-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IfFzucr99/M795h9I5b/yLDESVVeeITUICGPAetPR+5DlZgZbu30Mq1ALSdFQ1i/ vVkH8QlhvD1br6NlqcJqag== 0000950144-97-011224.txt : 19971028 0000950144-97-011224.hdr.sgml : 19971028 ACCESSION NUMBER: 0000950144-97-011224 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19971027 EFFECTIVENESS DATE: 19971027 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX INFORMATION SYSTEMS CORP CENTRAL INDEX KEY: 0000792157 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 133337797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-38837 FILM NUMBER: 97701517 BUSINESS ADDRESS: STREET 1: 100 SECOND AVE SOUTH STREET 2: STE 1100 CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138947674 MAIL ADDRESS: STREET 1: 100 SECOND AVE STREET 2: STE 1100 CITY: ST PETERSBERG STATE: FL ZIP: 33701 FORMER COMPANY: FORMER CONFORMED NAME: DYNASTY TRAVEL GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CS PRIMO CORP DATE OF NAME CHANGE: 19910718 S-8 1 PHOENIX INFORMATION SYSTEMS CORP. FORM S-8 1 As filed with the Securities and Exchange Commission on October 27, 1997. Registration No. 333-_______ -------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------------------------------- PHOENIX INFORMATION SYSTEMS CORP. (Exact Name of Issuer as specified in its Charter) Delaware 13-3337797 (State of other Jurisdiction (I.R.S. Employer Incorporation or Organization) Identification No.) 100 Second Avenue South, Suite 1100, St. Petersburg, FL 33701 (Address of Principal Executive Offices) (Zip Code) ----------------------------------------------- PHOENIX INFORMATION SYSTEMS CORP. CONSULTING AND SERVICES COMPENSATION AGREEMENT, AS AMENDED (Full title of the Plans) ---------------------------------------------- Robert P. Gordon, Chairman of the Board 100 Second Avenue South, Suite 1100 St. Petersburg, Florida 33701 (813) 894-8021 (Name, address, including zip code, and telephone number, including area code, of agent for service) ---------------------------------------------- Copies of all communications to: Steven Morse, Esq. Lester Morse P.C. 111 Great Neck Road, Suite 420 Great Neck, NY 11021 Pursuant to Rule 429, this Registration Statement constitutes a post-effective amendment to the Registrant's Form S-8 Registration Statements, File No. 33-75862 and File No. 333-01013 which relate to 4,000,000 shares and 5,000,000 shares, respectively, under the Registrant's Consulting and Compensation Agreement dated February 25, 1994, as amended. 2 CALCULATION OF REGISTRATION FEE
==================================================================================================== Proposed Proposed Maximum Title of Each Class Maximum Aggregate Amount of of Securities to be Amount to be Offering Price Offering Price Registration Registered (1) Registered Per Share (3) (3) Fee (3) - ---------------------------------------------------------------------------------------------------- Common Stock, 7,000,000(1)(2) $.50 $3,500,000 $1,060.61 Par Value $.01 Per Share - ----------------------------------------------------------------------------------------------------
- -------------- (1) To be issued at the sole discretion of the Registrant, as Direct Shares, or shares underlying options granted to and to be granted under the Phoenix Information Systems Corp. Consulting and Services Compensation Agreement, dated February 25, 1994, as amended (the "Plan"). This Registration Statement registers 7,000,000 shares under the Plan for issuance and the resale of any shares acquired by non-affiliated persons to the public as Selling Security Holders. (2) Pursuant to Rule 416 promulgated under the Securities Act of 1933, an additional undeterminable number of shares of Common Stock is being registered to cover any adjustments in the number of shares of Common Stock pursuant to the anti-dilution provisions of the Plan. (3) Estimated solely for the purpose of calculating the registration fee and based on no less than the average of the closing high bid and low asked price of the Company's Common Stock on NASDAQ within five business days of the filing date of this Form S-8. REGISTRATION OF ADDITIONAL SECURITIES The Registrant currently has an effective registration statement filed on Form S-8 relating to its employee benefit plan which registered securities (i.e. 4,000,000 shares of Common Stock) of the same class as those being registered herewith, File No. 33-75862, filed with the Securities and Exchange Commission (the "Commission") on March 1, 1994. On December 4, 1995, the Registrant filed a reoffer prospectus covering control securities by means of Post Effective Amendment No. 1 to the aforementioned Form S-8. On February 16, 1996, the Registrant filed a Form S-8, File No. 333-01013, a registration statement relating to its employee benefit plan which registered with the Commission securities (i.e. 5,000,000 shares of Common Stock) of the same class as those being registered herewith. EXPLANATORY NOTE Pursuant to General Instruction C of Form S-8, this Registration statement contains a Prospectus on Form S-3 relating to the reoffering of 9,747,539 shares issuable upon exercise of stock options granted under the Plan. The reoffer Prospectus contained herein supersedes the reoffer Prospectus previously filed Registration Statement, File No. 33-75862. 2 3 PART I INFORMATION REQUIRED IN THE PROSPECTUS Note: The document(s) containing the information concerning the Phoenix Information Systems Corp. Consulting and Services Compensation Agreement, dated February 25, 1994, as amended (the "Plan") required by Item 1 of Form S-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the statement of availability of registrant information, employee benefit plan annual reports and other information required by Item 2 of Form S-8 will be sent or given to participants as specified by Rule 428. In accordance with Rule 428 and the requirements of Part I of Form S-8, such documents are not being filed with the Securities and Exchange Commission (the "Commission") either as part of this registration statement on Form S-8 (the "Registration Statement") or as prospectuses or prospectus supplements pursuant to Rule 424. Phoenix Information Systems Corp., a Delaware corporation (the "Registrant" or the "Company"), shall maintain a file of such documents in accordance with the provisions of Rule 428. Upon request, the Company shall furnish to the Commission or its staff a copy or copies of all documents included in such file. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Incorporated hereby by reference and made a part hereof is the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997, and Form 10-Q for the quarter ended June 30, 1997, as and if amended, filed under the Securities Exchange Act of 1934 (the "Exchange Act"), Form 8-A which was declared effective on August 2, 1995 by the Securities and Exchange Commission registering the Company's Common Stock under Section 12 of the Exchange Act and all documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing such documents. Item 4. DESCRIPTION OF SECURITIES Not applicable. Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL The legality of the securities being registered by this Registration Statement is being passed upon by Lester Morse P.C., 111 Great Neck Road, Suite 420, Great Neck, NY 11021, counsel to the Company. Members of Lester Morse's family beneficially own less than 1% of the outstanding shares of the Company's Common Stock. 3 4 Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Limitation of Directors' Liability. The Company's Certificate of Incorporation contains a provision which, in substance, eliminates the personal liability of the directors to the Company and its stockholders for monetary damages for breaches of their fiduciary duties as directors to the fullest extent permitted by Delaware law. By virtue of this provision, under current Delaware law a director of the Company will not be personally liable for monetary damages for breach of his fiduciary duty, except for liability for (a) breach of his duty of loyalty to the Company or to its stockholders, (b) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (c) dividends or stock repurchases or redemptions that are unlawful under Delaware laws and (d) any transaction from which he receives an improper personal benefit. This provision pertains only to breaches of duty by directors as directors and not in any other corporate capacity, such as officers, and limits liability only for breaches of fiduciary duties under Delaware corporate law and not for violations of other laws such as the federal securities laws. As a result of the inclusion of such provision, stockholders may be unable to recover monetary damages against directors for actions taken by them that constitute negligence or gross negligence or that are in violation of their fiduciary duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. The inclusion of this provision in the Company's Certificate of Incorporation may have the effect of reducing the likelihood of derivative litigation against directors, and may discourage or deter stockholders or Management from bringing a lawsuit against directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefitted the Company and its stockholders. Indemnification. The General Corporation Law of Delaware provides generally that a corporation may indemnify any person who was or is a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative in nature to procure a judgment in its favor, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) and, in a proceeding not by or in the right of the corporation, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him in connection with such suit or proceeding, if he acted in good faith and in a manner believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reason to believe his conduct was unlawful. Delaware law further provides that a corporation will not indemnify any person against expenses incurred in connection with an action by or in the right of the corporation if such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall deem proper. The indemnification and advancement of expenses provided by, or granted pursuant to Delaware Corporation Law is not be deemed exclusive of any other rights to which those seeking indemnification or advance of expenses may be entitled under any bylaw, agreement, vote of stockholders of disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. 4 5 The Company's Certificate of Incorporation provides that the Company shall indemnify in the manner and to the extent permitted by law, any person (or that person's testator or intestate successor) made or threatened to be made a party to any action or proceeding, whether domestic or foreign, civil or criminal, judicial or administrative, or federal or state, by reason of the fact that the person was a director or officer of the corporation or served any other corporation in any capacity at the request of the corporation, in the manner and to the extent permitted by law. The Company has entered into employment contracts with various officers and directors to provide for indemnification under certain circumstances. The Company currently has director and officer liability insurance in the amount of $5,000,000. No assurances can be given that such insurance will be maintained by the Company due to the high cost of such coverage. Item 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. Item 8. EXHIBITS The following is a complete list of exhibits filed as a part of, or incorporated by reference in, this Registration Statement.
