<PAGE>
AS FILED WITH THE COMMISSION ON MARCH 27, 1998
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
DELPHI INFORMATION SYSTEMS, INC.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Registrant as Specified In Its Charter)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5) Total fee paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
1) Amount Previously Paid: _____________________________________
2) Form, Schedule or Registration Statement No.: _______________
3) Filing Party: _______________________________________________
4) Date Filed: _________________________________________________
<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a Special Meeting of Stockholders of Delphi
Information Systems, Inc. (the "Company") will be held at the principal
executive office of the Company, located at 3501 Algonquin Road, Suite 500 in
Rolling Meadows, Illinois, on May 6, 1998, at 11:00 a.m., local time, and at any
adjournments thereof, for the following purpose:
To consider and vote upon a proposal (the "Reverse Stock Split
Proposal") to amend the Company's Certificate of Incorporation to effect a
one-for-five reverse stock split of the Company's outstanding Common Stock,
$.10 par value per share (the "Common Stock") and to reduce the number of
authorized shares of the Company's Common Stock from 75,000,000 to
20,000,000.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. ANY PERSON GIVING A
PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND, IF
PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON. THE LAST PROXY
EXECUTED BY A STOCKHOLDER REVOKES ALL PREVIOUS PROXIES EXECUTED BY THAT
STOCKHOLDER.
By Order of the Board of Directors
-----------------------------------
Secretary
Dated: April __, 1998
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<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
3501 Algonquin Road, Suite 500
Rolling Meadows, Illinois 60008
TO BE HELD ON MAY 6, 1998
-------------------------------
PROXY STATEMENT
-------------------------------
INTRODUCTION
This Proxy Statement and enclosed proxy card are being mailed on or about
April 9, 1998 in connection with the solicitation on behalf of the Board of
Directors of Delphi Information Systems, Inc. (the "Company") of proxies to be
voted at a Special Meeting of Stockholders of the Company to be held at the
principal executive offices of the Company, located at 3501 Algonquin Road,
Suite 500, Rolling Meadows, Illinois 60008, on May 6, 1998 at 11:00 a.m, local
time, and at any adjournments thereof.
The purpose of the meeting is to consider and vote upon a proposal (the
"Reverse Stock Split Proposal") to amend the Company's Certificate of
Incorporation to effect a one-for-five reserve stock split of the outstanding
Common Stock, par value $.10 par value (the "Common Stock") and to reduce the
number of authorized shares of the Company's Common Stock from 75,000,000 to
__,000,000.
Shares represented by proxies, received in the enclosed form and properly
filled out, will be voted in accordance with the specifications made thereon.
In the absence of specific instructions, proxies will be voted in favor of the
Reverse Stock Split Proposal described in this Proxy Statement. Proxies may be
revoked by stockholders by written notice received by the Secretary of the
Company at the address set forth above, at any time prior to the exercise
thereof. The last proxy executed by a stockholder revokes all previous proxies
executed by that stockholder. A stockholder may also attend the Special Meeting
and vote in person. Except for the "Reverse Stock Split Proposal" described in
this Proxy Statement, no other matters will be presented for action at the
Special Meeting.
The holders of a majority of the issued and outstanding Common Stock of
the Company, as a class, and the holders of a majority of the issued and
outstanding Common Stock and Series D Preferred, together as a class, present
in person or represented by proxy, shall constitute a quorum for the
transaction of business at the Special Meeting. If a quorum is not present
or represented by proxy at the Special Meeting, the stockholders entitled to
vote at the meeting, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented
by proxy. If the adjournment is for more than thirty days, or, if after the
adjournment a new record date is set, a notice of adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting. At such
adjourned meeting at which a quorum shall be present or represented by proxy,
any business may be transacted which might have been transacted at the prior
meeting. Abstentions will be treated as present and entitled to vote for
purposes of determining a quorum. Broker non-votes will not be considered as
present and entitled to vote for purposes of determining a quorom.
Stockholders of record at the close of business on Monday, April 6, 1998 (the
"Record Date") are entitled to notice of and to vote at the Special Meeting
or any adjournments thereof.
