-----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, BOtKJ3qOxJfUrdtw29cddlZAekpPGx6po4So/7hA+eivUtUqjNTIVgfvYZg+rg+M 6PTzmc8jGaDRfEqtJDpn8Q== 0000921530-96-000099.txt : 19961231 0000921530-96-000099.hdr.sgml : 19961231 ACCESSION NUMBER: 0000921530-96-000099 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961227 SROS: NASD GROUP MEMBERS: CHATTERJEE FUND MANAGEMENT, L.P. GROUP MEMBERS: PURNENDU CHATTERJEE GROUP MEMBERS: QIH MANAGEMENT INVESTOR, L.P. GROUP MEMBERS: QIH MANAGEMENT, INC. GROUP MEMBERS: QUANTUM INDUSTRIAL PARTNERS LDC GROUP MEMBERS: S-C PHOENIX HOLDINGS L.L.C. GROUP MEMBERS: S-C PHOENIX PARTNERS GROUP MEMBERS: SOROS GEORGE GROUP MEMBERS: WINSTON PARTNERS, L.P. SUBJECT COMPANY: 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: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-44587 FILM NUMBER: 96687276 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 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SOROS GEORGE CENTRAL INDEX KEY: 0000900203 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 888 SEVENTH AVENUE STREET 2: 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10106 BUSINESS PHONE: 212-262--6 MAIL ADDRESS: STREET 1: 888 SEVENTH AVE STREET 2: 33RD FLR CITY: NEW YORK STATE: NY ZIP: 10106 SC 13D/A 1 13D/A RE PHOENIX INFORMATION SYSTEMS CORP. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 9)* PHOENIX INFORMATION SYSTEMS CORP. ----------------------------------------- (Name of Issuer) Common Stock, $.01 Par Value ------------------------------------------ (Title of Class of Securities) 719077109 --------------------- (CUSIP Number) Stephen M. Vine, Esq. Akin, Gump, Strauss, Hauer & Feld, L.L.P. 399 Park Avenue New York, New York 10022 (212) 872-1000 ------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 23, 1996 ----------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_]. Check the following box if a fee is being paid with the statement [_]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Continued on following page(s) Page 1 of 51 Pages Exhibit Index: Page 16 SCHEDULE 13D CUSIP No. 719077109 Page 2 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person S-C Phoenix Partners 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization New York 7 Sole Voting Power Number of 38,944,999 Shares Beneficially 8 Shared Voting Power Owned By 0 Each Reporting 9 Sole Dispositive Power Person 38,944,999 With 10 Shared Dispositive Power 0 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 3 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Quantum Industrial Partners LDC 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Cayman Islands 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 4 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person S-C Phoenix Holdings, L.L.C. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* OO *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 5 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person QIH Management Investor, L.P. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 6 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person QIH Management, Inc. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 7 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person George Soros 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* PF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization United States 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* IA; IN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 8 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Winston Partners, L.P. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* PN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 9 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Chatterjee Fund Management, L.P. 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization Delaware 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* IA; PN *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D CUSIP No. 719077109 Page 10 of 51 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Purnendu Chatterjee 2 Check the Appropriate Box If a Member of a Group* a. [_] b. [X] 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [_] 6 Citizenship or Place of Organization United States 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 38,944,999 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 38,944,999 11 Aggregate Amount Beneficially Owned by Each Reporting Person 38,944,999 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [_] 13 Percent of Class Represented By Amount in Row (11) 55.63% 14 Type of Reporting Person* IA *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 11 of 51 Pages This Amendment No. 9 to Schedule 13D relates to the shares of Common Stock, $.01 par value (the "Shares"), of Phoenix Information Systems Corp. (the "Issuer") and supplementally amends the initial statement on Schedule 13D dated December 16, 1994 and all prior amendments thereto (collectively, the "Initial Statement"). This Amendment No. 9 is being filed to report the acquisition of 833,333 shares of Series C Convertible Preferred Stock, par value $0.01 per share (the "Series C Shares") from the Issuer. Capitalized terms used herein but not defined herein shall have the meanings assigned to them in the Initial Statement. The information set forth in the Initial Statement is supplementally amended as set forth herein. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On December 23, 1996, Phoenix Partners and the Issuer entered into a Series C Convertible Preferred Stock Purchase Agreement (the "Preferred Stock Purchase Agreement") pursuant to which Phoenix Partners purchased the Series C Shares upon the terms specified in the Preferred Stock Purchase Agreement, a copy of which is attached as Exhibit AI hereto. The aggregate purchase price for the Series C Shares was $15,000,000. Phoenix Partners received the $15,000,000 to purchase the Series C Shares from its partners. The partners of Phoenix Partners advanced the subject funds out of working capital or personal funds. The Shares held for the accounts of the Reporting Persons may be held through margin accounts maintained with brokers, which extend margin credit as and when required to open or carry positions in its margin accounts, subject to applicable federal margin regulations, stock exchange rules and such firm's credit policies. The positions held in the margin accounts, including the Shares, are pledged as collateral security for the repayment of debit balances in the respective accounts. ITEM 4. PURPOSE OF TRANSACTION. Phoenix Partners entered into the Preferred Stock Purchase Agreement and purchased the Series C Shares pursuant thereto for investment purposes. Pursuant to the Preferred Stock Purchase Agreement, the Issuer issued and sold to Phoenix the Series C Shares with such designations as are set forth in the Certificate of Designation (the "Certificate of Designation"), a copy of which is attached as Exhibit A to the Preferred Stock Purchase Agreement. Pursuant to the Certificate of Designation, Phoenix Partners may convert its Series C Shares at any time into that amount of Shares obtained by multiplying ten by the Conversion Rate (as such is defined in the Certificate of Designation) then in effect. On the day immediately preceding the date of such conversion, Phoenix Partners shall receive a dividend of Series C Shares equal to the difference between (a) the amount of share dividends that would have accrued under Section 1.1 of the Certificate of Designation from the date of issuance until January 1, 2003, as if such Series C Shares shall have remained outstanding until January 1, 2003, and (b) share dividends actually paid to such Holder as of the date of conversion on each January 1, April 1, July 1 and October 1 prior thereto, pursuant to the calculations set forth in the Certificate of Designation. These additional Series C Shares, once received, may also be converted into additional Shares as set forth above. Page 12 of 51 Pages Except as described herein, none of the Reporting Persons, nor, to the best of their knowledge, any of the other individuals identified in response to Item 2, has any plans or proposals which relate to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. The Reporting Person reserves the right to acquire additional securities of the Issuer, to dispose of such securities at any time or to formulate other purposes, plans or proposals regarding the Issuer or any of its securities, to the extent deemed advisable in light of general investment and trading policies, market conditions or other factors. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The aggregate number of Shares of which each of the Reporting Persons may be deemed a beneficial owner is 38,944,999 (approximately 55.63% of the total number of Shares which would be outstanding assuming the exercise or conversion by Phoenix Partners of all of the convertible securities that it holds). This number consists of (i) 15,659,999 Shares held by Phoenix Partners, (ii) 4,000,000 Shares issuable to Phoenix Partners upon exercise of the 4,000,000 warrants presently exercisable by Phoenix Partners pursuant to the terms of the Warrant Agreement, (iii) the 2,500,000 Shares issuable to Phoenix Partners pursuant to the terms of the Second Warrant Agreement, (iv) 600,000 Shares issuable upon exercise of the 600,000 warrants issued to Phoenix Partners pursuant to the Second Conversion Warrants, (v) 345,000 Shares issuable upon exercise of the warrant issued to Phoenix Partners pursuant to the February Warrant Agreement, (vi) 140,000 Shares issuable upon conversion of 140,000 warrants issued pursuant to the Additional Warrant Agreement, (vii) 700,000 Shares issuable upon conversion of the Early Purchase Warrant, and (viii) 15,000,000 Shares issuable upon conversion of the Series C Shares. (c) Except as described in Item 3 and Item 4 hereof, which is incorporated in this Item 5(c) by reference, there have been no transactions in the Shares effected since October 26, 1996 (60 days prior to the date hereof) by any of the Reporting Persons. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS IN RELATIONSHIP WITH RESPECT TO SECURITIES OF THE ISSUER. On December 23, 1996, the Issuer and Phoenix Partners entered into a Registration Rights Agreement (the "December Registration Rights Agreement"), a copy of which is attached as Exhibit AJ hereto. Pursuant to the December Registration Rights Agreement, the Issuer granted certain registration rights to Phoenix Partners with respect to Shares issuable upon conversion of the Series C Shares. The December Registration Rights Agreement grants to Phoenix Partners certain demand registration rights in addition to "piggy-back" registration rights, each as set forth in the December Registration Rights Agreement. From time to time, the Reporting Persons may lend portfolio securities to brokers, banks or other financial institutions. These loans typically obligate the borrower to return the securities, or an equal amount of securities of the same class to the lender and typically provide that the borrower is entitled to exercise voting rights and to retain dividends during the term of the loan. From time to time to the extent permitted by applicable Page 13 of 51 Pages laws, each of the Reporting Persons may borrow securities, including the Shares, for the purpose of effecting, and may effect, short sale transactions, and may purchase securities for the purpose of closing out short positions in such securities. Except as set forth herein, and as described in previous filings, the Reporting Person does not have any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. (a) Joint Filing Agreement, dated as of December 16, 1994 by and between S-C Phoenix Partners, S-C Phoenix Holdings, L.L.C., Quantum Industrial Partners LDC, QIH Management Investor, L.P., QIH Management, Inc., Mr. George Soros, Winston