Exhibit No. Document ----------- -------- 4.1 Registration Statement of the Registrant on Form 8-A (filed on August 2, 1995, File No. 0-26532, and incorporated herein by reference) 5.1 Opinion of Counsel, Lester Morse P.C.* 10.1 Consulting Services and Compensation Agreement dated February 25, 1994, as amended and restated on October 7, 1997.* 23.1 Consent of Coopers & Lybrand, LLP Certified Public Accountants* 23.2 Consent of BDO Seidman, LLP, Certified Public Accountants* 23.3 Consent of Counsel, Lester Morse P.C. (contained as part of Exhibit 5.1 hereto)
- --------------- *Filed herewith 5 6 Item 9. UNDERTAKINGS A. To Update Annually The undersigned registrant hereby undertakes (1) other than as provided in the proviso to item 512(a) of Regulation S-K, to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (a) to include any prospectus required by Section 10(a)(3) of the Securities Act, (b) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement, and (c) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration; (2) that for the purpose of determining any liability under the Securities Act, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. Incorporation of Subsequent Securities Exchange Act of 1934 Documents by Reference The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Indemnification of Officers and Directors Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 6 7 PHOENIX INFORMATION SYSTEMS CORP. Up to 9,747,539 Shares Common Stock, $.01 par value All of the shares of Common Stock offered hereby are being sold by the Selling Security Holders, each of whom may be deemed to be affiliates of the Company. The shares of Common Stock being registered hereunder for reoffer and resale are defined as control securities and may be reoffered and resold on a continuous or delayed basis in the future. See "Selling Security Holders." The Company will not receive any of the proceeds from the sale of shares sold by the Selling Security Holders. The Common Stock has been registered with the Securities and Exchange Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934, and is traded on the Electronic Bulletin Board of the National Association of Securities Dealers, Inc. under the trading symbol "PHXS." On October 6, 1997, the closing sale price was $.65. See "Risk Factors" for a discussion of certain factors that should be considered by prospective purchasers of the securities offered hereby. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OFFERED BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THE DATE OF THIS PROSPECTUS IS OCTOBER __, 1997 8 AVAILABLE INFORMATION AND CERTAIN DEFINITIONS The Company is a reporting company subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, Proxy and Information Statements and other information filed by the Company can be inspected and copied at the public reference facilities, maintained by the Commission at 450 Filth Street, N.W., Washington, D.C. 20549. Copies of such materials can be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Material filed electronically through EDGAR (Electronic Data Gathering Analysis and Retrieval System) may also be accessed through the SEC's home page on the worldwide web at http:\\www.sec.gov. The Company has filed with the Commission, 450 5th Street, N. W., Washington, D.C. 20549, a registration statement on Form S-8 (herein, together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended, regarding the shares of the Company offered. This Prospectus, filed as part of the Registration Statement, omits certain information regarding the Company and the securities offered. Reference is made to the Registration Statement and the Exhibits filed therewith, which may be obtained from the principal office of the Commission at 450 Fifth Street N.W., Judiciary PIaza, Washington, D.C. 20549 upon request and payment of the prescribed fee. All references herein to the "Company" include Phoenix Information Systems Corp. and its subsidiaries, namely, Phoenix Systems Group, Inc., Phoenix Systems Ltd., Phoenix Transaction Services, Inc. and Hainan Phoenix Information Systems, Ltd. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES lnsofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will governed by the final adjudication of such issue. 2 9 ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES SECURITIES LAWS Certain of the Company's and subsidiaries' directors, officers, and controlling persons reside outside the United States, and all or a substantial portion of their assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon these persons or to enforce against them judgments of courts of the United States predicated upon civil liabilities under the United States federal securities laws or state securities laws. The Company has been advised that there is doubt as to the enforceability against such persons, whether in original actions or in actions for enforcement of Judgments of United States courts, of civil liabilities predicated solely upon the United States federal securities laws or state securities laws. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents are incorporated into this Prospectus by reference and made a part hereof: (I) Contents of the Company's Registration Statements on Form S-8, SEC File No.33-75862, filed with the Commission on March 1, 1994 and SEC File No. 333-01013 filed with the Commission on February 16, 1996; (ii) contents of the Company's Registration Statement on Form 8-A, filed with the Commission on August 2, 1995, SEC File No.0-26532; (iii) the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997, and (iv) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of any and all of the documents incorporated by reference herein (other than exhibits and schedules to such documents, unless such exhibits or schedules are specifically incorporated by reference in such documents). Requests should be directed to Phoenix Information Systems Corp., Shareholder Relations Department. 100 Second Avenue South, Suite 1100. St. Petersburg, Florida 33701. and at (813)894-8021. 3 10 TABLE OF CONTENTS AVAILABLE INFORMATION AND CERTAIN DEFINITIONS ...................... 2 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ..................................... 2 ENFORCEABILITY OF CIVIL LIABILITIES ................................ 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................... 3 PROSPECTUS SUMMARY ................................................. 4 RISK FACTORS ....................................................... 8 SELLING SECURITY HOLDERS ........................................... 12 PLAN OF DISTRIBUTION ............................................... 15 INTERESTS OF NAMED EXPERTS AND COUNSEL ............................. 15
PROSPECTUS SUMMARY The following summary information should be read in conjunction with, and is qualified in its entirety by, the detailed information and financial statements and related notes thereto appearing either elsewhere in this Prospectus or included in the Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are incorporated herein by reference. THE COMPANY Phoenix Information Systems Corp. and its subsidiaries, Phoenix Systems Group, Inc. (wholly owned since March 27, 1995), Phoenix Systems Ltd. (wholly owned since November 11, 1993), Phoenix Transaction Services, Inc. (wholly owned since June 3, 1997), and Hainan Phoenix Information Systems, Ltd. (70% owned since November 22, 1993) are collectively referred to herein as "Phoenix" or the "Company." Phoenix was incorporated in Delaware on April 4, 1986, as C.S. Primo Corp., changed its name to Dynasty Travel Group, Inc., on July 9, 1991, and subsequently changed its name to Phoenix on September 29, 1993. Phoenix is a development-stage information systems and services company that was formed specifically to support the growing demand for automation services in the travel, tourism and aviation transportation industry. Phoenix has installed, and received formal approval from the Civil Aviation Administration of China ("CAAC") to operate, an advanced computerized reservation system for the domestic airlines, hotels and travel agencies in the People's Republic of China ("China"). Phoenix provides state-of-the-art, travel-related services to China through its joint venture with China Southern Airlines ("China Southern"), named Hainan Phoenix Information Systems, Ltd. ("Hainan-Phoenix" or the "Joint Venture"). Hainan-Phoenix is the only commercial entity to receive formal approval to operate a computerized reservation system in China. The Company owns 70% of Hainan-Phoenix through its wholly-owned subsidiary, Phoenix Systems Ltd., a Bermuda corporation ("PSL"). Phoenix has not generated any significant revenues, earnings or history of operations from inception through March 31, 1997. Consequently, Phoenix's continued existence has depended primarily upon its ability to raise capital. 