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<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on the Record Date, there were ________ shares
of Common Stock and ____ shares of the Series D Preferred Stock, par value
$.10 per share (the "Series D Preferred") outstanding. The Common Stock and
the Series D Preferred are the Company's only outstanding classes of voting
securities. Each share of Common Stock is entitled to one vote, and each
share of Series D Preferred is entitled to 226.2 votes on the Reverse Stock
Split Proposal. (As of _____, there were ____ shares of Series D Preferred
outstanding representing a total of _____ votes for the Series D Preferred).
The affirmative vote of the holders of a majority of the issued and
outstanding Common Stock, voting as a class, and the affirmative vote of the
holders of a majority of the issued and outstanding Common Stock and Series D
Preferred, voting together as a class, shall be required to adopt the Reverse
Stock Split Proposal. Abstentions and broker non-votes will be treated as a
vote against the Reverse Stock Split Proposal. Votes cast at the Special
Meeting will be counted by the persons appointed by the Company to act as
inspectors of election for the Special Meeting.
REVERSE STOCK SPLIT PROPOSAL
GENERAL
The Board of Directors of the Company has approved the Reverse Stock Split
Proposal, subject to the approval by the stockholders of the Company. The
Reverse Stock Split Proposal provides for (i) the combination and
reclassification of the presently issued and outstanding shares of Common Stock,
into a smaller number of shares of identical Common Stock, on the basis of one
share of Common Stock for each five shares of Common Stock previously issued and
outstanding (the "Reverse Stock Split") and (ii) a reduction in the number of
shares of authorized Common Stock from 75,000,000 to __,000,000 (the "Authorized
Shares Reduction"). Except as may result from the payment of cash for
fractional shares as described below, each stockholder will hold the same
percentage of Common Stock and/or Series D Preferred, as the case may be,
outstanding immediately following the Reverse Stock Split as each stockholder
did immediately prior to the Reverse Stock Split and the Authorized Shares
Reduction. If approved by the stockholders of the Company as provided herein,
the Reverse Stock Split and the Authorized Shares Reduction will be effected by
an amendment to the Company's Certificate of Incorporation in substantially the
form attached to this Proxy Statement as Appendix A (the "Reverse Stock Split
Amendment"), and will become effective upon the filing of the Reverse Stock
Split Amendment with the Secretary of State of Delaware (the "Effective Time").
The following discussion is qualified in its entirety by the full text of the
Reverse Stock Split Amendment, which is hereby incorporated by reference herein.
At the Effective Time, each share of Common Stock issued and outstanding
will automatically be reclassified and converted into one-fifth of a share of
Common Stock. The Series D Preferred has not been specifically included in the
Reverse Stock Split Proposal because its conversion rate into Common Stock
automatically adjusts to reflect the Reverse Stock Split.
Fractional shares of Common Stock will not be issued as a result of the
Reverse Stock Split. Stockholders entitled to receive a fractional share of
Common Stock as a consequence of the Reverse Stock Split will, instead, receive
from the Company a cash payment in U.S. dollars equal to such fraction
multiplied by five times the arithmetic mean average closing bid price per share
of the Common Stock on the Nasdaq Stock Market, Inc. ("Nasdaq") for the five
trading days immediately preceding the Effective Date.
The Company expects that, if the Reverse Stock Split Proposal is approved
by the stockholders at the Special Meeting, the Reverse Stock Split Amendment
will be filed promptly. However, notwithstanding approval of the Reverse Stock
Split Proposal by the stockholders of the Company, the Board of Directors of the
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<PAGE>
Company may elect not to file, or to delay the filing of, the Reverse Stock
Split Amendment, if the Board of Directors determines that filing the Reverse
Stock Split Amendment would not be in the best interest of the Company's
stockholders at such time. Factors leading to such a determination could
include, without limitation, any possible effect on Nasdaq listing or future
securities offerings (see "Reasons for the Reverse Stock Split Proposal,"
below).
REASONS FOR THE REVERSE STOCK SPLIT
The primary purpose of the Reverse Stock Split is to combine the
outstanding shares of Common Stock so that the Common Stock outstanding after
giving effect to the Reverse Stock Split trades at a significantly higher price
per share than the Common Stock outstanding before giving effect to the Reverse
Stock Split.