Partners, L.P., Chatterjee Fund Management, L.P. and Dr. Purnendu Chatterjee (filed as Exhibit A to the Initial Statement and incorporated herein by reference). (b) Power of Attorney dated December 16, 1994 granted by Quantum Industrial Partners LDC in favor of Mr. Sean Warren (filed as Exhibit B to the Initial Statement and incorporated herein by reference). (c) Power of Attorney dated October 27, 1994 granted by Mr. George Soros in favor of Mr. Sean Warren (filed as Exhibit C to the Initial Statement and incorporated herein by reference). (d) Power of Attorney dated November 18, 1994 granted by Winston Partners, L.P. in favor of Mr. Peter A. Hurwitz (filed as Exhibit J to Amendment No. 1 to the Initial Statement and incorporated herein by reference). (e) Power of Attorney dated November 18, 1994 granted by Chatterjee Fund Management, L.P. in favor of Mr. Peter A. Hurwitz (filed as Exhibit K to Amendment No. 1 to the Initial Statement and incorporated herein by reference). (f) Power of Attorney dated November 18, 1994 granted by Dr. Purnendu Chatterjee in favor of Mr. Peter A. Hurwitz (filed as Exhibit L to Amendment No. 1 to the Initial Statement and incorporated herein by reference). (ai) Series C Convertible Preferred Stock Purchase Agreement, dated December 23, 1996, between Phoenix Information Systems Corp. and S-C Phoenix Partners. (aj) Registration Rights Agreement, dated December 23, 1996, by and between Phoenix Information Systems Corp. and S-C Phoenix Partners. (ak) Power of Attorney dated July 27, 1995 granted by Mr. George Soros in favor of Mr. Michael C. Neus. Page 14 of 51 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: December 27, 1996 S-C PHOENIX PARTNERS By: S-C Phoenix Holdings, L.L.C. By: /S/ GARY GLADSTEIN ------------------------ Gary Gladstein Manager Date: December 27, 1996 QUANTUM INDUSTRIAL PARTNERS LDC By: /S/ GARY GLADSTEIN ----------------------------- Gary Gladstein Attorney-in-Fact Date: December 27, 1996 QIH MANAGEMENT INVESTOR, L.P. By: QIH MANAGEMENT, INC., its general partner By: /S/ GARY GLADSTEIN ------------------------ Gary Gladstein President Date: December 27, 1996 QIH MANAGEMENT, INC. By: /S/ GARY GLADSTEIN ----------------------------- Gary Gladstein President Page 15 of 50 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Date: December 27, 1996 S-C PHOENIX HOLDINGS, L.L.C. By: /S/ GARY GLADSTEIN ----------------------------- Gary Gladstein Manager Date: December 27, 1996 GEORGE SOROS By: /S/ MICHAEL NEUS ----------------------------- Michael Neus Attorney-in-Fact Date: December 27, 1996 WINSTON PARTNERS, L.P. By: Chatterjee Fund Management, L.P., its General Partner By: Purnendu Chatterjee, its General Partner By: /S/ PETER HURWITZ ----------------------------- Peter Hurwitz Attorney-in-Fact Date: December 27, 1996 CHATTERJEE FUND MANAGEMENT, L.P. By: Purnendu Chatterjee, its General Partner By: /S/ PETER HURWITZ ------------------------ Peter Hurwitz Attorney-in-Fact Date: December 27, 1996 PURNENDU CHATTERJEE By: /S/ PETER HURWITZ ----------------------------- Peter Hurwitz Attorney-in-Fact Page 16 of 51 Pages EXHIBIT INDEX Exhibit - ------- A Joint Filing Agreement dated as of December 16, 1994 by and between S-C Phoenix Partners, S-C Phoenix Holdings, L.L.C., Quantum Industrial Partners LDC, QIH Management Investor, L.P., QIH Management, Inc., Mr. George Soros, Winston Partners, L.P., Chatterjee Fund Management, L.P. and Dr. Purnendu Chatterjee (filed as Exhibit A to the Initial Statement and incorporated herein by reference). B Power of Attorney dated December 16, 1994 granted by Quantum Industrial Partners LDC in favor of Mr. Sean Warren (filed as Exhibit B to the Initial Statement and incorporated herein by reference). C Power of Attorney dated October 27, 1994 granted by Mr. George Soros in favor of Mr. Sean Warren (filed as Exhibit C to the Initial Statement and incorporated herein by reference). D Power of Attorney dated November 18, 1994 granted by Winston Partners, L.P. in favor of Mr. Peter A. Hurwitz (filed as Exhibit J to Amendment No. 1 to the Initial Statement and incorporated herein by reference). E Power of Attorney dated November 18, 1994 granted by Chatterjee Fund Management, L.P. in favor of Mr. Peter A. Hurwitz (filed as Exhibit K to Amendment No. 1 to the Initial Statement and incorporated herein by reference). F Power of Attorney dated November 18, 1994 granted by Dr. Purnendu Chatterjee in favor of Mr. Peter A. Hurwitz (filed as Exhibit L to Amendment No. 1 to the Initial Statement and incorporated herein by reference). AI Series C Convertible Preferred Stock Purchase Agreement, dated December 23, 1996, between Phoenix Information Systems Corp. and S-C Phoenix Partners. AJ Registration Rights Agreement, dated December 23, 1996, by and between Phoenix Information Systems Corp. and S-C Phoenix Partners. AK Power of Attorney dated July 27, 1995 granted by Mr. George Soros in favor of Mr. Michael C. Neus. EX-99.AI 2 EXHIBIT AI - SERIES C CONVERTIBLE PREFERRED Page 17 of 50 Pages EXHIBIT AI _______________________________________________________________________________ _______________________________________________________________________________ PHOENIX INFORMATION SYSTEMS CORP. ______________________ ______________________ SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT _______________________________________________________________________________ _______________________________________________________________________________ December 23, 1996 Page 18 of 51 Pages SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREE- MENT, dated December 23, 1996, is by and between PHOENIX INFORMATION SYSTEMS CORP., a Delaware corporation (the "Company"), and S-C PHOENIX PARTNERS, a New York general partnership ("Purchaser"). WHEREAS, the Company desires to issue and sell a total of 833,333 of its shares of Series C Convertible Preferred Stock, par value $0.01 per share ("Series C Shares"), with such designations as are set forth on the Certificate of Designation (the "Certificate of Designation") annexed hereto as Exhibit A, which are convertible into shares of its common stock, par value $0.01 per share ("Common Stock"), on the terms and conditions provided in the Certificate of Designation; WHEREAS, Purchaser desires and has agreed to purchase the Series C Shares subject to the terms and conditions set forth herein; and WHEREAS, the parties desire to set forth their mutual agreements with respect to the sale and purchase of the Series C Shares. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Sale and Purchase of the Series C Shares. Subject to the terms ---------------------------------------- and conditions hereof, the Company hereby sells, transfers, assigns, conveys and delivers to Purchaser, and Purchaser purchases from the Company, the Series C Shares. Simultaneously herewith, the Company shall deliver to Purchaser a stock certificate representing the Series C Shares, duly executed by the Company against payment therefor in an amount equal to the $15,000,000 (or $18.00 per share) by wire transfer of immediately available funds to the Company's account as follows: Account Name : Phoenix Information Systems Corp. Account No. : 1263680853 Bank : Barnett Bank of Pinellas County Address : One Progress Plaza 200 Central Avenue St. Petersburg, FL 33701 (813) 892-1502 ABA No. : 063000047 or to such other account or accounts as the Company may designate in writing. 2. Representations, Warranties and Covenants of the Company. To --------------------------------------------------------- induce Purchaser to enter into this Agreement and to purchase the Series C Shares, the Company hereby represents, warrants and covenants to Purchaser that: Page 19 of 51 Pages 2.1 Organization, Standing, etc. The Company is a corporation ----------------------------- duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to issue the Series C Shares and the shares of Common Stock issuable upon conversion thereof (collectively, the "Securities") and to otherwise perform its obligations hereunder and under the Certificate of Designation and the Registration Rights Agreement (the "Registration Rights Agreement") between the Company and Purchaser being executed simultaneously herewith in the form of Exhibit B hereto. The Company has all requisite corporate power and authority to own, lease and operate its business as presently conducted. 2.2 Corporate Acts and Proceedings. Each of this Agreement and -------------------------------- the Registration Rights Agreement has been duly authorized by all necessary corporate action on behalf of the Company, has been duly executed and delivered by authorized officers of the Company, and is a valid and binding agreement on the part of the Company that is enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws affecting the enforcement of creditors' rights generally and to judicial limitations on the enforcement of the remedy of specific performance and other equitable remedies. All corporate action necessary to the authorization, creation, issuance and delivery of the Series C Shares has been taken by the Company and the Certificate of Designation has been filed in the office of the Secretary of State of the State of Delaware. The 833,333 Series C Shares, when issued and fully paid for pursuant to this Agreement, the Share Dividends (as defined in the Certificate of Designation) on the Series C Shares and the Common Stock, when issued upon conversion of the Series C Shares in accordance with the terms thereof, will be duly and validly issued and fully paid and nonassessable and will not subject the holders thereof to statutory personal liability by reason of being such holders. 2.3 Capitalization. As of December 5, 1996, the authorized -------------- capital stock of the Company consisted of 125,000,000 shares of Common Stock, of which 48,214,739 are issued and outstanding as of the date hereof, and 5,000,000 shares of preferred stock of which 1,250,000 shares are designated as Series A Convertible Preferred Stock, par value $.01 per share ("Series A Shares"), of which 818,750 which are issued and outstanding, 1,250,000 shares are designated as Series B Convertible Preferred Stock, par value $.01 per share ("Series B Shares"), all of which are issued and outstanding, and 2,500,000 shares are designated as Series C Shares, none of which are issued and outstanding. The Common Stock, the Series A Shares, the Series B Shares and the Series C Shares are collectively referred to as the "Equity Securities." All outstanding Equity Securities have been duly and validly issued and are fully paid and nonassessable. Except as set forth on Schedule 2.3, as of December 5, 1996, ------------ the Company has not issued any options, warrants or other rights of any kind to acquire shares of the Company's capital stock or securities convertible into or exchange- able for such shares, or commit itself to do any of the foregoing. Except as set forth on Schedule 2.3, there are no contracts, commitments, ------------ agreements, understandings, arrangements, registration rights, or restrictions or preemptive rights to which the Company is a party or by which it is bound relating to Equity Securities or other securities of the Company, whether or not outstanding. 2.4 Non-Contravention. Neither the execution, delivery and ----------------- performance of this Agreement or the Registration Rights Agreement nor the consummation of the transactions contemplated herein or therein will violate or be in conflict with any provision of the certificate of incorporation or bylaws Page 20 of 51 Pages of the Company, or violate or be in conflict with any material debt, note, bond, lease, mortgage, indenture, license, obligation, contract, commitment, franchise, permit, instrument or other agreement or obligation to which the Company is a party, or violate or be in conflict with any law, judgment, decree, order, regulation or ordinance by which the Company is bound or affected. 