1
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or Sections
240.14a-12

CONTINENTAL INFORMATION SYSTEMS CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:

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2) Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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CONTINENTAL INFORMATION
SYSTEMS CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD OCTOBER 28, 1997

The Annual Meeting of Stockholders (the "Meeting") of Continental
Information Systems Corporation (the "Company") will be held at ONCENTER, 800
South State Street, Syracuse, New York, on Tuesday, October 28, 1997 at 9:30
a.m., local time, to consider and act upon the following matters:

1. To elect six (6) Directors to serve for the next year.

2. To consider and act upon a proposal to amend the Company's
Restated Certificate of Incorporation to increase the number
of authorized common shares, $.01 par value per share, from
ten million (10,000,000) to twenty million (20,000,000) and
certain other amendments.

3. To ratify the appointment by the Board of Directors of Price
Waterhouse LLP as the Company's independent auditors for the
fiscal year ending May 31, 1998.

4. To vote on a stockholder proposal to request that the Board
of Directors adopt a plan of complete liquidation of the
Company.

5. To transact such other business as may properly come before
the Meeting or any adjournments thereof.

Stockholders of record at the close of business on September 18, 1997
will be entitled to vote at the Meeting or any adjournments thereof. A list of
the stockholders entitled to vote at the Meeting will be open to the examination
of any stockholder of the Company, for any purpose germane to the Meeting,
during ordinary business hours at the offices of the Company for the ten-day
period prior to the Meeting.

By Order of the Board of Directors,

JAMES J. MOSHER, Secretary

Syracuse, New York
October 3, 1997

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED, SELF-ADDRESSED
ENVELOPE SO THAT YOUR SHARES ARE REPRESENTED. NO POSTAGE IS NEEDED IF THE PROXY
IS MAILED WITHIN THE UNITED STATES.

CONTINENTAL INFORMATION SYSTEMS CORPORATION
ONE NORTHERN CONCOURSE
P. O. BOX 4785
SYRACUSE, NEW YORK 13221-4785

PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD OCTOBER 28, 1997

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Continental Information Systems
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held on October 28, 1997 and at all adjournments of that meeting (the
"Meeting"). All proxies will be voted in accordance with the instructions
contained in them. If no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting, except for the
stockholder proposal, for which such proxies will be voted against such matter.
Any proxy may be revoked by a stockholder at any time before its exercise by
delivery of written revocation to the Secretary of the Company.

On September 18, 1997, the record date for the determination of
stockholders entitled to vote at the Meeting, there were outstanding and
entitled to vote an aggregate of 6,939,259 shares of common stock, $.01 par
value per share ("Common Stock"), of the Company. Each share is entitled to one
vote.

The Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1997 is being mailed to stockholders with the mailing of this Notice and
Proxy Statement beginning on or about October 3, 1997.

VOTES REQUIRED

Each matter requiring the approval of stockholders requires the vote of
holders of at least a majority of the shares present in person or represented by
proxy at the Meeting, except for the proposed amendment to the Company's
Restated Certificate of Incorporation set forth below under Proposal 2, which
requires the vote of holders of a majority of all outstanding shares entitled to
vote at the Meeting. Pursuant to the Company's Joint Plan of Reorganization
dated October 4, 1994, as modified and confirmed on November 29, 1994 (the
"Plan of Reorganization"), the Company was authorized to issue 7,000,000 shares
of Common Stock. The Plan of Reorganization and the Restated Certificate of
Incorporation of the Company provide that until 6,300,000 of the shares of
Common Stock have been distributed to creditors and prior equity holders
pursuant to the Plan of Reorganization, any matter requiring the approval of
stockholders shall require the approval of a vote of at least two-thirds (2/3)
of the then-issued and outstanding shares of Common Stock. As of July 28, 1997,
all but 77,724 shares issued pursuant to the Plan of Reorganization had been
distributed to creditors and prior equity holders, and accordingly the
two-thirds majority requirement is no longer in effect.

Shares of Common Stock represented in person or by proxy at the Meeting
(including shares that abstain or do not vote with respect to one or more of the
matters presented at the Meeting) will be tabulated by the inspectors of
election appointed for the Meeting whose tabulation will determine whether or
not a quorum is present. Abstentions will be counted as shares that are present
and entitled to

vote for purposes of determining the presence of a quorum with respect to any
matter, but will not be counted as votes in favor of such matter. Accordingly,
an abstention from voting on a matter by a stockholder present in person or
represented by proxy at the Meeting will have the same legal effect as a vote
"against" the matter. If a broker holding stock in "street name" indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a matter, those shares will not be considered as present and entitled to
vote with respect to that matter. Accordingly, a "broker non-vote" on a matter
will have no effect on the voting on such matter, except Proposal 2, as to which
a broker non- vote will be equivalent to a vote "against" the proposal.

EXECUTIVE OFFICERS OF THE COMPANY

The following persons are currently executive officers of the Company.