During the 1997 calendar year, the closing bid price for the Common
Stock on the SmallCap tier of The Nasdaq Stock Market, Inc. (the "Nasdaq
SmallCap Market") ranged from $1.875 to $.875 per share. The closing bid
price for the Common Stock on ________________, 1998, was ______ per share.
The Company believes that such a low quoted market price per share may
discourage potential new investors, increase market price volatility and
decrease the liquidity of the Common Stock. Most importantly, on February
27, 1998, the Staff of Nasdaq SmallCap Market advised the Company that the
Company's then current market price was below the minimum bid price of $1.00
per share required for continued inclusion of the Common Stock on the Nasdaq
SmallCap Market, pursuant to new rules that went into effect on February 23,
1998 (the "New Nasdaq Listing Requirements"). The Company was then provided
90 days to comply with such requirement in order to continue the listing of
its Common Stock on the Nasdaq SmallCap Market. The Company believes, but
cannot assure, that the Reverse Stock Split will enable the Common Stock to
trade above the minimum bid price established by the New Nasdaq Listing
Requirements. See "--Other Nasdaq Requirements."
The Company believes that maintaining the listing of the Common Stock on
Nasdaq is in the best interests of the Company and its stockholders. Inclusion
in Nasdaq increases liquidity and may potentially minimize the spread between
the "bid" and "asked" prices quoted by market makers. Further, a Nasdaq listing
may enhance the Company's access to capital and increase the Company's
flexibility in responding to anticipated capital requirements. The Company
believes that prospective investors will view an investment in the Company more
favorably if its shares qualify for listing on Nasdaq.
The Company also believes that the current per share price level of the
Company's Common Stock has reduced the effective marketability of the shares
because of the reluctance of many leading brokerage firms to recommend low
priced stock to their clients. Certain investors view low-priced stock as
unattractive, although certain other investors may be attracted to low-priced
stock because of the greater trading volatility sometimes associated with such
securities. In addition, a variety of brokerage house policies and practices
tend to discourage individual brokers within those firms from dealing in low
priced stock. Some of those policies and practices pertain to the payment of
brokers commissions and to time-consuming procedures that function to make the
handling of low priced stocks unattractive to brokers from an economic
standpoint.
In addition, since brokerage commissions on low-priced stock generally
represent a higher percentage of the stock price than commissions on higher
priced stock, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commission, markups, or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor also may
limit the willingness of institutions to purchase the Common Stock at its
current low share price.
The Company also believes that the number of shares of Common Stock
authorized and outstanding is too high relative to the Company's current
market capitalization.
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<PAGE>
For all the above reasons, the Company believes that the Reverse Stock
Split is in the best interests of the Company and its stockholders. However,
there can be no assurances that the Reverse Stock Split will have the desired
consequences. The Company anticipates that, following the consummation of the
Reverse Stock Split, the Common Stock will trade at a price per share that is
significantly higher than the current market price of the Common Stock.
However, there can be no assurance that, following the Reverse Stock Split, the
Common Stock will trade at five times the market price of the Common Stock prior
to the Reverse Stock Split.
REASONS FOR THE AUTHORIZED SHARES REDUCTION
The purpose of the Authorized Shares Reduction is to decrease the number of
authorized shares of Common Stock following effectiveness of the Reverse Stock
Split so that the number of shares of Common Stock following the Reverse Stock
Split bears a more appropriate relation to the total number of shares of Common
Stock then outstanding.
EFFECT OF THE REVERSE STOCK SPLIT PROPOSAL
Subject to stockholder approval, the Reverse Stock Split Proposal will be
effected by filing the Reverse Stock Split Amendment to the Company's
Certificate of Incorporation, and will be effective immediately upon such
filing. Although the Company expects to file the Reverse Stock Split Amendment
with the Delaware Secretary of State's office promptly following approval of the
Reverse Stock Split Proposal at the Special Meeting, the actual timing of such
filing will be determined by the Company's management based upon their
evaluation as to when such action will be most advantageous to the Company and
its stockholders. The Company reserves the right to forego or postpone filing
the Reverse Stock Split Amendment, if such action is determined to be in the
best interests of the Company and its stockholders.