2.5 Reports Under Securities Exchange Act of 1934. During the ------------------------------------------------ period that the Company has been subject to the reporting requirements of the Securities Exchange Act of 1934 ("1934 Act"), the Company has filed all reports required to be filed pursuant thereto (collectively, "Reports"). As of their respective dates, all such Reports filed by the Company (including all exhibits and schedules thereto and documents incorporated by reference therein), did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Purchaser shall be entitled to rely on all such Reports for purposes of the transactions contemplated by this Agreement. The Company covenants and agrees to continue to make all required filings under the 1934 Act as may be necessary to permit Purchaser to avail itself of the provisions of Rule 144 promulgated under the Securities Act of 1933 ("1933 Act") at such time as Rule 144 shall become available to Purchaser and to provide Purchaser with copies thereof promptly after filing. The Company has no knowledge of any facts, particular to the Company, which are reasonably likely to prevent or unreasonably delay the registration under the 1933 Act of the Common Stock as contemplated by the Registration Rights Agreement. 2.6 No Brokers or Finders. No person, firm or corporation has or --------------------- will have, as a result of any act or omission by the Company, any right, interest or valid claim against the Company or Purchaser for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement except as set forth on Schedule 2.6. The Company shall indemnify and hold Purchaser harmless ------------ against any and all liability with respect to any such commission, fee or other compensation which may be payable or which shall be determined to be payable as a result of the actions of the Company in connection with the transactions contemplated by this Agreement. 2.7 Governmental Authorization; Third Party Consents. No ------------------------------------------------------ approval, consent, compliance, exemption, authorization or other action by, or notice to or filing with, any governmental authority or any other entity, and no lapse of a waiting period, is necessary or required in connection with the execution, delivery or performance by the Company, or enforcement against the Company, of this Agreement and the Registration Rights Agreement or the transactions contemplated hereby or thereby. 2.8 Litigation. Except as set forth in the Reports, there are no ---------- legal actions, suits, proceedings, claims or disputes pending, or to the knowledge of the Company, overtly threatened, at law, in equity, in arbitration or before any governmental authority against or affecting the Company. Page 21 of 51 Pages 2.9 Compliance with Laws. The Company is in compliance in all --------------------- material respects with all laws, ordinances, regulations and orders of all U.S. and foreign governmental entities applicable to the Company, except as disclosed in the Reports. 2.10 Intellectual Property. Except as specifically set forth in ---------------------- the Reports, the Company owns or is licensed or otherwise has the right to use all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, franchises and other rights, all products, processes and methods, computer software, computer programs and similar intangible assets of the Company that are material to the operation of its business as presently conducted and as proposed to be conducted. 2.11 Taxes. (a) Except as disclosed in the Reports, the Company has filed all returns with respect to all federal, state, county, local, foreign and other taxes, whether or not measured in whole or in part by net income (collectively, "Taxes"), required to be filed through the date hereof in a manner consistent with prior years. Except as disclosed in the Reports (and any interest, additions to tax and penalties incurred since the date of the last Report in connection with matters disclosed therein), the Company has paid all Taxes (in- cluding deficiencies, interest, additions to tax and penalties with respect thereto) that are shown as due through the date hereof, or that are claimed or asserted by any taxing authority to be due through the date hereof, with respect to the operations of the Company in each case except for those Taxes that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside. Except as disclosed in the Reports (and any interest, additions to tax and penalties incurred since the date of the Reports in connection with matters disclosed therein), with respect to any period for which Tax returns have not yet been filed, or for which Taxes are not yet due or owing, the Company has no liability for Taxes in each case other than Taxes incurred in the ordinary course of business or for which accruals are reflected in the financial statements contained in the Reports. (b) Except as disclosed in the Reports, no audit or other proceedings by any court, taxing authority, or similar entity is pending or, to the knowledge of the Company, overtly threatened with respect to any Taxes due from or with respect to the operations of the Company or any Tax return filed by or with respect to the operations of the Company. No assessment of Taxes is proposed against the Company or its assets. 2.12 Financial Condition. The Company has furnished Purchaser with true and complete copies of its latest Reports. The Company's financial statements contained in the Reports fairly present the financial position of the Company as of the dates thereof, and the results of operations and cash flows of the Company for the periods set forth therein, all in conformity with generally accepted accounting principles consistently applied during the periods involved, subject, with respect to quarterly periods, to year-end adjustments. Page 22 of 51 Pages 2.13 Disclosure. This Agreement does not contain any untrue --------- statement of a material fact or omit to state a material fact necessary in order to make any statement contained herein or therein, in the light of the circumstances under which it was made, not misleading. There is no fact known to the Company that has not been disclosed to Purchaser orally or in writing or in the Reports that materially adversely affects or, insofar as the Company can reasonably foresee, will materially adversely affect the Company or the ability of the Company to perform its obligations under this Agreement or the Registration Rights Agreement or to consummate the transactions contemplated hereby or thereby; provided, however, that any disclosure made herein with respect to any particular representation or warranty shall be deemed a disclosure for all purposes hereof. 2.14 Material Adverse Change. Since the date of the last Report ------------------------ there has not been any material adverse change nor, to the knowledge of the Company, is any such change overtly threatened, in the assets, business, operations or financial condition of the Company. 3. Representations of Purchaser. Purchaser represents, warrants ---------------------------- and covenants to the Company that: 3.1 Organization, etc. Purchaser is a general partnership duly ------------------ organized and validly existing under the laws of the State of New York and has the requisite power and authority and has been duly authorized to perform its obligations hereunder and under the Registration Rights Agreement. 3.2 Investment Intent. (a) The Securities being acquired by it ------------------ are being purchased for investment for its own account and not with the view to, or for resale in connection with, any distribution or public offering thereof. Purchaser understands that such Securities have not been registered under the 1933 Act or any state securities laws by reason of their contemplated issu- ance in transactions exempt from the registration requirements of the 1933 Act pursuant to Section 4(2) thereof and applicable state securities laws, and that the reliance of the Company and others upon these exemptions is predicated in part upon this representation by Purchaser. Purchaser further understands that such Securities may not be transferred or resold without (i) registration under the 1933 Act and any applicable state securities laws, or (ii) an exemption from the requirements of the 1933 Act and applicable state securities laws. (b) Purchaser understands that an exemption from such registration is not presently available pursuant to Rule 144 promulgated under the 1933 Act by the Securities and Exchange Commission and that in any event Purchaser may not sell any such Securities pursuant to Rule 144 prior to the expiration of the period required under Rule 144 after it has acquired such Securities. Purchaser understands that any sales pursuant to Rule 144 can be made only in full compliance with the provisions of Rule 144. Page 23 of 51 Pages 3.3 Location of Principal Office; Qualifications as an Accredited ------------------------------------------------------------- Investor. The address of Purchaser's principal office is set forth in Section - -------- 7.1 hereof. Purchaser qualifies as an "accredited investor" for purposes of Regulation D promulgated under the 1933 Act. Purchaser acknowledges that the Company has made available to it the opportunity to ask questions and receive answers concerning the terms and conditions of the sale of securities contemplated by this Agreement and to obtain any additional information (which the Company possesses or can acquire without unreasonable effort or expense) as may be necessary to verify the accuracy of the information furnished to it. Purchaser (a) is able to bear the risk of loss of its entire investment in the Securities being acquired by it without any material adverse effect on its business, operations or prospects, and (b) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment to be made by it pursuant to this Agreement. 3.4 Acts and Proceedings. This Agreement has been duly authorized -------------------- by all necessary action on the part of Purchaser. This Agreement, with respect to Purchaser, has been duly executed and delivered. This Agreement is a valid and binding agreement of Purchaser, en- forceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or other similar laws affecting the enforcement of creditors' rights generally and to judicial limitations on the enforcement of the remedy of specific performance and other equitable remedies. 3.5 No Brokers or Finders. No person, firm or corporation has or --------------------- will have, as a result of any act or omission by Purchaser, any right, interest or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement, except as set forth on Schedule 2.6. Purchaser shall indemnify and hold the Company harmless against any and all liability with respect to any such commission, fee or other compensation which may be payable or which shall be determined to be payable as a result of the actions of Purchaser in connection with the transactions contemplated by this Agreement. 4. Additional Agreements and Covenants. ----------------------------------- 4.1 Financial Statements. The Company shall provide to Purchaser -------------------- unaudited monthly and quarterly financial statements, within 30 days after the last day of each calendar month and within 45 days after the last day of each fiscal quarter, respectively. In addition, the Company shall provide to Purchaser audited annual financial statements within 90 days after the end of each fiscal year. The Company shall provide to Purchaser such additional information regarding its business and financial condition as Purchaser shall reasonably request. 