or (ii) preclude the right of
the Participant to receive and the Corporation to issue Common
Shares or other equity securities in lieu of cash.
(b) Any grant may specify that the amount payable upon the
exercise of an Appreciation Right shall not exceed a maximum
specified by the Board on the Date of Grant.
(c) Any grant may specify (i) a waiting period or periods
before Appreciation Rights shall become exercisable and (ii)
permissible dates or periods on or during which Appreciation
Rights shall be exercisable.
(d) Any grant may specify that an Appreciation Right may be
exercised only in the event of a change in control of the
Corporation or other similar transaction or event.
(e) On or after the Date of Grant of any Appreciation
Rights, the Board may provide for the payment to the Participant
of dividend equivalents thereon in cash or Common Shares on a
current, deferred or contingent basis.
<PAGE> 79
(f) Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Corporation by any officer
thereof and delivered to and accepted by the Optionee and shall
describe the subject Appreciation Rights, identify any related
Option Rights, state that the Appreciation Rights are subject to
all of the terms and conditions of this Plan and contain such
other terms and provisions as the Board may determine consistent
with this Plan.
(g) Regarding Tandem Appreciation Rights only: Each grant
shall provide that a Tandem Appreciation Right may be exercised
only (i) at a time when the related Option Right (or any similar
right granted under any other plan of the Corporation) is also
exercisable and the Spread is positive and (ii) by surrender of
the related Option Right (or such other right) for cancellation.
(h) Regarding Free-Standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-
Standing Appreciation Right a Base Price per Common Share,
which shall be equal to or greater than the Market Value
per Share on the Date of Grant;
(ii) Successive grants may be made to the same
Participant regardless of whether any Free-Standing
Appreciation Rights previously granted to the Participant
remain unexercised;
(iii) Each grant shall specify the period or
periods of continuous employment of the Participant by the
Corporation or any Subsidiary that are necessary before the
Free-Standing Appreciation Rights or installments thereof
shall become exercisable, and any grant may provide for the
earlier exercise of the Free-Standing Appreciation Rights
in the event of a change in control of the Corporation or
other similar transaction or event; and
(iv) No Free-Standing Appreciation Right granted under
this Plan may be exercised more than 10 years from the Date
of Grant.
6. RESTRICTED SHARES. The Board may also authorize grants
or sales to Participants of Restricted Shares upon such terms and
conditions as the Board may determine in accordance with the following
provisions:
(a) Each grant or sale shall constitute an immediate
transfer of the ownership of Common Shares to the Participant in
consideration of the performance of services, entitling the
Participant to dividend, voting and other ownership rights,
subject to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.
<PAGE> 80
(b) Each grant or sale may be made without additional
consideration from the Participant or in consideration of a
payment by the Participant that is less than the Market Value per
Share on the Date of Grant.
(c) Each grant or sale shall provide that the Restricted
Shares covered thereby shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a
period to be determined by the Board on the Date of Grant, and
any grant or sale may provide for the earlier termination of such
period in the event of a change in control of the Corporation or
other similar transaction or event.
(d) Each grant or sale shall provide that, during the
period for which such substantial risk of forfeiture is to
continue, the transferability of the Restricted Shares shall be
prohibited or restricted in the manner and to the extent
prescribed by the Board on the Date of Grant. Such restrictions
may include, but are not limited to, rights of repurchase or
first refusal in the Corporation or provisions subjecting the
Restricted Shares to a continuing substantial risk of forfeiture
in the hands of any transferee.
(e) Any grant or sale may require that any or all dividends
or other distributions paid on the Restricted Shares during the
period of such restrictions be automatically sequestered and
reinvested on an immediate or deferred basis in additional Common
Shares, which may be subject to the same restrictions as the
underlying award or such other restrictions as the Board may
determine.
(f) Each grant or sale shall be evidenced by an agreement,
which shall be executed on behalf of the Corporation by any
officer thereof and delivered to and accepted by the Participant
and shall contain such terms and provisions as the Board may
determine consistent with this Plan. Unless otherwise directed
by the Board, all certificates representing Restricted Shares,
together with a stock power that shall be endorsed in blank by
the Participant with respect to the Restricted Shares, shall be
held in custody by the Corporation until all restrictions thereon
lapse.
7. DEFERRED SHARES. The Board may also authorize grants
or sales to Participants of Deferred Shares upon such terms and
conditions as the Board may determine in accordance with the following
provisions:
(a) Each grant or sale shall constitute the agreement by
the Corporation to issue or transfer Common Shares to the
Participant in the future in consideration of the performance of
services, subject to the fulfillment during the Deferral Period
of such conditions as the Board may specify.
<PAGE> 81
(b) Each grant or sale may be made without additional
consideration from the Participant or in consideration of a
payment by the Participant that is less than the Market Value per
Share on the Date of Grant.