Each stockholder that owns fewer than five Common Stock will have such
stockholder's fractional share of Common Stock converted into the right to
receive cash as set forth below in "Exchange of Stock Certificates and
Payment for Fractional Shares." The interest of such stockholder in the
Company will thereby be terminated, and such stockholder will have no right
to share in the assets or future growth of the Company. Each stockholder
that owns five or more shares of Common Stock will continue to own shares of
Common Stock and will continue to share in the assets and future growth of
the Company as a stockholder. Such interest will be represented by one-fifth
as many shares as such stockholder owned before the Reverse Stock Split,
subject to the adjustment for fractional shares in which case such
stockholder shall receive cash in lieu of such fractional share. The number
of shares of Common Stock that may be purchased upon the exercise of
outstanding options, warrants, and other securities convertible into, or
exercisable or exchangeable for, shares of Common Stock, including the Series
D Preferred (collectively, "Convertible Securities") and the per share
exercise or conversion prices thereof, will be adjusted appropriately as of
the Effective Date, so that the aggregate number of shares of Common Stock
issuable in respect of Convertible Securities immediately following the
Effective Date will be one-fifth of the number issuable in respect thereof
immediately prior to the Effective Date, and the aggregate exercise or
conversion prices thereunder shall remain unchanged.
The Reverse Stock Split will also result in some stockholders owning "odd
lots" of less than 100 shares of Common Stock received as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions in
odd lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
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<PAGE>
The Company is authorized to issue 75,000,000 shares of Common Stock, of
which ______ shares were issued and outstanding at the close of business on
the Record Date. As proposed and as effected, the Authorized Shares
Reduction would reduce the number of authorized shares of Common Stock to
__,000,000. The Company is also authorized to issue 2,000,000 shares of
Preferred Stock, $.10 par value (the "Preferred Stock"), of which 16,577
where designated the Series D Preferred, of which _____ were issued and
outstanding at the close of business on the Record Date. The number of
outstanding shares of the Series D Preferred will not be changed by the
Reverse Stock Split Proposal because its conversion rate into Common Stock
automatically adjusts to reflect the Reverse Stock Split.
On March 23, 1998, the Board of Directors declared a dividend of one
preferred share purchase right ("Right") on each outstanding share of the
Common Stock, payable to stockholders of record at the close of business on
March 23, 1998. The Rights will expire on March 23, 2008. Each Right, when
exercisable, entitles the holder thereof to purchase from the Company, at an
exercise price of $25.00, one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.10 per share (the "Series A
Preferred"). The Reverse Stock Split Proposal has no effect on the
authorized and, when issued, outstanding number of Series A Preferred or the
exercise price thereof because its conversion rate into Common Stock
automatically adjusts to reflect the Reverse Stock Split.
As of _______, 1998, the Company had approximately ______ record holders of
Common Stock and ______ holders of Series D Preferred and believes, based on
information received from the transfer agent and those brokerage firms that hold
the Company's securities in custodial or "street" name, that such shares were
beneficially owned by an aggregate of approximately ______ beneficial owners of
Common Stock and _____ beneficial owners of Series D Preferred. Based on
estimated stockholdings as of __________, 1998, the Company estimates that,
after the Reverse Stock Split and Authorized Shares Reduction, the Company will
continue to have approximately the same number of stockholders. EXCEPT FOR THE
RECEIPT OF CASH IN LIEU OF FRACTIONAL INTERESTS, THE REVERSE STOCK SPLIT AND THE
AUTHORIZED SHARES REDUCTION WILL NOT AFFECT ANY STOCKHOLDER'S PROPORTIONATE
EQUITY INTEREST IN THE COMPANY.
The par value of the Common Stock will remain at $.10 per share following
the Reverse Stock Split and the Authorized Shares Reduction, and the number of
shares of the Common Stock outstanding will be reduced. As a consequence, the
aggregate par value of the outstanding Common Stock will be reduced, while the
aggregate capital in excess of par value attributable to the outstanding Common
Stock for statutory and accounting purposes will be correspondingly increased.
The Reverse Stock Split and Authorized Shares Reduction will not affect the
Company's retained deficit, and stockholders' equity will remain substantially
unchanged.