4 11 PSL was formed in 1993 to provide reservation systems and services worldwide. PSL formed its first joint venture company with Hainan Airlines. PSL has the responsibility to market, outside of each joint venture's defined territory, all Phoenix travel products (including the inventory of airline seats and hotel rooms). PSL has also established a turnkey reservations center in the United States and is currently taking on-line reservations for Laker Airways. Eastwind Airlines, Inc., a former customer, was the first U.S. carrier to use Phoenix's airline reservation system and reservation center. PSL is also actively pursuing other small to medium carriers throughout North America to provide a complete, low-cost solution for their reservation needs. Hainan-Phoenix is a Chinese joint venture that was formed in late 1993. The Joint Venture was granted its business license in March 1994. In January, 1995, the Joint Venture installed its proprietary airline and hotel reservation systems software on Stratus Computer, Inc. ("Stratus") hardware located in the Joint Venture's office in Hainan Province, China. The Company's system is presently capable of providing computer reservation services to subscribing Chinese airlines, hotels, tour companies and other travel providers. On June 1, 1996, Hainan-Phoenix officially went operational with its first customer, Hainan Airlines. Hainan Airlines, a publicly held airline in China, is a fast growing airline that carried more than 870,000 passengers in 1995, over 1,200,000 in 1996, and expects to carry over 2.7 million passengers by 1998. Based in China's Hainan province, Hainan Airlines currently operates a fleet of six Boeing 737, two Metro 23 and one Lear 55 aircraft throughout China. Hainan Airlines, like the other regional and independent airlines in China, is hampered by the lack of automation. In order to remedy this problem, Hainan Airlines entered into the Joint Venture as a means of gaining access to automated reservation services. Through its reservation system, the Joint Venture has created a database of airline seats and hotel rooms that will be marketed in mainland China by the Joint Venture. On November 15, 1996, China Southern, the largest domestic airline in the People's Republic of China, became Phoenix's new joint venture partner in Hainan-Phoenix. In a trilateral agreement between Phoenix, China Southern, and the Company's former joint venture partner, Hainan Airlines, China Southern acquired the entire equity interest held by Hainan Airlines, representing 30% of the Joint Venture, for US$2,580,000. Further, China Southern agreed to invest an additional US$4,780,000 in capital contributions of cash and real estate in exchange for an additional 15% interest in the Joint Venture, which will raise China Southern's total stake to 45% upon the completion of the additional contribution. Hainan Airlines continues as a customer of the Joint Venture on a limited basis. On December 23, 1996, Phoenix acquired for $7,500,000 a 25% interest in American Aviation Ltd., through the exercise of an option. American Aviation is a company owned by affiliates of George Soros, Purnendu Chatterjee, and Quantum Industrial Holdings Ltd. American Aviation's sole asset is a 25% interest in Hainan Airlines, which it purchased for $25,000,000 in December 1995. Phoenix Systems Group, Inc. ("PSG"), a wholly-owned subsidiary of the Company, 5 12 is responsible for the development, support and maintenance of the Company's application software systems. Phoenix Transaction Services, Inc. ("PTS"), a wholly-owned subsidiary of the Company, was established in June 1997. PTS now manages the existing U.S. reservations and call center operation, which was previously controlled by PSL. The goal of PTS is to establish ventures in volume-intensive transaction environments such as passenger reservation services, airline cargo services, and hotel reservation services. These ventures will be created through alliances, partnerships, and acquisitions. PTS would bring industry knowledge and proprietary solutions, built or acquired, to the ventures, while the partners would have the facility, manpower, and management responsibilities. PTS is responsible for securing strategic partners and achieving revenue growth. 6 13 THE OFFERING Common Stock offered by the Selling Security Holders 9,747,539 Shares of Common Stock Outstanding as of September 30, 1997 49,867,200 Use of Proceeds The Company will not receive any proceeds from the sale of shares by the Selling Security Holders Electronic Bulletin Board Symbol PHXS DESCRIPTION OF SECURITIES TO BE REGISTERED The Registrant's Common Stock was registered with the Commission on August 2, 1995, pursuant to Section 12(g) of the Exchange Act on Form 8-A, SEC, File No.0-26532, and the securities to be registered hereunder for reoffer and resale by the Selling Security Holders are of the same class. The Selling Security Holders acquired the shares of Common Stock pursuant to Registrant's employee's and consultant's benefit plan, entitled "Consulting and Services Compensation Agreement dated February 25, 1994," as may be amended from time to time (the "Plan"). The shares to be issued pursuant to the Plan and the shares underlying any grant of option thereunder have been registered with the Commission under its registration statements on Form S-8, SEC File No.33-75862 and SEC File No. 333-01013, of which this Prospectus is a part. 7 14 RISK FACTORS POTENTIAL BUSINESS OBSTACLES The Company faces the following potential obstacles, among others, to the successful execution and completion of its proposed operations: 1. delays or failure to obtain adequate financing; 2. delays in the timetable for completing the software installation effort, due to unforeseen difficulties; 3. delays in effecting workstation communications to the airline reservations system via a data transmission network in China; 4. delays in effecting agreements with international airlines, travel agency reservation systems and other travel entitles; 5. inability to obtain additional contracts with domestic airlines in China; 6. competition from Civil Aviation Administration of China ("CAAC"), the government-owned airline reservation system and other entities; 7. delays or failure in connecting the planned network to the existing CAAC network; and 8. unforseen regulatory, political or economic changes in China. The Company's securities involves a high degree of risk, including, but not limited to, the factors described herein. An investment in the Company's securities should be made only by persons who can afford a loss of their entire investment. Investors should consider carefully the following risk factors inherent in and affecting the business of the Company. 1. DEVELOPMENT STAGE COMPANY. The Company was organized under the laws of the State of Delaware on April 4,1986. On March 4, 1991, the Company entered into an agreement to acquire approximately 98% of PSG pursuant to a Plan of Reorganization in exchange for an amount representing 90% of the Company's outstanding Common Stock. PSG was incorporated under the laws of the State of Delaware on June 25, 1987 and commenced development stage operations on April 1, 1989. Since inception, the Company has been engaged principally in negotiating various agreements with respect to its proposed business operations and attempting to obtain financing to support its operations. The likelihood of success of the Company must be considered in light of the risks, costs, difficulties and delays frequently encountered in a development stage company establishing new businesses and developing new products and/or services, particularly such types of activities within China. There could be no 8 15 assurance that the Company's business will prove to be commercially feasible, successful or profitable. 2. HISTORY OF OPERATING LOSSES; WORKING CAPITAL DEFICIT; FINANCIAL INSTABILITY. During the years ended March 31, 1997, 1996, 1995, 1994, 1993,1992 and 1991, the Company sustained net losses of $11,031,821, $9,704,318, $4,841,824, $2,567,932, $1,640,852, $549,095, and $167,007, respectively. These losses are expected to continue for the fiscal year ending March 31, 1998 and for a presently undetermined time. The Company is a development stage company which has had limited revenues, and a history of operating losses. The Company's independent certified public accountants have included an explanatory paragraph in their reports on the Company's financial statements stating that various factors affecting the Company's operations raise substantial doubt as to the Company's ability to continue as a going concern. There can be no assurance that the Company will be able to continue as a going concern or achieve material revenues or profitable operations. 3. ADDITIONAL FINANCING. The Company will from time-to-time require additional financing for its operations. No assurances can be given that such financing will be available or, if available, that it can be obtained on terms satisfactory to the Company. 