(c) Each grant or sale shall provide that the Deferred
Shares covered thereby shall be subject to a Deferral Period,
which shall be fixed by the Board on the Date of Grant, and any
grant or sale may provide for the earlier termination of the
Deferral Period in the event of a change in control of the
Corporation or other similar transaction or event.
(d) During the Deferral Period, the Participant shall not
have any right to transfer any rights under the subject award,
shall not have any rights of ownership in the Deferred Shares and
shall not have any right to vote the Deferred Shares, but the
Board may on or after the Date of Grant authorize the payment of
dividend equivalents on the Deferred Shares in cash or additional
Common Shares on a current, deferred or contingent basis.
(e) Each grant or sale shall be evidenced by an agreement,
which shall be executed on behalf of the Corporation by any
officer thereof and delivered to and accepted by the Participant
and shall contain such terms and provisions as the Board may
determine consistent with this Plan.
8. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Board
may also authorize grants of Performance Shares and Performance Units,
which shall become payable to the Participant upon the achievement of
specified Management Objectives, upon such terms and conditions as the
Board may determine in accordance with the following provisions:
(a) Each grant shall specify the number of Performance
Shares or Performance Units to which it pertains, which may be
subject to adjustment to reflect changes in compensation or other
factors.
(b) The Performance Period with respect to each Performance
Share or Performance Unit shall be determined by the Board on the
Date of Grant and may be subject to earlier termination in the
event of a change in control of the Corporation or other similar
transaction or event.
(c) Each grant shall specify the Management Objectives that
are to be achieved by the Participant, which may be described in
terms of Corporation-wide objectives or objectives that are
related to the performance of the individual Participant or the
Subsidiary, division, department or function within the
Corporation or Subsidiary in which the Participant is employed.
(d) Each grant shall specify in respect of the specified
Management Objectives a minimum acceptable level of achievement
<PAGE> 82
below which no payment will be made and shall set forth a formula
for determining the amount of any payment to be made if
performance is at or above the minimum acceptable level but falls
short of full achievement of the specified Management Objectives.
(e) Each grant shall specify the time and manner of payment
of Performance Shares or Performance Units that shall have been
earned, and any grant may specify that any such amount may be
paid by the Corporation in cash, Common Shares or any combination
thereof and may either grant to the Participant or reserve to the
Board the right to elect among those alternatives.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum
specified by the Board on the Date of Grant. Any grant of
Performance Units may specify that the amount payable, or the
number of Common Shares issuable, with respect thereto may not
exceed maximums specified by the Board on the Date of Grant.
(g) On or after the Date of Grant of Performance Shares,
the Board may provide for the payment to the Participant of
dividend equivalents thereon in cash or additional Common Shares
on a current, deferred or contingent basis.
(h) The Board may adjust Management Objectives and the
related minimum acceptable level of achievement if, in the sole
judgment of the Board, events or transactions have occurred after
the Date of Grant that are unrelated to the performance of the
Participant and result in distortion of the Management Objectives
or the related minimum acceptable level of achievement.
(i) Each grant shall be evidenced by an agreement, which
shall be executed on behalf of the Corporation by any officer
thereof and delivered to and accepted by the Participant and
shall contain such terms and provisions as the Board may
determine consistent with this Plan.
9. TRANSFERABILITY. (a) Any grant of an Option Right or
other "derivative security" (as defined in Rule 16a-1(c) under Section
16(a) of the Exchange Act) under this Plan may permit the transfer
thereof by the Participant upon such terms and conditions as the Board
shall specify.
(b) Any grant made under this Plan may provide that all or
any part of the Common Shares that are to be issued or transferred by
the Corporation upon the exercise of Option Rights or Appreciation
Rights or upon the termination of the Deferral Period applicable to
Deferred Shares or in payment of Performance Shares or Performance
Units, or are no longer subject to the substantial risk of forfeiture
and restrictions on transfer referred to in Section 6 of this Plan,
shall be subject to further restrictions upon transfer.