Effectuation of the Reverse Stock Split Proposal as of December 31, 1997
would not have had an effect on the Company's $3.7 million consolidated net loss
for the nine month period then ended. However, net loss per share of $.10 would
have been proportionately increased to approximately $.50. No adjustment has
been made for the reduction in the number of shares of Common Stock resulting
from the payment of cash for fractional shares. If the Reverse Stock Split
Proposal is effected, the per share information and the average number of shares
outstanding as presented in previously issued consolidated financial statements
and other publicly available information of the Company would be restated
following the Effective Date to reflect the Reverse Stock Split and the
Authorized Shares Reduction.
The Common Stock is currently listed on the Nasdaq SmallCap Market, under
the trading symbol DLPH.
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<PAGE>
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
The combination and reclassification of shares of Common Stock pursuant to
the Reverse Stock Split and Authorized Shares Reduction will occur automatically
on the Effective Date without any action on the part of stockholders of the
Company and without regard to the date certificates representing shares of
Common Stock prior to the Reverse Stock Split and Authorized Shares Reduction
are physically surrendered for new certificates. If the number of shares of
Common Stock to which a holder is entitled as a result of the Reverse Stock
Split would otherwise include a fraction, the Company will pay to the
stockholder, in lieu of issuing fractional shares of the Company, cash in an
amount equal to the same fraction multiplied by five times the average closing
price of the Common Stock on the Nasdaq SmallCap Market for the five days
immediately preceding the Effective Date. A change in the closing price of the
Common Stock will affect the amount received by stockholders in lieu of
fractional shares.
As soon as practicable after the Effective Date, transmittal forms will be
mailed to each holder of record of certificates for shares of Common Stock to be
used in forwarding such certificates for surrender and exchange for certificates
representing the number of shares of Common Stock such stockholder is entitled
to receive as a consequence of the Reverse Stock Split. The transmittal forms
will be accompanied by instructions specifying other details of the exchange.
Upon receipt of such transmittal form, each stockholder should surrender the
certificates representing shares of Common Stock prior to the Reverse Stock
Split, in accordance with the applicable instructions. Each holder who
surrenders certificates will receive new certificates representing the whole
number of shares of Common Stock that he holds as a result of the Reverse Stock
Split and any cash payable in lieu of a fractional share. STOCKHOLDERS SHOULD
NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
After the Effective Date, each certificate representing shares of Common
Stock outstanding prior to the Effective Date (an "old certificate") will, until
surrendered and exchanged as described above, be deemed, for all corporate
purposes, to evidence ownership of the whole number of shares of Common Stock,
and the right to receive from the Company the amount of cash for any fractional
shares, into which the shares of Common Stock evidenced by such certificate have
been converted by the Reverse Stock Split, except that the holder of such
unexchanged certificates will not be entitled to receive any dividends or other
distributions payable by the Company after the Effective Date, until the old
certificates have been surrendered. Such dividends and distributions, if any,
will be accumulated, and at the time of surrender of the old certificates, all
such unpaid dividends or distributions will be paid without interest.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes the material federal income tax
consequences of the Reverse Stock Split. This discussion is based upon the
Internal Revenue Code of 1986 (the "Code"), existing and proposed regulations
thereunder, reports of congressional committees, judicial decisions, and current
administrative rulings and practices, all as amended and in effect on the date
hereof. Any of these authorities could be repealed, overruled, or modified at
any time. Any such change could be retroactive and, accordingly, could cause
the tax consequences to vary substantially from the consequences described
herein. No ruling from the Internal Revenue Service (the "IRS") with respect to
the matters discussed herein has been requested, and there is no assurance that
the IRS would agree with the conclusions set forth in this discussion. All
stockholders should consult with their own tax advisors.
This discussion may not address certain federal income tax consequences
that may be relevant to particular stockholders in light of their personal
circumstances or to certain types of stockholders (such as dealers in
securities, insurance companies, foreign individuals and entities, financial
institutions, and tax-exempt entities) who may be subject to special treatment
under the
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federal income tax laws. This discussion also does not address any tax
consequences under state, local, or foreign laws.
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE REVERSE SPLIT, INCLUDING THE APPLICABILITY OF
ANY STATE, LOCAL, OR FOREIGN TAX LAWS, CHANGES IN APPLICABLE TAX LAWS, AND ANY
PENDING OR PROPOSED LEGISLATION.