4. NEGOTIATIONS WITH ADDITIONAL DOMESTIC AIRLINES IN CHINA AND HOTELS. The Company is presently negotiating to install its Reservation Systems with various additional hotels and domestic airlines located in China and on Hainan Island besides those already under contract. No assurances can be given that the Company will successfully conclude these negotiations by executing definitive agreements, or, if successful, that such agreements will be on terms satisfactory to the Company. 5. POLITICAL ECONOMIC AND LEGAL UNCERTAINTIES OF CONDUCTING BUSINESS IN THE PEOPLE'S REPUBLIC OF CHINA. The Company is subject to various significant risks inherent in doing business in The People's Republic of China, including political and economic instability and undetermined difficulty in engaging in any type of litigation to enforce contractual rights and copyright protection. In June 1989, uncertainties resulting from political instability in China generally had a detrimental impact on foreign companies conducting business in China and had the effect of delaying the Company's proposed operations and financing efforts. There can be no assurance that similar events in the future, in China or elsewhere, will not disrupt the Company's activities and have a material adverse effect on the Company's operations. There can be no assurance that the Company will be able to enforce its contractual rights or receive damages for their breach or other justified remedies in China should the occasion arise. The Company is also subject to various additional risks of doing business in China and abroad, including, but not limited to, volatile fluctuations in foreign currency, restrictions 9 16 on transfer of funds, and risks of non-acceptance in currency exchanges, all of which could have a significant impact upon the Company's business. 6. TECHNOLOGICAL OBSOLESCENCE. The computer software field is characterized by rapid technological developments and advances, particularly in the travel industry. Although the Company believes that its reservation system is expected to be technically and economically competitive and it is anticipated that it will not become obsolete for the foreseeable future, it is possible that intervening development of new technology and/or new systems could render all or part of the Company's reservation system virtually obsolete at any time. 7. COMPETITION. Hotel chains such as Sheraton and Hyatt have computerized reservation Systems pertaining to their own hotels, however, management believes that they do not offer the complete services which are anticipated to be offered by the Company. International Air Carriers, such as United, Northwest, Air China and Japan Airlines have computerized reservation systems for international travel, however, they do not offer complete reservation services for intra-China flights. No assurances can be given that other better capitalized companies with greater resources and more experienced personnel may not seek to compete directly with the Company's proposed computerized reservation system. Fundamental to installing any reservation system is access to a communications link, and China's network capacity is believed by management to be severely limited. The Joint Venture has successfully negotiated an agreement to obtain access to ChinaPac, China's only state-of-the-art data communications line. Management has been informed that it is difficult to obtain access to ChinaPac. However, the Company cannot make representations that a competitor could not gain access to ChinaPac, obtain contracts with various Chinese domestic airlines, and enter into competition with the Company. 8. NO DIVIDENDS AND NONE ANTICIPATED. The payment by the Company of cash dividends, if any, in the future rests within the discretion of its Board of Directors and will depend, among other things, upon the Company's earnings, its capital requirements and its financial condition, as well as other relevant factors. The Company has not paid or declared any cash dividends upon its Common Stock since its inception and by reason of its present financial status and its contemplated future financial requirements does not contemplate or anticipate making any cash distributions upon its Common Stock in the foreseeable future. 9. FUTURE SALES OF COMMON STOCK BY MANAGEMENT AND OTHERS. The Company has 49,867,200 shares issued and outstanding as of the date of this Prospectus. In general, under Rule 144, a person who has satisfied a one-year holding period may, under certain circumstances, sell within any three-month period a number of shares which does not exceed the greater of one percent of the then outstanding shares of Common Stock or the average weekly trading volume in shares during the four calendar weeks 10 17 immediately prior to such sale. Rule 144 also permits under certain circumstances, the sale of shares without any quantity or other limitation by a person who is not an affiliate of the Company and who has satisfied a two-year holding period. Future sales of such shares made under Rule 144 may have an adverse effect on the then prevailing market price, if any, of the Common Stock and adversely affect the Company's ability to obtain future financing in the capital markets as well as create a potential market overhang. As of the date of this Prospectus, pursuant to Rule 144, over 20,000,000 shares are eligible for sale under Rule 144. 11 18 SELLING SECURITY HOLDERS This Prospectus relates to 9,747,539 shares of Common Stock to be offered for sale by certain officers and directors of the Company (collectively the "Selling Stockholders"). The aforesaid shares were issued or are issuable pursuant to the Company's Consulting and Services Compensation Agreement dated February 25, 1994, as amended (the "Plan"). The address of each Selling Stockholder is c/o Phoenix Information Systems Corp., 100 Second Avenue South, Suite 1100, St. Petersburg, Florida 33701. The following table sets forth certain information with respect to the Selling Stockholders:
=========================================================================================================== Number of Shares (and Percentage of Number of Shares Owned Number of Outstanding Shares) (and Percentage of Shares Covered Owned After Name and Position with the Outstanding Shares) as of by this Completion of this Company During the Past September 30, 1997 Prospectus Offering Three Years (1) (2) (3) - ----------------------------------------------------------------------------------------------------------- Robert P. Gordon, Chairman of the Board 8,536,271(4) 15.7% 4,641,527 3,894,744 (7.1%) - ----------------------------------------------------------------------------------------------------------- Robert J. Conrads, Director 2,328,000(5) 4.5% 1,178,000 1,150,000 (2.2%) - ----------------------------------------------------------------------------------------------------------- Paul Henry, Secretary, Director 608,000(6) 1.2% 428,000 180,000 * - ----------------------------------------------------------------------------------------------------------- Delbert Bloss, President 1,000,000(7) 2.0% 1,000,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Frank Cappiello, Director 541,000(8) 1.1% 491,000 50,000 * - ----------------------------------------------------------------------------------------------------------- Yu Yan 'en, Director 300,000(9)* 300,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- W. James Peet, Director 108,000(10)* 108,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Larry McGee, Vice President of subsidiary 155,000(11)* 155,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Peter J. Ford, Vice President and Chief Financial Officer 168,500(12)* 160,000 8,500 * - ----------------------------------------------------------------------------------------------------------- Frank Streine, Vice President 120,000(13)* 120,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Robert O. Harlan, Vice President of subsidiary 600,012(14) 1.2% 600,012 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Judith A. Schafers, Vice President of subsidiary 216,000(15)* 216,000 -0- (0%) - ----------------------------------------------------------------------------------------------------------- Peter Sham, Acting President of subsidiary 350,000(16)* 350,000 -0- (0%) ===========================================================================================================