<PAGE> 83
10. ADJUSTMENTS. The Board may make or provide for such
adjustments in the number of Common Shares covered by outstanding
Option Rights, Appreciation Rights, Deferred Shares and Performance
Shares granted hereunder, the Option Prices per Common Share or Base
Prices per Common Share applicable to any such Option Rights and
Appreciation Rights, and the kind of shares (including shares of
another issuer) covered thereby, as the Board may in good faith
determine to be equitably required in order to prevent dilution or
expansion of the rights of Participants that otherwise would result
from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the
Corporation or (b) any merger, consolidation, spin-off, spin-out,
split-off, split-up, reorganization, partial or complete liquidation
or other distribution of assets, issuance of warrants or other rights
to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any
such transaction or event, the Board may provide in substitution for
any or all outstanding awards under this Plan such alternative
consideration as it may in good faith determine to be equitable under
the circumstances and may require in connection therewith the
surrender of all awards so replaced. Moreover, the Board may on or
after the Date of Grant provide in the agreement evidencing any award
under this Plan that the holder of the award may elect to receive an
equivalent award in respect of securities of the surviving entity of
any merger, consolidation or other transaction or event having a
similar effect, or the Board may provide that the holder will
automatically be entitled to receive such an equivalent award. The
Board may also make or provide for such adjustments in the numbers of
Common Shares specified in Sections 3(a)(i) and 3(a)(ii) of this Plan
as the Board may in good faith determine to be appropriate in order to
reflect any transaction or event described in this Section 10.
11. FRACTIONAL SHARES. The Corporation shall not be
required to issue any fractional Common Shares pursuant to this Plan.
The Board may provide for the elimination of fractions or for the
settlement thereof in cash.
12. WITHHOLDING TAXES. To the extent that the Corporation
is required to withhold federal, state, local or foreign taxes in
connection with any payment made or benefit realized by a Participant
or other person under this Plan, and the amounts available to the
Corporation for the withholding are insufficient, it shall be a
condition to the receipt of any such payment or the realization of any
such benefit that the Participant or such other person make
arrangements satisfactory to the Corporation for payment of the
balance of any taxes required to be withheld. At the discretion of
the Board, any such arrangements may include relinquishment of a
portion of any such payment or benefit. The Corporation and any
Participant or such other person may also make similar arrangements
with respect to the payment of any taxes with respect to which
withholding is not required.
<PAGE> 84
13. PARTICIPATION BY DIRECTORS, OFFICERS AND OTHER KEY
EMPLOYEES OF OR CONSULTANTS TO A LESS-THAN-80-PERCENT SUBSIDIARY. As
a condition to the effectiveness of any grant or award to be made
hereunder to a Participant who is a director or an officer or other
key employee of or a consultant to a Less-Than-80-Percent Subsidiary,
regardless of whether the Participant is also employed by the
Corporation or another Subsidiary, the Board may require the Less-
Than-80-Percent Subsidiary to agree to transfer to the Participant
(as, if and when provided for under this Plan and any applicable
agreement entered into between the Participant and the Less-Than-80-
Percent Subsidiary pursuant to this Plan) the Common Shares that would
otherwise be delivered by the Corporation upon receipt by the Less-
Than-80-Percent Subsidiary of any consideration then otherwise payable
by the Participant to the Corporation. Any such award may be
evidenced by an agreement between the Participant and the Less-Than-
80-Percent Subsidiary, in lieu of the Corporation, on terms consistent
with this Plan and approved by the Board and the Less-Than-80-Percent
Subsidiary. All Common Shares so delivered by or to a Less-Than-80-
Percent Subsidiary will be treated as if they had been delivered by or
to the Corporation for purposes of Section 3 of this Plan, and all
references to the Corporation in this Plan shall be deemed to refer to
the Less-Than-80-Percent Subsidiary except with respect to the
definitions of the Board and the Committee and in other cases where
the context otherwise requires.
14. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND
APPROVED LEAVES OF ABSENCE. Notwithstanding any other provision of
this Plan to the contrary, in the event of termination of employment
by reason of death, disability, normal retirement, early retirement
with the consent of the Corporation, termination of employment to
enter public service with the consent of the Corporation or leave of
absence approved by the Corporation, or in the event of hardship or
other special circumstances, of a Participant who holds an Option
Right or Appreciation Right that is not immediately and fully
exercisable, any Restricted Shares as to which the substantial risk of
forfeiture or the prohibition or restriction on transfer has not
lapsed, any Deferred Shares as to which the Deferral Period is not
complete, any Performance Shares or Performance Units that have not
been fully earned, or any Common Shares that are subject to any
transfer restriction pursuant to Section 9[(b)] of this Plan, the
Board may take any action that it deems to be equitable under the
circumstances or in the best interests of the Corporation, including
without limitation waiving or modifying any limitation or requirement
with respect to any award under this Plan.
15. FOREIGN PARTICIPANTS. In order to facilitate the
making of any award or combination of awards under this Plan, the
Board may provide for such special terms for awards to Participants
who are foreign nationals, or who are employed by the Corporation or
any Subsidiary outside of the United States of America, as the Board
may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom. Moreover, the Board may approve such
<PAGE> 85
supplements to, or amendments, restatements or alternative versions
of, this Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of this Plan as in effect
for any other purpose; PROVIDED, HOWEVER, that no such supplements,
amendments, restatements or alternative versions shall include any
provisions that are inconsistent with the terms of this Plan, as then
in effect, unless this Plan could have been amended to eliminate the
inconsistency without further approval by the stockholders of the
Corporation.