4.2 Press Releases. The Company and Purchaser shall consult with -------------- each other with respect to any press release or public announcement pertaining to this Agreement or the Registration Rights Agreement, and shall not issue such press release or make any such public announcement prior to such consultation, except that (a) the Company may issue any such release or make any such public announcement as it shall determine, in its sole discretion, may be required by applicable law after consultation with Purchaser to the extent references to Purchaser shall be required to be disclosed and (b) Purchaser and its affiliates may make disclosure on any reports Purchaser or its affiliates shall furnish to their investors. 4.3 Confidentiality. Purchaser shall keep confidential any and --------------- all confidential information regarding the Company, including its business, financial condition, operations, assets, employees and properties, except as may be required by law. Page 24 of 51 Pages 4.4 Further Assurances. The Company, on the one hand, and ------------------- Purchaser, on the other hand, agree from time to time after the date hereof, upon the request of the other, to do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged or delivered, all such further acts, documents and assurances as may be necessary or appropriate to carry out the terms of this Agreement. 4.5 Additional Payments. At the option of any Holder (as defined ------------------- in the Certificate of Designation), such Holder shall have the right to pay additional consideration upon any conversion, liquidation or issuance of Series C Shares or Common Stock to the extent necessary to permit such conversion, liquidation or issuance to comply with applicable law, but any such payment pursuant to such option shall not in any way reduce the obligation of the Company under this Agreement if such payment were not to be made. 5. Restriction on Transfer of Securities ------------------------------------- 5.1 Restrictions. The Securities are only transferable pursuant ------------ to (a) an offering registered under the 1933 Act, (b) Rule 144 promulgated thereunder (or any similar rule then in effect) if such rule is available, or (c) subject to the conditions specified elsewhere in this Sec- tion 5, any other legally available means of transfer. 5.2 Legend. Each certificate evidencing Securities shall be ------ endorsed with the following legend: "THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF AN EFFECTIVE REGIS- TRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECU- RITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COM- PANY THAT THE TRANSFER IS EXEMPT FROM REGISTRATION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS." 5.3 Removal of Legend. Any legend endorsed on a certificate ------------------ pursuant to Section 5.2 hereof shall be removed, and the Company shall issue a Security without such legend to the holder of such Security, if such Security is being disposed of pursuant to a registration under the 1933- Act or pursuant to Rule 144 or any similar rule then in effect or if such holder provides that Compa- ny with an opinion of counsel satisfactory to the Company to the effect that a transfer of such Security may be made without registration. In addition, if the holder of such Security delivers to the Company an opinion of such counsel to the effect that no subsequent transfer of such Security shall require registration under the 1933 Act, the Company shall promptly upon such contemplated transfer deliver new Securities that shall not bear the legend set forth in Section 5.2. Page 25 of 51 Pages 6. Indemnification. --------------- 6.1 Indemnitors; Indemnified Persons. For purposes of this ---------------------------------- Section 6, each party which, pursuant to this Section 6, agrees to indemnify any other person or entity shall be referred to, as applicable, as the "Indemnitor" with respect to such persons and entities, and each such person and entity which shall be indemnified by the Indemnitor shall be referred to as the "Indemnified Person." 6.2 Company Indemnity. The Company hereby agrees to indemnify and ----------------- hold harmless Purchaser and its directors, officers, controlling persons (within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act), agents and employees from and against any and all claims, liabilities, losses, damages and expenses incurred by such Indemnified Person (including reasonable attorneys' fees and disbursements) which shall be caused by or related to or arise out of any material breach of any representation, warranty, covenant or agreement of the Company con- tained in this Agreement, and shall reimburse such Indemnified Person for all costs and expenses (including reasonable attorneys' fees and disbursements) as they shall be incurred, in connection with investigating, preparing for, or defending any action, claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, which shall have been caused by or related to or arise out of such breach, whether or not such Indemnified Person shall be named as a party thereto and whether or not any liability shall result therefrom. The Company shall not, however, be responsible for any claims, liabilities, losses, damages, or expenses pursuant to this Section 6.2 or otherwise which shall be finally judicially determined to have resulted primarily from an Indemnified Person's bad faith, willful misconduct or gross negligence, or any material breach by Purchaser of this Agreement. The Company further agrees that the Company shall not, without the prior written consent of Purchaser, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder unless such settlement, compromise or consent shall include an unconditional release of each Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. 6.3 Purchaser Indemnity. Purchaser hereby agrees to indemnify and ------------------- hold harmless each of the Company and its directors, officers, controlling persons (within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act), agents, including without limitation Robert Conrads, and employees from and against any and all claims, liabilities, losses, damages and expenses incurred by such Indemnified Person (including reasonable attorneys' fees and disbursements) which shall be caused by or related to or arise out of such Purchaser's material breach of any representation, warranty, covenant or agreement of such Purchaser contained in this Agree- ment, and shall reimburse such Indemnified Person for all costs and expenses (including reasonable attorneys' fees and disbursements) as they shall be incurred, in connection with investigating, prepar- ing for, or defending any action, claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, which shall be caused by or related to or arise out of such breach, whether or not such Indemnified Person shall be named as a party thereto and whether or not any liability results therefrom. Purchaser shall not, however, be responsible for any claims, liabilities, losses, damages, or expenses pursuant to this Section 6.3 or otherwise which shall be finally judicially determined to have resulted primarily from an Indemnified Person's bad faith, willful misconduct or gross negligence, or any material breach by the Page 26 of 51 Pages Company of this Agreement. Purchaser further agrees that it shall not, without the prior written consent of the Company, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder unless such settlement, compromise or consent shall include an unconditional release of each Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. 6.4 Defense. Promptly after receipt by an Indemnified Person of ------- notice of the commencement of any action or proceeding with respect to which indemnification may be sought hereunder, such person shall notify the Indemnitor of the commencement of such action or proceeding, but failure so to notify the Indemnitor shall not relieve the Indemnitor from any liability which the Indemnitor may have hereunder or otherwise, unless the Indemnitor shall be materially prejudiced by such failure. If the Indemnitor shall so elect, the Indemnitor shall assume the defense of such action or proceeding, including the employment of counsel reasonably satisfactory to such Indemnified Person and shall pay the fees and disbursements of such counsel. In the event, however, that such Indemnified Person reasonably shall determine in its judgment that having common counsel would present such counsel with a conflict of interest or alternative defenses shall be available to an Indemnified Person or if the Indemnitor shall fail to assume the defense of the action or proceeding in a timely manner, then such Indemnified Person may employ separate counsel to represent or defend it in any such action or proceeding, and the Indemnitor shall pay the reasonable fees and disbursements of such counsel; provided, -------- however, that the Indemnitor shall not be required to pay the fees and - ------- disbursements of more than one separate counsel for all Indemnified Persons in any jurisdiction in any single action or proceeding. In any action or proceeding the defense of which the Indemnitor shall assume, the Indemnified Person shall have the right to participate in such litigation and to retain its own counsel at such Indemnified Person's own expense, so long as such participation shall not interfere with the Indemnitor's control of such litigation. 7. Miscellaneous. ------------ 7.1 Notices. All notices, requests, demands and other ------- communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given and effective: (i) on the date of delivery, if delivered personally; (ii) on the earlier of the fourth (4th) day after mailing or the date of the return receipt acknowledgement, if mailed, postage prepaid, by certified or registered mail, return receipt requested; or (iii) on the date of transmission if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic communications equipment, (a) if to Purchaser, at 888 Seventh Avenue, New York, New York 10106, Attn: Peter Hurwitz, Esq.; facsimile number: (212) 489-2005 or at such other address or facsimile number as the Purchaser may specify by written notice to the Company, or (b) if the Company at 100 Second Avenue South, Suite 1100, St. Petersburg, Florida 33701, Attention: Robert P. Gordon, Chairman or Paul W. Henry, Director; facsimile number: (813) 895-0378 or at such other address or facsimile number as the Company may specify by written notice to Purchaser. Page 27 of 51 Pages 7.2 Benefit of Agreement. All terms and provisions of this ---------------------- Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 7.3 Governing Law. This Agreement and the legal relations among ------------- the parties hereto shall be governed by and construed in accordance with the internal law of the State of New York (without regard to the laws of conflict that might otherwise apply) as to all matters includ- ing without limitation matters of validity, construction, effect, performance and remedies. 7.4 Headings. The headings of the Sections of this Agreement have -------- been inserted for convenience of reference only and do not constitute a part of this Agreement. 7.5 Counterparts. This Agreement may be executed 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. 7.6 Entire Agreement. This Agreement represents the entire ----------------- agreement among the parties with respect to the subject matter hereof superseding all prior agreements and understandings, written or oral. 7.7 Expenses. Each party shall be responsible and shall pay for -------- all expenses incurred by it in connection with the preparation, negotiation and execution of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein; provided, -------- however, that the Company shall reimburse Purchaser for reasonable attorneys' - ------- fees which shall actually be incurred by it in connection herewith (including fees incurred in connection with the preparation, negotiation and execution and delivery of this Agreement) up to a maximum amount of $30,000. 