12 19 - ------------------- * Owns less than one percent of the issued and outstanding shares. (1) Assumes all options covered by this Prospectus are beneficially owned by the option holder and the underlying shares are deemed outstanding, but such shares shall not be deemed outstanding for the purpose of computing percentage of Common Stock owned by any other person. (2) Includes all shares issued or issuable upon exercise of options granted directly by the Company held by the officer/director, even though some of said shares covered by the options are not currently beneficially owned by Optionee under the regulations of the Exchange Act of 1934, as amended. (3) Assumes all Options granted are exercised and sold by each respective person. (4) Includes the following shares deemed to be beneficially owned by Mr. Gordon: (a) 3,212,219 shares of the Company's Common Stock owned by him and Heaven International Inc., (b) 682,525 shares beneficially owned by Visitors Services Inc. and in which Mr. Gordon is a controlling stockholder, and (c) options to purchase 4,641,527 shares of the Company's Common Stock at exercise prices ranging from $1.35 per share to $1.70 per share. (5) Includes warrants and options to purchase an aggregate of 1,378,000 shares of the Company's Common Stock at exercise prices ranging from $1.00 per share to $3.60 per share (including options held by Voyager Capital Group). (6) Includes options to purchase 428,000 shares of the Company's Common Stock at exercise prices ranging from $1.00 per share to $2.00 per share. (7) Includes options to purchase 1,000,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. (8) Includes options to purchase 491,000 shares of the Company's Common Stock at exercise prices ranging from $1.00 per share to $1.75 per share. (9) Includes options to purchase 300,000 shares of the Company's Common Stock at an exercise price of $2.50 per share. (10) Includes options to purchase 108,000 shares of the Company's Common Stock at an exercise price of $1.70 per share. (11) Includes options to purchase 155,000 shares of the Company's Common Stock at an exercise price of $1.70 per share. 13 20 (12) Includes options to purchase 160,000 shares of the Company's Common Stock at an exercise price of $2.00 per share. (13) Includes options to purchase 120,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. (14) Includes options to purchase 600,012 shares of the Company's Common Stock at an exercise price of $1.50 per share. (15) Includes options to purchase 216,000 shares of the Company's Common Stock at an exercise price of $1.70 per share. (16) Includes options to purchase 350,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. 14 21 PLAN OF DISTRIBUTION All of the shares of Common Stock offered hereby are being sold by the Selling Security Holders and may be offered through the selling efforts of brokers or dealers unknown to the Registrant. Each of the Selling Security Holders are deemed affiliates of the Company and are thereby subject to the volume limitations imposed on affiliates and control securities by Rule 144 of the Securities Act of 1933, as amended, and may further be subject to internal restrictions or volume limitations on resale imposed on them by the Board of Directors of the Registrant. In addition, the Selling Security Holders are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934. INTERESTS OF NAMED EXPERTS AND COUNSEL The law firm of Lester Morse P.C. (the "Firm") has acted as securities counsel to the Registrant and has given its opinion as to the validity of the securities registered with the Registration Statement hereunder, filed with the Commission, which opinion appears at Exhibit 5.1 thereto. As of the date of this Prospectus, members of the family of Lester Morse beneficially own less than 1% of the issued and outstanding shares of the Company. Such ownership includes the grant of stock options to purchase 200,000 shares under the Company's Plan. 15 22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this Form S-8 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Petersburg, State of Florida on the 27th day of October, 1997. PHOENIX INFORMATION SYSTEMS CORP. By: /s/ Robert P. Gordon ----------------------------------------- Robert P. Gordon, Chairman of the Board Pursuant to the requirements of the Securities Act of 1933, this Form S-8 Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signatures Titles Date ---------- ------ ---- /s/ Robert P. Gordon Chairman of the Board October 27, 1997 - -------------------------- Robert P. Gordon /s/ Delbert F. Bloss President, Chief Executive - -------------------------- Officer, Director October 27, 1997 Delbert F. Bloss /s/ Paul W. Henry Secretary, Director October 27, 1997 - -------------------------- Paul W. Henry /s/ Peter J. Ford Vice President and Chief - -------------------------- Financial Officer October 27, 1997 Peter J. Ford /s/ Yu Yan'en Director October 27, 1997 - -------------------------- Yu Yan'en /s/ Frank Cappiello Director October 27, 1997 - -------------------------- Frank Cappiello /s/ Robert J. Conrads Director October 27, 1997 - -------------------------- Robert J. Conrads /s/ W. James Peet Director October 27, 1997 - -------------------------- W. James Peet
EX-5.1 2 OPINION OF COUNSEL, LESTER MORSE P.C. 1 EXHIBIT 5.1 LESTER MORSE P.C. 111 Great Neck Road Great Neck, New York 11021-473 -- Telephone (516) 487-1446 Telecopier (516) 487-1452 October 27, 1997 U.S. Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Phoenix Information Systems Corp. Form S-8 Registration Statement Ladies and Gentlemen: OPINION OF COUNSEL We have acted as counsel to Phoenix Information Systems Corp. (the "Company") in connection with the preparation and filing of a Registration Statement on Form S-8 (the "Registration Statement") covering registration under the Securities Act of 1933, as amended, of 7,000,000 shares of the Company's common stock, $.01 par value per share (the "Shares"), pursuant to the Phoenix Information Systems Corp., Consulting and Services Compensation Agreement dated February 25, 1994, as amended (the "Plan"). As such, we have examined the Registration Statement, the Company's Articles of Incorporation and Bylaws, as amended, and minutes of meetings of its Board of Directors. Based upon the foregoing, and assuming that the Shares will be issued as set forth in the Plan and Registration Statement, at a time when effective, and that the Company will fully comply with all applicable securities laws involved under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated pursuant to said Acts, and in those states or foreign jurisdictions in which the Shares may be sold, we are of the opinion that, upon proper and legal issuance of the Shares according the Registration Statement and receipt of the consideration to be paid for the Shares, the Shares will be validly issued, fully paid and nonassessable shares of Common Stock of the Company. This opinion does not cover any matters related to any re-offer or re-sale of the Shares by any Plan Beneficiaries except as described in the Registration Statement , once properly and legally issued pursuant to the Plan as described in the Registration Statement. This opinion is not to be used, circulated, quoted or otherwise referred to for any other purpose without our prior written consent. This opinion is based on our knowledge of the law and facts as of the date hereof. This opinion does not address or relate to any specific state securities laws. We assume no duty to communicate with the Company in respect to any matter which comes to our attention hereafter. 2 CONSENT We consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to our firm in the prospectus which is made part of the Registration Statement. Sincerely, LESTER MORSE P.C. /s/ Steven Morse, Esq. EX-10.1 3 CONSULTING SERVICES AND COMPENSATION AGREEMENT 1 EXHIBIT 10.1 PHOENIX INFORMATION SYSTEMS CORP. CONSULTING AND SERVICES COMPENSATION AGREEMENT (AS RESTATED OCTOBER 7, 1997) SECTION 1. INTRODUCTION 1.1 Establishment. Effective as provided in Section 17, Phoenix Information Systems Corp., a Delaware corporation (the "Company"), hereby establishes a restated plan of long-term stock-based compensation incentives for selected Eligible Participants (defined below) of the Company and its affiliated corporations. Such a plan was adopted on February 25, 1994. The plan as restated herein and adopted by the Board of Directors on October 7, 1997, shall be known as the Consulting and Services Compensation Agreement (the "Plan"). 1.2 Purpose. The purpose of the Plan is to promote the best interest of the Company, and its stockholders by providing a means of non-cash remuneration to selected Eligible Participants who contribute most to the operating progress and earning power of the Company. SECTION 2. DEFINITIONS The following definitions shall be applicable to the terms used in the Plan: 2.1 "Affiliated Corporation" means any corporation that is either a parent corporation with respect to the Company or a subsidiary corporation with respect to the Company (within the meaning of Sections 424(e) and (f), respectively, of the Internal Revenue Code). 2.2 "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time. 2.3 "Committee" means a committee designated by the Board of Directors to administer the Plan or, if no committee is so designated, the Board of Directors. Any Committee Member who is also an Eligible Participant may receive a grant only if he abstains from voting in favor of a grant to himself, and the grant is determined and approved by the remaining Committee Members. The Board of Directors, in its sole discretion, may at any time remove any member of the Committee and appoint another Director to fill any vacancy on the Committee. 