The Company should not recognize any gain, or loss as a result of the
Reverse Stock Split. No gain or loss should be recognized by a stockholder who
receives only Common Stock upon the Reverse Stock Split. A stockholder who
receives cash in lieu of a fractional share of Common Stock that otherwise would
be held as a capital asset generally should recognize capital gain or loss on an
amount equal to the difference between the cash received and his basis in such
fractional share of Common Stock. For this purpose, a stockholder's basis in
such fractional share of Common Stock will be determined as if the stockholder
actually received such fractional share. Except as provided with respect to
fractional shares, the aggregate tax basis of the shares of Common Stock held by
a stockholder following the Reverse Stock Split will equal the stockholder's
aggregate basis in the Common Stock held immediately prior to the Reverse Stock
Split and generally will be allocated among the shares of Common Stock held
following the Reverse Stock Split on a pro-rata basis. Stockholders who have
used the specific identification method to identify their basis in shares of
Common Stock combined in the Reverse Stock Split should consult their own tax
advisors to determine their basis in the post-Reverse Stock Split shares Common
Stock received in exchange therefor.
OTHER NASDAQ REQUIREMENTS
In addition to the minimum bid price per share requirement described
above, the Common Stock's continued listing on the Nasdaq SmallCap Market is
subject to the maintenance of other quantitative and non-quantitative
requirements, as set forth in the New Nasdaq Listing Requirements. In
particular, the New Nasdaq Listing Requirements require that a company
currently included in Nasdaq meet each of the following standards to maintain
its continued listing: (i) either (A) net tangible assets (defined as total
assets, excluding goodwill, minus total liabilities) of $2 million, (B) total
market capitalization of $35 million, or (C) net income (in the latest fiscal
year or in two of the last three fiscal years) of $500,000; (ii) public float
of at least 500,000 shares, with a market value of at least $1 million; (iii)
minimum bid price of $1; (iv) at least two market makers; (v) at least 300
round lot beneficial shareholders; and (vi) compliance with certain corporate
governance requirements. Determination of the calculation of net tangible
assets may be subject to review from time to time by Nasdaq. Although the
Company believes that it will meet such requirements on the first full
trading day after the Company gives Nasdaq written notice that the Reverse
Stock Split has become effective, there can be no assurances that such will
be the case, or that continued losses or other factors beyond the control of
the Company will not cause the Company to fail to meet such requirements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
REVERSE STOCK SPLIT PROPOSAL.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of ________, 1998, the ownership of
Common Stock and Series D Preferred by (i) each director of the Company, (ii)
each executive officer of the Company, (iii) all current executive officers and
directors of the Company as a group, and (iv) all persons known to the Company
to be beneficial owners of more than five percent of the Common Stock or the
Series D Preferred. The Common Stock and the Series D Preferred are the
Company's only outstanding classes of voting securities. The information set
forth in the table as to directors and officers is based upon information
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<PAGE>
provided to the Company by such persons in connection with the preparation of
this proxy statement.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------------------
COMMON STOCK SERIES D PREFERRED
----------------------- -----------------------
PERCENT PERCENT
OF OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP CLASS
- - ------------------------ ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
</TABLE>
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THE COMPANY HAS BEEN ADVISED BY CORAL PARTNERS II ("CORAL"), OF WHICH
DIRECTORS OF THE COMPANY YUVAL ALMOG AND WILLIAM BAUMEL ARE AFFILIATES, THAT
CORAL INTENDS TO VOTE FOR APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL. Not
including any voting capital shares that such stockholders have the right to
acquire within 60 days pursuant to options and warrants (which confer no voting
power at the Special Meeting), the Beneficial Owners of more than five percent
of the Common stock as set forth above, and each of the directors own, in the
aggregate, ______% of the total voting power of the Company issued and
outstanding on the Record Date.
COSTS OF SOLICITATION
The cost of soliciting proxies, which also includes the preparation,
printing, and mailing of this Proxy Statement, will be borne by the Company.
Solicitation will be made by the company primarily through the mail, but certain
employees of the company, who will receive no compensation for their services
other than their regular remuneration, may also solicit proxies by telephone,
telegram, telex, telecopy, or personal interview. The Company will request
brokers and nominees to obtain voting instructions of beneficial owners of stock
registered in the names of such brokers and nominees and other "street names"
and will reimburse them for any expenses incurred in connection therewith. The
Company's transfer agent, ChaseMellon Shareholder Services, L.L.C., will assist
the Company in the solicitation of proxies from brokers and nominees for a fee
of approximately $________. The Company will also reimburse the transfer agent
for its reasonable out-of-pocket expenses incurred in connection with providing
solicitation services.