7.8 Arbitration. Any dispute hereunder or otherwise arising out ----------- of relating to this Agreement (except for disputes directly relating to a third party claim for which indemnification may be required to the extent an action shall have been commenced by a third party in a court or other forum) shall be resolved only by arbitration by a single arbitrator. The arbitration shall be held in New York, New York and shall be conducted by the American Arbitration Association (the "AAA") pursuant to its Commercial Arbitration Rules. The arbitrator shall be selected by the Company and Purchaser, or, failing such selection within ten days after any party shall have requested such arbitration, shall be selected by the AAA. The decision of the arbitrator shall be final and binding upon the parties, and the judgment upon the arbitral award may be entered by any court of competent jurisdiction, in law or in equity. Such decision shall include an award to the prevailing party of all costs and expenses (including, without limitation, reasonable attorney's fees) incurred in connection with the resolution of any such dispute. Any award shall include interest payable thereon at a rate of ten percent per annum from the date of the commencement of the arbitration. The parties expressly agree that the arbitrator shall have the power to incorporate injunctive relief or require specific performance as part of any award. Page 28 of 51 Pages 7.9 Schedules. All Schedules referred to herein refer to --------- information provided in a separate disclosure document but shall be deemed to be a part hereof for purposes of representations and covenants herein. Next Page is Signature Page Page 29 of 51 Pages IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first stated above. PHOENIX INFORMATION SYSTEMS CORP. By:______________________________ Title: S-C PHOENIX PARTNERS By:______________________________ Name: Title: Page 30 of 51 Pages Schedule 2.3 Capitalization See attached list. Page 31 of 51 Pages Preemptive Rights - ----------------- 1. Rights granted pursuant to the Convertible Note Purchase Agreement, dated December 9, 1994, between the Company and Purchaser. 2. Rights granted pursuant to the Offshore Convertible Securities Subscription Agreement of the Company to Infinity Investors Ltd. 3. Rights granted pursuant to Regulation S Securities Subscription Agreement, dated as of September 30, 1996, among the Company, Infinity Investors Ltd. and Fairway Capital Limited. Registration Rights - ------------------- 1. Rights granted pursuant to the Registration Rights Agreement, dated as of December 9, 1994, between the Company and Purchaser. 2. Rights granted to Robert Conrads and described in Schedule 2.6. 3. Rights granted to Robert P. Gordon. 4. Rights granted pursuant to the Registration Rights Agreement, dated as of September 30, 1996, among the Company, Infinity Investors Ltd. and Fairway Capital Limited. 5. Rights granted pursuant to the Registration Rights Agreement, dated as of September 30, 1996, between the Company and Infinity Investors Ltd. Page 32 of 51 Pages Schedule 2.6 Brokers and Finders In connection with this Agreement, the Company has agreed to accelerate options to purchase 105,000 shares of Common Stock, which were granted to Robert Conrads pursuant to a Unanimous Written Consent of the Board of Directors of the Company dated as of September 28, 1995. The exercise price for such options is $3.60 per share, and such options shall expire on the second anniversary of the date of this Agreement. In addition, the Company has agreed that such options shall have piggyback registration rights with no underwriter cutbacks. EX-99.A 3 EXHIBIT A - CERT OF DESIGNATION ETC. Page 33 of 51 Pages EXHIBIT A CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C CONVERTIBLE PREFERRED STOCK OF PHOENIX INFORMATION SYSTEMS CORP. The undersigned, being a duly elected officer of Phoenix Information Systems Corp. (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 151 thereof, DOES HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, the Board of Directors adopted the following resolution creating a series of 1,500,000 shares of preferred stock designated as Series C Convertible Preferred Stock. NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority conferred upon the Board of Directors of this Corporation in accordance with the provisions of the Certificate of Incorporation, there is hereby established a series of the authorized preferred stock of the Corporation, $.01 par value per share, which series shall be designated as "Series C Convertible Preferred Stock," and which shall consist of 1,500,000 shares (collectively, the "Series C Shares" or singularly, a "Series C Share") and shall have the following dividend rights, voting rights, liquidation preferences and other rights, qualifications, limitations and restrictions: 8. Dividend Rights --------------- 8.1 Share Dividends. The holder of record of each Series C Share --------------- (a "Holder") as of the Record Date (as hereinafter defined) shall be entitled to receive on each January 1, April 1, July 1 and October 1 during the period commencing on April 1, 1997 and ending on January 1, 2003 (each, a "Dividend Payment Date") cumulative dividends ("Share Dividends") of additional Series C Shares equal to 0.0247935 additional Series C Shares (a) for each such Series C Share held by such Holder on such Record Date and (b) for each Series C Share accrued as a Share Dividend (whether or not declared or paid). 8.2 Share Dividend Payment. To the extent permitted by applicable ---------------------- law and not prohibited pursuant to the terms of applicable credit instruments, senior securities or the Certificate of Incorporation of the Corporation, Share Dividends, if and when declared on each Series C Share, shall be declared at least twenty (20) business days prior to the next Dividend Payment Date for payment on the next Dividend Payment Date to the Holders of record on the date determined in such declaration, which date shall in no event be more than ten (10) business days after the date of declaration (the "Record Date"). Page 34 of 51 Pages 8.3 Participatory Dividends. The Series C Shares shall ------------------------- participate in all dividends declared and paid on shares of Common Stock to the same extent as though and as if the Series C Shares had been converted on the day immediately preceding the record date for the payment of such dividends. 8.4 No Other Dividends. Except as set forth in this Section 1 and ------------------ Section 2 below, the Series C Shares shall be entitled to no other dividends or distributions. 9. Rights on Liquidation and Ranking. In the event of any liquidation, --------------------------------- dissolution or winding up (collectively, a "Liquidation") of the Corporation, whether voluntary or involuntary, each issued and outstanding Series C Share shall be entitled to receive an amount equal to the greater of (a) the amount such Series C Share would receive if it were converted into Common Stock pursuant to Section 4.2 immediately prior to the Record Date for distribution upon liquidation or (b) the lesser of (i) eighteen dollars ($18.00) or (ii) an amount obtained by dividing (A) the difference between (1) fifteen million dollars ($15,000,000) and (2) the product of the shares of Common Stock, par value $.01 per share, of the Corporation ("Common Stock") into which Series C Shares shall have been converted pursuant to Section 4 hereof and the Target Threshold (as defined in Section 4.3(d) hereof) at which each of such Series C Shares shall have been converted by (B) the number of Series C Shares issued and outstanding, which amount shall be paid in cash (the "Liquidation Preference"). The full Liquidation Preference shall be paid, or determined and set apart, prior to any distribution in respect of the Common Stock. In the event that the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the full liquidation preferences (including the Liquidation Preference) for each series of the Corporation's securities entitled thereto, the entire amount of assets of the Corporation available for distribution to stockholders shall be paid first, ratably in respect of ----- liquidation preferences applicable to the Corporation's Series A Convertible Preferred Stock, par value $.01 per share, and Series B Convertible Preferred Stock, par value $.01 per share, and such other securities of the Corporation which, by their terms, shall rank senior, as to liquidation, to the Series C Shares, second, ratably in respect of the liquidation preferences applicable to ------ the Series C Shares and such other securities of the Corporation which, by their terms, shall rank on a parity with the Series C Shares as to liquidation, third, ----- in respect of liquidation preferences applicable to shares of such other securities which shall rank junior, as to liquidation, to the Series C Shares, and holders of Common Stock shall receive nothing. A reorganization or any other consolidation, share exchange or merger of the Corporation with or into any other corporation (collectively, a "Merger"), or any other sale of all or substantially all of the assets of the Corporation, shall not be deemed to be a Liquidation of the Corporation within the meaning of this Section 2, and the Series C Shares shall be entitled only to the rights contained in the Delaware General Corporation Law and the rights contained in other Sections hereof. 10. Voting Rights. ------------- 10.1 Voting Rights. In addition to the rights hereinafter specified in ------------- this Section 3 and any other rights provided by law or the By-laws of the Page 35 of 51 Pages Corporation, each Series C Share shall entitle the Holder to such number of votes per share as shall equal the number of shares of Common Stock which would have been obtained upon the conversion of such Series C Share at the time in question as provided in Section 4 hereof, and shall further entitle the Holder to vote on all matters, including, without limitation, the election of directors of the Corporation, as to which holders of Common Stock shall be entitled to vote (with the number of votes specified in this Section 3.1), together with such holders of Common Stock as one class and in the same manner and with the same effect as such holders of Common Stock. Copies of all notices sent to the holders of Common Stock shall be simultaneously sent to each Holder. 10.2 Voting as a Class. The Corporation shall not without the ------------------- affirmative consent or approval of the Holders of a majority of the outstanding Series C Shares, given by written consent in lieu of a meeting or by vote at a meeting called for such purpose for which notice shall have been given to the Holders of the Series C Shares in the manner provided by law (i) in any manner authorize, create, designate, issue or sell any class or series of capital stock (including any shares of treasury stock) or rights, options, warrants or other securities convertible into or exercisable for capital stock or any debt security which by its terms shall be convertible into or exchangeable for any equity security or shall have any other equity feature or any security that shall be a combination of debt and equity, which, in each case, as to the payment of dividends and distributions to be made upon a Liquidation shall be on parity with or senior to the Series C Shares; (ii) effect a sale of all or substantially all of the Corporation's assets, a Merger or a Liquidation; (iii) repurchase or redeem any Common Stock other than pursuant to employee vesting or repurchase agreements in effect from time to time and purchases from officers, directors and employees upon termination of their relationship with the Corporation and other than as may be required by any binding commitment of the Corporation which shall have existed as of the first date of issuance of the Series C Shares; or (iv) declare or pay any dividends on Common Stock. 