2.4 "Common Stock" means the Company's $.01 par value voting common stock. 2.5 "Company" means Phoenix Information Systems Corp., a Delaware corporation and its subsidiaries. 2.6 "Effective Date" means the effective date of the Plan, as set forth in Section 17 hereof. 2 2.7 "Eligible Participant" or "Participant" means any employee, director, officer, consultant, or advisor of the Company who is determined (in accordance with the provisions of Section 4 hereof) to be eligible to receive stock and exercise stock options hereunder. 2.8 "Fair Market Value" means with respect to Common Stock, as of any date, the closing price of a share of Common Stock as reported on such exchange on which the Company's Common Stock may be listed. 2.9 "Option" means the grant to an Eligible Participant of a right to acquire shares of Restricted Stock of the Company, unless said shares are duly registered, and thus freely tradeable, pursuant to a Grant of Option approved by the Committee and executed and delivered by the Company. 2.10 "Plan" means this Phoenix Information Systems Corp. Consulting and Services Compensation Agreement as restated and adopted on October 7, 1997. 2.11 "Registered Stock" means shares of common stock, $.01 par value, of the Company underlying an Option which, if specified in the written Option are, upon issuance, freely tradeable by virtue of having been registered with the Securities and Exchange Commission under cover of Form S-8, or another appropriate registration statement, and which shares have been issued subject to the "blue sky" provisions of any appropriate state jurisdiction. Special resale restrictions may, however, apply to officers, directors, control shareholders and affiliates of the Company and such individuals or entities will be required to obtain an opinion of counsel as regards their ability to resell shares received pursuant to this Plan. 2.12 "Stock" or "Restricted Stock" means shares of common stock, $.01 par value, of the Company issuable directly under the Plan or underlying the grant of the Option, which are, upon issuance, subject to the restrictions set forth in Section 11 hereof. Wherever appropriate, words used in the Plan in the singular may mean the plural, the plural may mean the singular, and the masculine may mean the feminine. SECTION 3. ADOPTION AND ADMINISTRATION OF THE PLAN A plan of long-term stock-based compensation incentives for selected Eligible Participants of the Company and its affiliated corporations was adopted by the Board of Directors on February 25, 1994. The plan was restated and adopted by the Board of Directors on October 7, 1997 (the "Plan"). In the absence of contrary action by the Board of Directors, and except for action taken by the Committee pursuant to Section 4 in connection with the determination of Eligible Participants, any action taken by the Committee or by the Board of Directors with respect to the implementation, interpretation or administration of the Plan shall be final, conclusive and binding. 3 SECTION 4. ELIGIBILITY AND AWARDS The Committee shall determine at any time and from time to time after the effective date of the Plan: (i) the Eligible Participants; (ii) the number of shares of Common Stock issuable directly or to be granted pursuant to the Option which an Eligible Participant may exercise; (iii) the price per share at which each option may be exercised, in cash or cancellation of fees for services for which the Company is liable, if applicable, or the value per share if a direct issue of stock; and (iv) the terms on which each option may be granted. Such determination may from time to time be amended or altered at the sole discretion of the Committee. Notwithstanding the provisions of Section 3 hereof, no such determination by the Committee shall be final, conclusive and binding upon the Company unless and until the Board of Directors has approved the same; provided, however, that if the Committee is composed of a majority of the persons then comprising the Board of Directors of the Company, such approval by the Board of Directors shall not be necessary. SECTION 5. GRANT OF OPTION Subject to the terms and provisions of this Plan, the terms and conditions under which the Option may be granted to an Eligible Participant shall be set forth in a written agreement (i.e., a Consulting Agreement, Services Agreement, Fee Agreement, or Employment Agreement) or a written Grant of Option in the form attached hereto as Exhibit A and made a part hereof and containing such modifications thereto and such other provisions as the Committee, in its sole discretion, may determine. Notwithstanding the foregoing provisions of this Section 5, each Grant of Option shall incorporate the provisions of this Plan by reference. SECTION 6. TOTAL NUMBER OF SHARES OF COMMON STOCK The total number of shares of Common Stock that have been reserved for issuance by the Company either directly or underlying Options granted under this Plan from inception to date is 16,000,000. The total number of shares of Common Stock reserved for such issuance may be increased only by a resolution adopted by the Board of Directors and amendment of the Plan. Such Common Stock may be authorized and unissued or reacquired common stock of the Company. SECTION 7. PURCHASE OF SHARES OF COMMON STOCK 7.1 As soon as practicable after the determination by the Committee and approval by the Board of Directors (if necessary, pursuant to Section 4 hereof) of the Eligible Participants and the number of shares an Eligible Participant may be issued directly or granted pursuant to an Option, the Committee shall give notice (written or oral) thereof to each Eligible Participant, which notice may be accompanied by the Grant of Option, if appropriate, to be executed by such Eligible Participant. Upon receipt, an Eligible Participant may exercise his right to an Option to purchase Common Stock by providing written notice as specified in the Grant of Option. 7.2 The negotiated cost basis of stock issued directly or the exercise price for each option to purchase shares of Common Stock pursuant to paragraph 7.1 shall be as determined by the Committee, it being understood that the price so determined by the Committee may vary from one 4 Eligible Participant to another. In computing the negotiated direct issue price or the Option exercise price of a share of Common Stock, the Committee shall take into consideration, among other factors, the restrictions set forth in Section 11 hereof. SECTION 8. PAYMENT UPON EXERCISE OF OPTION OR DIRECT ISSUANCE The Committee shall determine the terms of the Grant of Option and the exercise price or direct issue price for payment by each Participant for his shares of Common Stock granted thereunder. Such terms shall be set forth or referred to in the Grant of Option or Board Resolution authorizing the share issuance. The terms and/or exercise price so set by the Committee may vary from one Participant to another. In the event that all the Committee approves an Option grant permitting deferred payments, the Participant's obligation to pay for such Common Stock shall be evidenced by a Promissory Note executed by such Participant and containing such modifications thereto and such other provisions as the Committee, in its sole discretion, may determine. SECTION 9. DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE The Company shall deliver to or on behalf of each Participant such number of shares of Common Stock as such Participant elects to purchase upon direct issuance or upon exercise of the Option. Such shares, which shall be fully paid and nonassessable upon the issuance thereof (unless a portion or all of the purchase price shall be paid on a deferred basis) shall be represented by a certificate or certificates registered in the name of the Participant and stamped with an appropriate legend referring to the restrictions thereon, if any, as may be set forth in the Grant of Option. Subject to the terms and provisions of the General Corporation Law of Delaware and the Grant of Option to which he is a party, a Participant shall have all the rights of a stockholder with respect to such shares, including the right to vote the shares and to receive all dividends or other distributions paid or made with respect thereto (except to the extent such Participant defaults under the promissory note, if any, evidencing the deferred purchase price for such shares), provided that such shares shall be subject to the restrictions hereinafter set forth. In the event of a merger or consolidation to which the Company is a party, or of any other acquisition of a majority of the issued and outstanding shares of common stock of the Company involving an exchange or a substitution of stock of an acquiring corporation for common stock of the