APPRAISAL RIGHTS
Under Delaware law and the Company's Certificate of Incorporation, no
appraisal rights are available to dissenting stockholders in regard to the
Reverse Stock Split Proposal.
DEADLINE FOR STOCKHOLDER PROPOSALS
Any stockholder proposal which may be properly included in the proxy
solicitation material for the 1998 annual meeting of shareholders must be
received by the Secretary of the Company no later than April 15, 1998. The
mailing address of the Company for submission of any such proposal is given on
the first page of this Proxy Statement.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE
ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE
EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
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<PAGE>
APPENDIX A
[FORM OF]
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DELPHI INFORMATION SYSTEMS, INC.
Delphi Information Systems, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "DGCL") does hereby certify:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions setting forth the following amendment to the Certificate of
Incorporation of the Corporation (the "Amendment"), declaring the Amendment to
be advisable and calling for the submission of the proposed Amendment to the
stockholders of the Corporation for consideration thereof. The resolution
setting forth the proposed Amendment is as follows:
RESOLVED, that, subject to Stockholder approval at the Special Meeting,
Article IV of the Certificate of Incorporation of this Corporation shall be
amended and restated to read in its entirety as follows:
ARTICLE IV
Effective immediately upon the filing of this Amendment to the
Certificate of Incorporation in the office of the Secretary of State of the
State of Delaware, the outstanding shares of Common Stock shall be and
hereby are combined and reclassified as follows: each share of Common Stock
shall be reclassified as and converted into one-fifth of a share of Common
Stock; provided, however, that fractional shares of Common Stock will not
be issued in connection with such combination and reclassification, and
each holder of a fractional share of Common Stock shall receive in lieu
thereof a cash payment from the Corporation determined by multiplying such
fractional share of Common Stock by five times the arithmetic mean average
closing price per share of Common Stock on the Nasdaq SmallCap Market for
the five trading days immediately preceding the effective date of this
Amendment, such payment to be made upon such other terms and conditions as
the officers of the Corporation, in their judgment, determine to be
advisable and in the best interests of the Corporation.
Certificates representing shares combined and reclassified as provided
in this Amendment are hereby canceled, and, upon presentation of the
canceled certificates to the Corporation, the holders thereof shall be
entitled to receive new certificates representing the shares resulting from
such combination and reclassification.
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
2,000,000 and each of such share shall have a par value of ten cents
($.10). The total number of shares of Common Stock authorized to be
issued is __,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
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<PAGE>
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 or 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.
SECOND: That thereafter, pursuant to a resolution of the Board of
Directors, a special meeting of the stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the DGCL, at
which meeting the necessary number of shares as required by statute were voted
in favor of the Amendment.
THIRD: That the Amendment was duly adopted in accordance with the
provisions of Section 242 of the DGCL.
FOURTH: That the Amendment shall be effective on the date this Certificate
of Amendment is filed and accepted by the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Max Seybold, its President, this ________ day of ___________ 1998.
DELPHI INFORMATION SYSTEMS, INC.
By:
---------------------------------------------
Name:
Title:
-------------------------------------
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<PAGE>
DELPHI INFORMATION SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
May 6, 1998 10:00 A.M. C.S.T.
The undersigned hereby appoints Messrs. Reid Simpson and Max Seybold,
severally, proxy, with full power of substitution and revocation, to vote on
behalf of the undersigned all shares of Common Stock of Delphi Information
Systems, Inc. (the "Company") which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held on May 6, 1998, and any adjournments
thereof.
1. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A
ONE-FOR-FIVE REVERSE STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF
THE COMPANY'S COMMON STOCK, AND TO REDUCE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK OF THE COMPANY FROM 75,000,000 TO __,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) THEREOF.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF EACH OF THE ABOVE PROPOSALS. PLEASE SIGN EXACTLY AS OWNERSHIP
APPEARS ON THIS PROXY. WHERE STOCK IS HELD BY JOINT TENANTS, ALL PARTIES IN THE
JOINT TENANCY SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated:
-----------------------------------
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
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