11. Conversion Rights--Common Stock. ------------------------------- 11.1 Dividends on Conversion. The Holder of any Series C Shares ------------------------ which shall be the subject of a conversion pursuant to this Section 4 hereof shall, on the Conversion Date (as defined in Section 4.6 hereof), receive on the day immediately preceding such Conversion Date, an amount of Series C Shares equal to the difference between (a) the amount of Share Dividends that would have accrued under Section 1.1 hereof from the date of issuance of such Series C Shares until January 1, 2003, as if such Series C Shares shall have remained outstanding until January 1, 2003, and (b) Share Dividends actually paid to such Holder. 11.2 Optional Conversion. Each Series C Share shall be --------------------- convertible, together with all Share Dividends thereon, at the option of the Holder thereof, at any time and from time to time into that number of fully paid and non-assessable shares of Common Stock obtained by multiplying ten by the Conversion Rate then in effect. For purposes hereof, "Conversion Rate" shall mean the reciprocal of the Target Threshold (as defined below), expressed as an absolute number. Page 36 of 51 Pages 11.3 Automatic Conversion. Upon the occurrence of an Event of --------------------- Conversion, each outstanding Series C Share, by virtue of, and simultaneously with the occurrence of the Event of Conversion and without any action on the part of the Holder, shall be deemed automatically converted into such number of fully paid and nonassessable shares of Common Stock as shall have been obtained by the Holder upon the voluntary conversion of such Series C Share on the date of the Event of Conversion as provided in Section 4.2. For purposes hereof, (a) "Event of Conversion" means the earlier of (i) January 1, 2003, or (ii) the date on which the Market Price of the Common Stock shall be at least $3.60 per share; provided, however, that such date shall not occur prior to June 23, 1997; (b) - -------- ------- Market Price" on any day means the average of the closing bid prices per share of Common Stock on the National Association of Securities Dealers Inc. Over-The-Counter Bulletin Board (the "Nasdaq System"), or on the principal exchange where the Common Stock is then traded, in each case, for the ten (10) consecutive Trading Days immediately preceding the date of determination; and (c) "Trading Day" means a business day in which the principal market on which the Common Stock is traded is open for trading for at least four hours. If at the time of any computation pursuant to this paragraph the Common Stock is not then traded on any trading market, the "Market Price" for the purposes hereof shall be the fair value as reasonably determined in good faith by the Board of Directors of the Corporation. 11.4 Adjustments Upon Issuances of Shares and Certain Events. ------------------------------------------------------- (a) If the Common Stock issuable on conversion of the Series C Shares shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise, the Holders shall, upon its conversion, be entitled to receive, in lieu of the Common Stock which the Holders would have become entitled to receive but for such change, a number of shares of such other class or classes of stock that would have been subject to receipt by the Holders if they had exercised their rights of conversion of the Series C Shares immediately before that change. (b) If at any time there shall be a Merger, then, as a part of such Merger, lawful provision shall be made so that the Holders thereafter shall be entitled to receive upon conversion of the Series C Shares, the number of shares of stock or other securities or property of the Corporation, or of the successor corporation resulting from such Merger to which holders of Common Stock deliverable upon conversion of the Series C Shares would have been entitled on such Merger if the Series C Shares had been converted immediately before that Merger to the end that the provisions of this Section shall be applicable after that event as nearly equivalently as may be practicable. (c) Any adjustment made pursuant to paragraphs (a) or (b) above shall become effective at the close of business on the day upon which such reclassification, Merger or similar transaction shall become effective. (d) In case the Corporation shall sell or issue shares (including by way of stock dividend, distribution, stock split or reverse split) Page 37 of 51 Pages of Common Stock, warrants, options, or other rights to purchase Common Stock or securities convertible or exchangeable into any of the foregoing excluding shares of Common Stock any of the foregoing issued or reserved for issuance by the Corporation: (i) in any transaction described in paragraphs (a) or (b) above; (ii) upon conversion of the Series C Shares; (iii) upon conversion, exercise or exchange of rights, options, warrants or convertible or exchangeable securities outstanding or as to which a binding commitment shall have existed as of the first date of the issuance of the Series C Shares or which may be issued to employees, consultants and directors of such Corporation in such capacities pursuant to any plan approved by the Board of Directors of the Corporation from time to time; or (iv) as compensation to officers, directors, consultants and others performing services to the Corporation, provided the number of such shares of Common Stock shall not be in excess, in the aggregate, of 10% of the outstanding shares of Common Stock from time to time. and the price per share (determined in the case of rights, options, warrants or convertible or exchangeable securities as the quotient of (x) the aggregate consideration received or receivable by the Corporation upon the sale and issuance of such rights, options, warrants or convertible or exchangeable securities plus the total consideration payable to the Corporation upon such exercise or conversion divided by (y) the total number of shares of Common Stock covered by such rights, options, warrants or convertible or exchangeable securities) shall be lower than the Target Threshold (as defined below) on the date of such issuance, then the Target Threshold in effect immediately prior to such issuance shall upon such issuance be reduced to equal the number determined by multiplying such Target Threshold by a fraction, the numerator of which shall be an amount equal to the sum of (A) the number of shares of Common Stock outstanding on a fully-diluted basis (except with respect to shares of Common Stock issuable on conversion of Series C Shares) immediately prior to such issuance plus (B) the number of shares of Common Stock which the aggregate consideration received for the issuance of such additional shares of Common Stock would purchase at such Target Threshold, and the denominator of which shall be the total number of shares of Common Stock outstanding, on a fully diluted basis (except with respect to shares of Common Stock issuable on conversion of Series C Shares), immediately after such issuance. Such adjustment shall be made successively whenever such an issuance shall be made hereunder and, in the event any adjustment shall be made in respect of the issuance of any rights, options warrants or convertible or exchangeable securities, which shall lapse or terminate unexercised or converted, the Target Threshold shall be readjusted to the amount it would have been had no such issuance occurred. For purposes hereof, "Target Threshold" means $1.00 or such lower number to which it may be adjusted, from time to time, pursuant to this Section 4.4(d). Page 38 of 51 Pages (e) For the purposes of any computation to be made in accordance with Section 4.4(d), the following provisions shall be applicable: (i) In case of the issuance or sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of the cash consideration therefor shall be deemed to be the amount of cash received by the Corporation for such shares (or, if the shares of Common Stock shall be offered by the Corporation for subscription, the subscription price, or, if shares of Common Stock shall be sold to underwriters or dealers for public offering without a subscription offering, the public offering price, before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith). (ii) In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Corporation) of shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration therefor other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Corporation. (iii) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Corporation shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. (iv) The reclassification of securities of the Corporation, other than shares of Common Stock, into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately after the opening of business on the day following the record date for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in clause (ii) of this Section 4.4(e). (v) The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable (other than in respect of the Series C Shares) upon the exercise of then outstanding options, rights, warrants and upon the conversion or exchange for then outstanding convertible or exchangeable securities. 11.5 No Impairment. The Corporation shall not, by amendment of its -------------- Certificate of Incorporation or through any recapitalization, transfer of assets, Merger, dissolution or any other voluntary action or inaction, avoid or seek to avoid the observance or performance of any of the terms to be observed Page 39 of 51 Pages or performed hereunder by the Corporation, but shall at all times in good faith assist in the carrying out of all the provisions of this Certificate of Designation and in taking all such actions as may be necessary or appropriate in order to protect the conversion rights of the Holders against impairment. 11.6 Conversion Method. Any Holder of Series C Shares may, at any ----------------- time, exercise the conversion rights as to such Series C Shares by delivering to the Corporation during regular business hours, care of the then transfer agent (the "Transfer Agent") for the Corporation, a notice requesting conversion on a specified date and the number of Series C Shares that the Holder shall elect to convert (a "Notice of Conversion"), with a copy of such Notice of Conversion transmitted via facsimile to the Corporation. The Notice of Conversion shall also state the names and address of the persons to whom certificates for shares of Common Stock shall be issued, the denominations of such certificates and reasonable delivery instructions with respect thereto. Each conversion shall be deemed to have been effected immediately on the close of business on the date such Notice of Conversion shall be received (including receipt via facsimile) by the Transfer Agent (the "Conversion Date"); provided, that the Holder shall be -------- required to deliver to the Corporation the certificate or certificates representing the Series C Shares so to be converted, within four (4) Trading Days after the Conversion Date. The person in whose name any certificate for shares of Common Stock shall be issuable upon the conversion shall be deemed to have become the holder of record of the Common Stock at such time. If the stock transfer books of the Corporation shall be closed on the Conversion Date, the Conversion Date for purposes of determining record ownership shall be the next succeeding day on which the stock transfer books shall be open (and the conversion shall be deemed to have been effected immediately prior to the close of business on that day), but in all cases the conversion shall be at the Conversion Rate in effect on the Conversion Date. As promptly as practicable after the Conversion Date, the Corporation shall cause the Transfer Agent to issue and deliver to such Holder, at the expense of the Corporation and in accordance with such Holder's delivery instructions, a certificate or certificates for the number of full shares of Common Stock to which such Holder shall be entitled and cash with respect to any fractional interest in a share of Common Stock as provided in Section 4.7 below. The Corporation shall accept and act upon one or more Notices of Conversion in the order in which such notices shall be received by the Transfer Agent in accordance with the foregoing notice procedures. 