Company, or of any transfer of all or substantially all of the assets of the Company in exchange for stock of an acquiring corporation, a determination as to whether the stock of the acquiring corporation so received shall be subject to the restrictions set forth in Section 11 shall be made solely by the acquiring corporation. SECTION 10. RIGHTS OF EMPLOYEES; PARTICIPANTS 10.1 Employment. Nothing contained in the Plan or in any Stock Option, Restricted Stock award or other Common Stock award granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or interfere in any way with the right of the Company or any Affiliated Corporation, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of a Stock Option or other Common Stock award. Whether an 5 authorized leave of absence, or absence in military or government service, shall constitute termination of employment shall be determined by the Committee at the time. 10.2 Non-transferability. No right or interest of any Participant in a Stock Option award shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant's death, a Participant's rights and interest in Stock Option awards shall be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Stock Options may be made by, the Participant's legal representatives, heirs or legatees. If in the opinion of the Committee a person entitled to payments or to exercise rights with respect to the Plan is unable to care for his or her affairs because of mental condition, physical condition, or age, payment due such person may be made to, and such rights shall be exercised by, such person's guardian, conservator or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status. SECTION 11. GENERAL RESTRICTIONS 11.1 Restrictive Legend. All shares of Common Stock issued or issuable under this plan, unless qualified as Registered Stock as defined in Section 2 hereinabove, shall be restricted, and certificates representing the shares shall bear the following restrictive legend: The shares represented by this certificate have not been registered under the Securities Act of 1933 ("the Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The shares may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. 11.2 Investment Representations. The Company may require any person to whom a Stock Option, Restricted Stock award, or other Common Stock award is granted, as a condition of exercising such Stock Option, or receiving such Restricted Stock award, or other Common Stock award, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Common Stock subject to the Stock Option, Restricted Stock award, or other Common Stock award for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws. 11.3 Compliance with Securities Laws. Each Stock Option shall be subject to the requirement that if at any time counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such Stock Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of shares thereunder, such Stock Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, 6 consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification. 11.4 Changes in Accounting Rules. Notwithstanding any other provision of the Plan to the contrary, if, during the term of the Plan, any changes in the financial or tax accounting rules applicable to Stock Options, Restricted Stock awards or other Common Stock awards shall occur that, in the sole judgment of the Committee, may have a material adverse effect on the reported earnings, assets or liabilities of the Company, the Committee shall have the right and power to modify as necessary, or cancel, any then outstanding and unexercised Stock Options, any then outstanding Restricted Stock awards as to which the applicable employment restriction has not been satisfied and any other Common Stock awards. 11.5 Restrictions on Reoffers and Resales of Control Securities. Any Participant issued Registered Stock who is deemed to be an "affiliate" or "control" person, as defined in Rule 405 promulgated under the Securities Act of 1933, as amended (the "Act"), shall be restricted from the reoffer or resale of the Registered Stock imposed on affiliates and control persons, until a reoffer prospectus, or prospectus supplement thereto, has been filed with the Securities and Exchange Commission ("SEC") pursuant to an effective registration statement on Form S-8 identifying the affiliate or control person and the amounts of Registered Stock to be reoffered or resold, whether or not they have a present intent to do so. Furthermore, the reoffer or resale of the Registered Stock by affiliates or control persons are subject to the provisions of Rule 144 of the Act and Section 16 of the Securities Exchange Act of 1934, as amended, as those provisions apply to affiliates and control persons. SECTION 12. WITHHOLDING REQUIREMENT The Company's obligations to deliver shares of Common Stock upon the exercise of any Stock Option granted under the Plan or pursuant to any other Common Stock award, shall be subject to the Participant's satisfaction of all applicable federal, state and local income and other tax withholding requirements. SECTION 13. PLAN BINDING UPON ASSIGNS OR TRANSFEREES In the event that, at any time or from time to time, any shares of Common Stock are sold, exchanged, assigned or transferred to any party (other than the Company) pursuant to the provisions of Section 10.2 hereof, such party shall take such shares of Common Stock pursuant to all provisions and conditions of this Plan, and, as a condition precedent to the transfer of such shares of Common Stock, such party shall agree (for and on behalf of himself or itself, his or its legal representatives and his or its transferees and assigns) in writing to be bound by all provisions of this Plan. SECTION 14. COSTS AND EXPENSES All costs and expenses with respect to the adoption, implementation, interpretation and administration of the Plan shall be borne by the Company. 7 SECTION 15. CHANGES IN CAPITAL STRUCTURE OF THE COMPANY Unless otherwise consented to by the Company in writing or unless otherwise required by law, the shares of Restricted Stock issuable upon exercise of the Option which are held by a Participant shall not be adjusted in any manner for: (i) a subdivision or combination of any of the shares of capital stock of the Company; (ii) a dividend payable in shares of capital stock of the Company; (iii) a reclassification of any shares of capital stock of the Company; or (iv) any other change in the capital structure of the Company. SECTION 16. PLAN AMENDMENT, MODIFICATION AND TERMINATION The Board, upon recommendation of the Committee or at its own initiative, at any time may terminate and at any time and from time to time and in any respect, may amend or modify the Plan, including: (a) Increase the total amount of Common Stock that may be awarded under the Plan, except as provided in Section 15 of the Plan; (b) Change the classes of Eligible Employees from which Participants may be selected or materially modify the requirements as to eligibility for participation in the Plan; (c) Increase the benefits accruing to Participants; or (d) Extend the duration of the Plan. Any Stock Option or other Common Stock award granted to a Participant prior to the date the Plan is amended, modified or terminated will remain in effect according to its terms unless otherwise agreed upon by the Participant; provided, however, that this sentence shall not impair the right of the Committee to take whatever action it deems appropriate under Section 11 or Section 15. The termination or any modification or amendment of the Plan shall not, without the consent of a Participant, affect his rights under a Stock Option, Restricted Stock Award or other Common Stock award previously granted to him. With the consent of the Participant, the Committee may amend outstanding option agreements in a manner not inconsistent with the Plan. The Board shall have the right to amend or modify the terms and provisions of the Plan and of any outstanding Stock Options granted under the Plan. SECTION 17. EFFECTIVE DATE OF THE PLAN 17.1 Effective Date. The Plan as restated herein is effective as of October 7, 1997. 