16. ADMINISTRATION OF THE PLAN. (a) This Plan shall be
administered by the Board, which may delegate any or all of its
authority hereunder to the Committee. To the extent of any such
delegation, references in this Plan to the Board shall be deemed to
refer to the Committee, unless the context requires otherwise. A
majority of the Board shall constitute a quorum, and the acts of the
members of the Board who are present at any meeting thereof at which a
quorum is present, or acts unanimously approved by the members of the
Board in writing, shall be the acts of the Board.
(b) The interpretation and construction by the Board of any
provision of this Plan or any agreement, notification or document
evidencing the grant of Option Rights, Appreciation Rights, Restricted
Shares, Deferred Shares, Performance Shares or Performance Units, and
any determination by the Board pursuant to any provision of this Plan
or any such agreement, notification or document, shall be final and
conclusive. No member of the Board shall be liable for any such
action taken or determination made in good faith.
17. AMENDMENTS AND OTHER MATTERS. (a) This Plan may be
amended from time to time by the Board; PROVIDED, HOWEVER, except as
expressly authorized by this Plan, no such amendment shall increase
the numbers of Common Shares specified in Sections 3(a)(i) and
3(a)(ii) hereof or the number of Performance Units specified in
Section 3(b) hereof without the further approval of the stockholders
of the Corporation.
(b) With the concurrence of the affected Participant, the
Board may cancel any agreement evidencing Option Rights or any other
award granted under this Plan. In the event of any such cancellation,
the Board may authorize the granting of new Option Rights or other
awards hereunder, which may or may not cover the same number of Common
Shares as had been covered by the cancelled Option Rights or other
award, at such Option Price, in such manner and subject to such other
terms, conditions and discretion as would have been permitted under
this Plan had the cancelled Option Rights or other award not been
granted.
(c) The Board may grant under this Plan any award or
combination of awards authorized under this Plan, including but not
limited to Replacement Option Rights, in exchange for the surrender
and cancellation of an award that was not granted under this Plan,
<PAGE> 86
including but not limited to an award that was granted by the
Corporation or a Subsidiary, or by another corporation that is
acquired by the Corporation or a Subsidiary by merger or otherwise,
prior to the adoption of this Plan by the Board, and any such award or
combination of awards so granted under this Plan may or may not cover
the same number of Common Shares as had been covered by the cancelled
award and shall be subject to such other terms, conditions and
discretion as would have been permitted under this Plan had the
cancelled award not been granted.
(d) This Plan shall not confer upon any Participant any
right with respect to continuance of employment with the Corporation
or any Subsidiary and shall not interfere in any way with any right
that the Corporation or any Subsidiary would otherwise have to
terminate any Participant's employment at any time.
(e) To the extent that any provision of this Plan would
prevent any Option Right that was intended to qualify as a Tax-
Qualified Option from so qualifying, any such provision shall be null
and void with respect to any such Option Right; PROVIDED, HOWEVER,
that any such provision shall remain in effect with respect to other
Option Rights, and there shall be no further effect on any provision
of this Plan.
<PAGE> 87
Exhibit 5
SCHIFF HARDIN & WAITE
A Partnership Including Professional Corporations
7200 Sears Tower, Chicago, Illinois 60606-6473
Telephone (312) 876-1000 Facsimile (312) 258-5600
Writer's Direct Dial Number
(312) 258-5633
March 10, 1997
Delphi Information Systems, Inc.
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
Ladies and Gentlemen:
We have acted as counsel for Delphi Information Systems,
Inc., a Delaware corporation (the "Company"), in connection with the
Delphi Information Systems, Inc. 1996 Stock Incentive Plan (the
"Plan"). We have examined such documents, records and matters of law
as we have deemed necessary for the purposes of this opinion, and
based thereon, we are of the opinion that the shares of the Company's
Common Stock, par value $.10 per share, that may be issued and sold
pursuant to the Plan have been duly authorized and will be validly
issued, fully paid and nonassessable when issued and sold in
accordance with the Plan.
We hereby consent to the filing of this opinion as Exhibit
5 to the Registration Statement on Form S-8 that is being filed by the
Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
SCHIFF HARDIN & WAITE
By /s/ W. Brinkley Dickerson, Jr.
------------------------------------
W. Brinkley Dickerson, Jr.
<PAGE> 88
Exhibit 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
RE: Delphi Information Systems, Inc.
Form S-8 for Registration of 6,000,000 Shares of Common Stock
As independent public accountants, we hereby consent to the use of our
reports (and all references to our Firm) included in or made a part of
this registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 11, 1997<PAGE>