11.7 Fractional Shares of Common Stock. No fractional shares of ---------------------------------- Common Stock or scrip shall be issued upon conversion of Series C Shares. If more than one Series C Share shall be surrendered for conversion at any one time by the same Holder, the number of full shares of Common Stock issuable upon conversion of such Series C Shares shall be computed on the basis of the aggregate number of Series C Shares so surrendered. Instead of any fractional shares of Common Stock which otherwise would be issuable upon conversion of any Series C Shares, the Corporation shall pay a cash adjustment in respect of such fractional interest based upon the Market Price in effect at the close of business on the last business day prior to the Conversion Date. 11.8 Taxes. All shares of Common Stock issued upon conversion of ----- Series C Shares shall be validly issued, fully paid and nonassessable. The Page 40 of 51 Pages Corporation shall pay any and all documentary stamp or similar issue or transfer taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of Series C Shares pursuant hereto. The Corporation shall not, however, be required or pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the Series C Shares so converted shall have been registered, and no such issue or delivery shall be made unless and until the person requesting such transfer shall have paid to the Corporation the amount of any such tax or shall have established to the satisfaction of the Corporation that such tax shall have been paid or that no such tax shall be payable. 11.9 Surrendered Series C Shares. All certificates representing --------------------------- Series C Shares which shall be converted shall be appropriately cancelled on the books of the Corporation, and the Series C Shares so converted represented by such certificates shall be restored to the status of authorized but unissued Series C Shares. 11.10 Available Common Stock and Series C Shares. The Corporation ------------------------------------------ shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of Series C Shares, such number of shares of Common Stock as shall from time to time be sufficient to effect a conversion of all outstanding Series C Shares under this Section 4, as such number may from time to time be adjusted pursuant thereto, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Series C Shares, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel and subject to any necessary approval of its stockholders, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. The Corporation shall at all times reserve and keep available out of its authorized but unissued Series C Shares, solely for the purpose of issuing Share Dividends, such number of Series C Shares as shall from time to time be sufficient to issue all such Share Dividends, and if at any time the number of authorized but unissued Series C Shares shall not be sufficient to issue all such Share Dividends, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel and subject to any necessary approval of its stockholders, be necessary to increase its authorized but unissued shares of Series C Shares to such number of shares as shall be sufficient for such purpose. 11.11 Notice to Holders. Promptly upon the occurrence of any ----------------- event which shall require an adjustment to the conversion rights of the Series C Shares, the Corporation shall mail to each Holder at the Holder's address as it appears in the stock records of the Corporation, a notice describing such event and the adjustment. Upon any adjustment in the Conversion Rate or Target Threshold, the Corporation shall mail to each Holder at the Holder's address as it appears in the stock records of the Corporation a notice setting forth the adjusted Conversion Rate or Target Threshold and the method of calculation thereof. Any such adjustment shall be conclusive evidence of the correctness of the adjustment, absent manifest error. In the event that the Company shall (a) propose at any time to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights or (b) effect any transaction of the type described in Page 41 of 51 Pages Section 4.4 hereof involving a change in the Common Stock, then, in connection with each such event, the Company shall send to the Holders of the Series C Shares at least 10 days' prior written notice of the date on which a record shall be taken for making such offer or, in the case of (b), for voting on any such transaction or, if no vote of stockholders shall be required, when such transaction shall take place (and specifying the time on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such event). RESOLVED FURTHER, that the President or Vice President and the Secretary or any Assistant Secretary of the Corporation are each authorized to do or cause to be done all such acts or things and to make, execute and deliver or cause to be made, executed and delivered all such agreements, documents, instruments and certificates in the name and on behalf of the Corporation or otherwise as they deem necessary, desirable or appropriate to execute or carry out the purpose and intent of the foregoing resolution. Page 42 of 51 Pages IN WITNESS WHEREOF, we have executed and subscribed this Certificate PHOENIX INFORMATON SYSTEMS CORP. By: _______________________________ Title: ________________________ _________________________ Secretary EX-99.AJ 4 EXHIBIT AJ - REGISTRATION RIGHTS AGREEMENT EXHIBIT AJ ---------- REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT dated as of December 20, 1996, is by and between PHOENIX INFORMATION SYSTEMS CORP., a Delaware corporation (the "Company"), and S-C Phoenix Partners, a New York general partnership (the "Rights Holder"). This Agreement is made pursuant to the Series C Convertible Preferred Stock Purchase Agreement (the "Purchase Agreement") dated the date hereof, between the Company and the Rights Holder relating to the purchase by the Rights Holder of 1,388,888.889 shares of Series C Convertible Preferred Stock, par value $.01 per share, of the Company (the "Shares"), which are convertible into shares of common stock, par value $.01 per share, of the Company ("Common Shares"). In order to induce the Rights Holder to purchase the Shares, the Company has agreed to provide registration rights with respect to the Common Shares issuable upon conversion of the Shares, as set forth herein. Accordingly, the parties hereby agree as follows: 12. Definitions. For the purposes of this Agreement: ----------- (a) The terms, "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of 1933 (the "1933 Act"), and the declaration or ordering of effectiveness of such registration statement or document; and (b) The term "Registrable Securities" means (i) the Common Shares issued to the Rights Holder upon conversion of the Shares, and (ii) any other Common Shares issued by the Company that are acquired by the Rights Holder by purchase or transfer or issued to the Rights Holder by the Company upon the conversion or exercise of any warrant, right or other security that is issued as a dividend or other distribution with respect to, in exchange for or in replacement of any Common Shares or other securities of the Company. 13. Registration Rights. ------------------- 13.1 Registration upon Demand. (a) At any time after the date -------------------------- hereof, upon the written request of the holders of fifty (50%) percent or more of the Registrable Securities to which rights hereunder have been assigned in accordance herewith (also "Rights Holders"), requesting that the Company effect the registration under the 1933 Act of all or part of the Registrable Securities, which request shall specify the intended method of distribution thereof, the Company shall use its best efforts to so register (a "Demand Page 44 of 51 Pages Registration"), as expeditiously as may be practicable, the Registrable Securities that such holders have requested the Company to register; provided, however, that the Rights Holders shall have the right to make only two Demand Registrations; and provided further that at least 180 days shall have elapsed after the effective date of the first Demand Registration before any Rights Holders may request the second Demand Registration hereunder or under any other registration rights agreement relating to securities of the Company to which the Rights Holders are parties. (b) If at any time after the date hereof the Company is eligible to file a Registration Statement on Form S-3 under the 1933 Act, upon written request of any Rights Holder, the Company shall use its best efforts to prepare and file such Registration Statement with the Securities and Exchange Commission (the "Commission"), registering all or part of the Registrable Securities, at such Rights Holder's expense; provided, that in each such registration the price of the Registrable Securities being offered, without regard to any discounts or commissions, shall be at least $1,000,000. 13.2 "Piggy-back" Registrations. If, at any time after the date -------------------------- hereof, the Company proposes to register any securities under the 1933 Act in connection with any offering of its securities, whether or not for its own account, the Company shall furnish prompt written notice to the Rights Holders of the Company's intention to effect such registration and the intended method of distribution in connection therewith. Upon the written request of the Rights Holders made to the Company within 30 days after the receipt of such notice, the Company shall include in such registration the number of Registrable Securities requested to be registered by such Rights Holders (a "Piggy-back Registration"). 13.3 Obligations of the Company. Whenever the Company is required -------------------------- under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective and keep such registration statement effective for up to 60 days; (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of applicable law with respect to the disposition of all securities covered by such registration statement; (c) Furnish to each Rights Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of applicable law, and such other documents as it may reasonably request in order to facilitate the disposition of Registrable Securities owned by such Rights Holder; (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities laws of such Page 45 of 51 Pages states as shall be reasonably requested by the Rights Holders or the underwriters, in the case of an underwritten offering; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdictions; (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. The managing underwriter shall be selected by Rights Holders holding a majority of the Registrable Securities to be included in such registration in the case of a Demand Registration, which managing underwriter shall be reasonably satisfactory to the Company. The Rights Holders also shall enter into and perform their obligations under such an agreement; and (f) Notify the Rights Holders, at any time when a prospectus relating thereto is required to be delivered under applicable law, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Use commercially reasonable efforts to list such Registrable Securities on any national securities exchange on which any Common Shares are listed or, if the Common Shares are not listed on a national securities exchange, use commercially reasonable efforts to qualify such Registrable Securities for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. 