17.2 Duration of the Plan. The Plan as restated shall terminate at midnight on October 6, 2002, which is the day before the fifth anniversary of the Effective Date, and may be terminated prior thereto by action of the Board of Directors; and no Stock Option, Restricted Stock Award or other Common Stock award shall be granted after such termination. Stock Options, Restricted Stock 8 Awards and other Common Stock awards outstanding at the time of the Plan termination may continue to be exercised, or become free of restrictions, in accordance with their terms. SECTION 18. BURDEN AND BENEFIT The terms and provisions of this Plan shall be binding upon, and shall inure to the benefit of, each Participant, his executives or administrators, heirs, and personal and legal representatives. Executed as a sealed instrument as of the 7th day of October, 1997. PHOENIX INFORMATION SYSTEMS CORP. By: ----------------------------------------- Robert P. Gordon, Chairman ATTEST: - ----------------------------- Paul W. Henry, Secretary 9 EXHIBIT A FORM OF GRANT OF OPTION PURSUANT TO THE PHOENIX INFORMATION SYSTEMS CORP. CONSULTING AND SERVICES COMPENSATION AGREEMENT Phoenix Information Systems Corp., a Delaware corporation (the "Company"), hereby grants to ________________________________ ("Optionee") an option to purchase ___________ shares of common stock, $.01 par value, (the "Shares") of the Company at the purchase price of $______ per share (the "Purchase Price") in accordance with and subject to the terms of the Company's Consulting and Services Compensation Agreement, as may be amended and restated from time to time. This Grant of Option is exercisable in whole or in part, and upon payment in cash or cancellation of fees, or other form of payment acceptable to the Company, to the offices of the Company at 100 Second Avenue South, Suite 1100, St. Petersburg, Florida 33701. Unless otherwise set forth in an employment, consulting or other written agreement between the Optionee and the Company, in the event that Optionee's employee or consultant status with the Company or any of its subsidiaries ceases or terminates for any reason whatsoever, whether voluntary, involuntary, by contract or by mutual agreement, this Grant of Option shall terminate with respect to any portion of this Grant of Option that has not been validly exercised prior to either: 1) thirty days after the date of cessation or termination of employee or consultant status, as determined in the sole discretion of the Company; or 2) such other date as set forth in an employment, consulting or other written agreement between the Optionee and the Company; and no rights hereunder may be exercised after said date. In the event of a Participant's death, a Participant's rights and interest in Stock Option awards shall be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Stock Options may be made by, the Participant's legal representatives, heirs or legatees. Subject to the preceding paragraph, this Grant of Option, or any portion hereof, may be exercised only to the extent vested per the attached schedule, and must be exercised by Optionee no later than ____________________________ (the "Expiration Date") by (i) notice in writing, sent by facsimile copy to the Company at its address set forth above; and (ii) payment of the Purchase Price pursuant to the terms of this Grant of Option and the Company's Consulting and Services Compensation Agreement. Any portion of this Grant of Option that is not exercised on or before to the Expiration Date shall lapse. The notice must refer to this Grant of Option, and it must specify the number of shares being purchased, and recite the consideration being paid therefor. Notice shall be deemed given on the date on which the notice is delivered to the Company by facsimile transmission bearing an authorized signature of Optionee. This Grant of Option shall be considered validly exercised once payment therefor has cleared the banking system or the Company has issued a credit memo for services in the appropriate A-1 10 amount, or receives a duly executed acceptable promissory note, if this Grant of Option is granted with deferred payment, and the Company has received written notice of such exercise. If Optionee fails to exercise this Grant of Option in accordance with this Agreement, then this Agreement shall terminate and have no force and effect, in which event Optionor and Optionee shall have no liability to each other with respect to this Grant of Option. This Grant of Option may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Execution and delivery of this Grant of Option by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Grant of Option by such party. Such facsimile copies shall constitute enforceable original documents. The validity, construction and enforceability of this Grant of Option shall be construed under and governed by the laws of the State of Florida, without regard to its rules concerning conflicts of laws, and any action brought to enforce this Grant of Option or resolve any controversy, breach or disagreement relative hereto shall be brought only in a court of competent jurisdiction within the County of Pinellas, Florida. The shares of stock issued upon exercise of this Grant of Option (the "Underlying Shares") are not subject to adjustment due to any changes in the capital structure of the Company as set forth in Section 15 of the Plan. Further, the Underlying Shares may not be sold, exchanged, assigned, transferred or permitted to be transferred, whether voluntarily, involuntarily or by operation of law, delivered, encumbered, discounted, pledged, hypothecated or otherwise disposed of until (i) the Underlying Shares have been registered with the Securities and Exchange Commission pursuant to an effective registration statement on Form S-8, or such other form as may be appropriate, in the discretion of the Company; or (ii) an Opinion of Counsel, satisfactory to the Company, has been received, which opinion sets forth the basis and availability of any exemption for resale or transfer from federal or state securities registration requirements. This Grant of Option may not be assigned, transferred or hypothecated (except under the laws of descent and distribution) and any purported assignment, transfer or hypothecation shall be void ab initio and shall be of no force or effect. The Underlying Shares ___________________ [insert appropriate language: "have" or "have not"] been registered with the Securities and Exchange Commission pursuant to a registration statement on Form S-8. A-2 11 IN WITNESS WHEREOF, this Grant of Option has been executed effective as of ____________________, 19___. PHOENIX INFORMATION SYSTEMS CORP. BY THE BOARD OF DIRECTORS OR A SPECIAL COMMITTEE THEREOF NOT FOR EXECUTION By: NOT FOR EXECUTION By: NOT FOR EXECUTION By: OPTIONEE: NOT FOR EXECUTION A-3 12 GRANT OF OPTION PURSUANT TO THE PHOENIX INFORMATION SYSTEMS CORP. CONSULTING AND SERVICES COMPENSATION AGREEMENT, RESTATED OCTOBER 7, 1997 OPTIONEE: ____________________ OPTION GRANTED: _____________ Shares PURCHASE PRICE: US$_______ per Share DATE OF GRANT: ____________________ EXPIRATION DATE: ____________________ VESTING SCHEDULE: OPTION ON #SHARES DATE VESTED (ASSUMING CONTINUED EMPLOYEE OR CONSULTANT STATUS, ETC.) VESTED OPTIONS EXERCISED TO DATE: _________ (INCLUDING THIS EXERCISE) BALANCE OF VESTED OPTIONS TO BE EXERCISED: _________ ================================================================================ NOTICE OF EXERCISE (TO BE SIGNED ONLY UPON EXERCISE OF THE OPTION) TO: Phoenix Information Systems Corp. ("Optionor") The undersigned, the holder of the Grant of Option described above, hereby irrevocably elects to exercise the purchase rights represented by such Grant of Option for, and to purchase thereunder, _________ shares of the Common Stock of Phoenix Information Systems Corp., and herewith makes payment of _______________________ therefor. Optionee requests that the certificates for such shares be issued in the name of Optionee and be delivered to Optionee at the address of _________________________________________________________, and if such shares shall not be all of the shares purchasable hereunder, represents that a new Subscription of like tenor for the appropriate balance of the shares, or a portion thereof, purchasable under the Grant of Option pursuant to the Phoenix Information Systems Corp. Restated Consulting and Services Compensation Agreement, as restated October 7, 1997, be delivered to Optionor when and as appropriate. OPTIONEE: Dated: _________________________ EX-23.1 4 CONSENT OF COOPERS & LYBRAND, LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Phoenix Information Systems Corp. on Form S-8 related to the Consulting and Services Compensation Agreement as amended, of our report dated May 30, 1996, on our audits of the consolidated balance sheet of Phoenix Information Systems Corp. and Subsidiaries as of March 31, 1996 and the related consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows for the years ended March 31, 1996 and 1995, and cumulative for the period from April 1, 1991 through March 31, 1996, which report is included in the annual report on Form 10-K. Coopers & Lybrand L.L.P. Tampa, Florida October 22, 1997 EX-23.2 5 CONSENT OF BDO SEIDMAN, LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Phoenix Information Systems Corporation St. Petersburg, Florida We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated May 28, 1997 relating to the consolidated financial statements of Phoenix Information Systems Corporation appearing in the Company's Annual Report on form 10-K for the year ended March 31, 1997. We also consent to the reference to us under the caption "Experts" in the Prospectus. /s/ BDO Seidman, LLP Orlando, Florida October 20, 1997 -----END PRIVACY-ENHANCED MESSAGE-----