13.4 Furnish Information. It shall be a condition precedent to -------------------- the obligation of the Company to take any action pursuant to this Section 2 that each Rights Holder shall furnish to the Company such information regarding such Rights Holders, the Registrable Securities held by it and the intended method of disposition of such Registrable Securities as shall be required to effect the registration of the Registrable Securities. 13.5 Expenses of Registration. With respect to a Demand --------------------------- Registration or Piggy-back Registration, the Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company and, in the case of a Demand Registration, one counsel selected by the Rights Holders, but excluding underwriting discounts and commissions relating to Registrable Securities. 13.6 Underwriting Requirements. In connection with any offering -------------------------- involving an underwriting of Common Shares in which a Rights Holder has "piggy-back" rights, the Company shall not be required under Section 2.2 to include any of the Registrable Securities of the Rights Holder in the registration of the securities to be included in such underwriting unless the Rights Holder accepts the terms of the underwriting as agreed upon between the Page 46 of 51 Pages Company and the underwriters selected by it, and then only in such quantity as the underwriters determine in their reasonable discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities requested by the Rights Holders and any other shareholder to be included in such offering, exceeds the number of securities that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering up to 105,000 Common Shares held by Robert Conrads ("Conrads") and only such number of Registrable Securities as, together with the securities, if any, being registered by all other shareholders, including Robert P. Gordon ("Gordon") and the other holders of registration rights with respect to securities of the Company on the date hereof (the "Other Rights Holders"), the underwriters determine in their reasonable discretion will not jeopardize the success of the offering. The securities of all other shareholders (other than Gordon, Conrads and the Other Rights Holders) shall be reduced (or eliminated) in order to satisfy the reduction required by the underwriters before any Registrable Securities of the Rights Holder are reduced (or eliminated). For so long as a Rights Holder has rights pursuant to Sections 2.1 and 2.2 hereof, if the Company grants to any person any rights to have his or its securities included in any registration statement to be filed by the Company, such rights shall be subordinate to the rights granted to the Rights Holder herein. 13.7 Indemnification. In the event any Registrable Securities are --------------- included in a registration statement under this Section 2: (a) To the extent permitted by law, the Company shall indemnify and hold harmless the Rights Holder, any underwriter (as defined in the 1933 Act or other appli- cable law) for the Rights Holder, each person, if any, who controls the Rights Holder or underwriter within the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the "1934 Act") or other applicable law, and any officer, director, partner or other person who controls such entity within the meaning of the 1933 Act or other applicable law or agent thereof, against any and all losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject under the 1933 Act or other applicable law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act or other applicable law, or any rule or regulation promulgated under the 1933 Act or other applicable law; and the Company shall pay to the Rights Holder, underwriter or controlling person any reasonable legal or other expenses incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement Page 47 of 51 Pages contained in this Section 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon (iii).1 a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Rights Holder or such underwriter or controlling person or Page 34 of 50 Pages (iii).2 the use by any party, after receipt of a notice from the Company pursuant to Section 2.3(f) above, of the prospectus referred to in such notice. (b) To the extent permitted by law, the Rights Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the 1933 Act or other applicable law, any underwriter and any controlling person of any such underwriter, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject under the 1933 Act or other applicable law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon (i) any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Rights Holder expressly for use in connection with such registration, or (ii) the use by the Rights Holder, after receipt of a notice from the Company pursuant to Section 2.3(f) above, of the prospectus referred to in such notice; and the Rights Holder shall pay any reasonable legal or other expenses incurred by any person to be indemnified pursuant to this Section 2.7(b) in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the -------- indemnity agreement contained in this Section 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Rights Holder, which consent shall not be unreasonably withheld; and provided, further, that in no event -------- ------- shall any indemnity under this Section 2.7(b) exceed the proceeds from the offering received by the Rights Holder. (c) Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party so desires, to assume the defense thereof; provided that an indemnified party (together with all other indemnified parties - -------- that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time after the commencement of any such action, if prejudicial to the ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, but the omission so to deliver written notice to the indemnifying party shall not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.7. Page 48 of 51 Pages (d) The obligations of the Company to the Rights Holder under this Section 2.7 shall survive the completion of any offering of Registrable Securities under any registration statement pursuant to this Section 2 or otherwise. 13.8 "Market Stand-off" Agreement. The Rights Holder hereby ----------------------------- agrees that, during the period specified by the Company and the managing underwriter in connection with any underwritten public offering of any of the Company's securities, the Rights Holder shall not, to the extent reasonably requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of any securities of the Company held by the Rights Holder at any time during such period, except for any Common Shares included in such registration; provided, that private -------- transfers of such securities shall not be restricted during such period; and provided further, that such period shall not extend more than 15 days prior to - -------- ------- or beyond 120 days after the closing of the offering and, provided, further, -------- ------- that, with the exception of Conrads, such restriction shall be no more extensive in scope or duration than the restrictions imposed on any other person who has been granted registration rights or is an officer or director of the Company. In order to enforce the foregoing covenant, the Company may impose stop transfer instructions with respect to the Registrable Securities of the Rights Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. 14. Miscellaneous. ------------- 14.1 Successors and Assigns. The provisions of this Agreement ----------------------- shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties hereto; provided, however, that the Company -------- ------- shall not assign any of its obligations hereunder without the prior written consent of the Rights Holder and that the Rights Holder may not assign any of its rights hereunder except to transferees to which it has transferred any Registrable Securities, in accordance the Purchase Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. 14.2 Governing Law. This Agreement shall be governed by and -------------- construed in accordance with the internal laws of the State of New York, without regard to the conflicts of law principles thereof. 14.3 Counterparts. This Agreement may be executed by one or more ------------ of the parties to this Agreement on separate counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. 14.4 Captions and Headings. The captions and headings used in ---------------------- this Agreement are used for convenience only and are not to be considered in construing or inter- preting this Agreement. Page 49 of 51 Pages 14.5 Notices. Any notice, demand or delivery authorized by this ------- Agreement shall be in writing and shall be sufficiently given or made upon receipt thereof, if made by personal delivery or facsimile transmission (with confirmed receipt thereof), or four business days after mailed, if sent by first-class mail, postage prepaid, addressed, to the Rights Holder or the Company, as the case may be, at their respective addresses below, or such other address as shall have been furnished to the party giving or making such notice, demand or delivery: (a) If to the Company, to it at: Phoenix Information Systems Corp. 100 Second Avenue South, Suite 100 St. Petersburg, Florida 33701 Attention: Robert P. Gordon, Chairman Facsimile: 813-895-0378 (b) If to the Rights Holder, to it at: S-C Phoenix Partners c/o S-C Phoenix Holdings, L.L.P. 888 Seventh Avenue New York, New York 10106 Facsimile: (212) 489-2005 with a copy to: Soros Fund Management 888 Seventh Avenue, Suite 3300 New York, New York 10106 Attention: Sean A. Warren, Esq. Facsimile: 212-489-2005 [Next Page is Signature Page] Page 50 of 51 Pages IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. S-C Phoenix Partners By: S-C PHOENIX HOLDINGS, L.L.C., a General Partner By: __________________________________ Name: Title: PHOENIX INFORMATION SYSTEMS CORP. By: __________________________________ Name: Title: EX-24 5 EXHIBIT AK - POWER OF ATTORNEY Exhibit AK POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENT, that I, GEORGE SOROS, hereby make, constitute and appoint MICHAEL C. NEUS as my agent and attorney in fact for the purpose of executing in my name, in my personal capacity or in my capacity as sole proprietor of Soros Fund Management all documents, certificates, instruments, statements, filings and agreements ("documents") to be filed with or delivered to any foreign or domestic governmental or regulatory body or required or requested by any other person or entity pursuant to any legal or regulatory requirement relating to the acquisition, ownership, management or disposition of securities or other investments, and any other documents relating or ancillary thereto, including but not limited to, all documents relating to filings with the Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 or the Securities and Exchange Act of 1934 (the "Act") and the rules and regulations promulgated thereunder, including: (1) all documents relating to the beneficial ownership of securities required to be filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any acquisition statements on Schedule 13D or Schedule 13G and any amendments thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and (2) any information statements on Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act. All past acts of the attorney-in-fact in furtherance of the foregoing are hereby ratified and confirmed. This power of attorney shall be valid from the date hereof until revoked by me. IN WITNESS WHEREOF, I have executed this instrument this 27th day of July, 1995. /s/ George Soros ----------------------- GEORGE SOROS -----END PRIVACY-ENHANCED MESSAGE-----