Name Age Position and Information
---- --- ------------------------

Michael L. Rosen 41 President and Chief Executive Officer since July 18,
1997. Since 1988, Mr. Rosen has been affiliated with
Oscar Gruss & Son Incorporated, a registered broker-
dealer and in 1996 became Chief Executive Officer of
this firm and serves as a director. In addition to his
work with the Company and Oscar Gruss & Son, Mr.
Rosen operates a variety of real estate development
projects and multi-family rental properties through Park
Square Associates, Inc., of which he is the President and
a major stockholder.

Jonah M. Meer 42 Senior Vice President, Chief Financial Officer and Chief
Operating Officer since June 30, 1997. Prior to joining
the Company, Mr. Meer served as Senior Vice President
of Oppenheimer & Co., Inc., a registered broker-dealer
from May 1996 until June 1997. From 1983 until April
1996, Mr. Meer served as a Vice President and
Treasurer of Oscar Gruss & Son Incorporated, a
registered broker-dealer.

Thomas J. Prinzing 51 President of CIS Air since 1989. Mr. Prinzing served as
President and Chief Executive Officer of the Company
from 1995 until July 1997. Mr. Prinzing also served as a
director of the Company from September 1995 to July 1997.
From 1989 to 1991 he was Senior Vice President of the
Company. From 1984 to 1991 he was Senior Vice President
and Chief Financial Officer of the Company.

James J. Mosher 60 Vice President, Secretary and Controller. Mr. Mosher
has served as Controller of the Company since 1980,
Vice President since 1983, and Secretary since April
1997.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 18, 1997, certain
information regarding the ownership of Common Stock of (i) each person known by
the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock; (ii) each of the directors, nominees for director and
named executive officers of the Company; and (iii) all executive officers and
directors of the Company as a group.

Number of
Name and Address of Beneficial Owner Shares Owned (1) Percent Owned
- ------------------------------------ ---------------- -------------

Oscar Gruss & Son Incorporated, et al. (Group) 1,307,730 (2) 18.74%
74 Broad Street
New York, New York 10004

Gabriel Capital, L.P., Ariel Fund Limited, 687,100 (3) 9.90%
Ariel Management Corp. and J. Ezra Merkin (Group)
450 Park Avenue
New York, New York 10022

Franklin Mutual Advisers, Inc. 426,553 (4) 6.15%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078

Frederick John Jaindl 419,934 (5) 6.05%
Jaindl Farms
3150 Coffeetown Road
Orefield, Pennsylvania 18069

DIRECTORS AND EXECUTIVE OFFICERS

Julius S. Anreder 488,193 (6) 7.04%

Dr. Leon H. Bloom 198,939 (7) 2.86%

James P. Hassett 147,224 (8) 2.12%

George H. Heilborn -- --

Michael L. Rosen 632,937 (2)(9) 9.07%

Paul M. Solomon 39,000 (10) *

Jonah M. Meer 29,000 (11) *

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Number of
Name and Address of Beneficial Owner Shares Owned (1) Percent Owned
- ------------------------------------ ---------------- -------------

James J. Mosher 7,509 (12) *

Thomas J. Prinzing 91,717 (13) 1.31 %

All directors and executive officers as a group 1,156,326 (14) 16.30 %
(9 persons)

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* Percentage is less than 1% of the total number of outstanding shares of
the Company.

(1) Except as otherwise indicated, each party has sole voting and investment
power of the shares beneficially owned.

(2) In an Amendment No. 6 to Schedule 13D filed with the Commission in
March 1997, and as updated by the reporting persons through the date of
this proxy statement, Oscar Gruss & Son Incorporated (478,193 shares),
together with thirteen other persons, reported beneficial ownership of a
total of 1,268,396 shares as a group as follows: Emanuel Gruss (303,361
shares); Riane Gruss (100,000 shares); Hermann Merkin (166,227 shares);
Michael L. Rosen (31,601 shares); Daniel Goldberg (10,000 shares); Julius
S. Anreder (10,000 shares); Emanuel Gruss and Brenda Hirsch as trustees
for the benefit of Oren Arthur Gruss Hirsch (35,660 shares), Jonathan
Oscar Gruss Hirsch (31,745 shares) and Leni Gruss Hirsch (12,500 shares);
Emanuel Gruss and Leslie Gruss as trustees for the benefit of Ripton
Philip Gruss Rosen (41,362 shares) and Morgan Alfred Gruss Rosen (37,447
shares); Leslie Gruss (5,000 shares); and Michael Shaoul (5,000 shares).
Mr. Rosen also beneficially owns the following shares of Common Stock
issuable upon exercise of stock options that are currently exercisable
(36,334) and that are exercisable within 60 days (3,000). Each
reporting person has the sole power to vote and dispose of the shares
such person beneficially owns.

(3) As reported to the Company in an Amendment No. 1 to Schedule 13D filed
with the Commission on November 1996: Gabriel Capital, L.P. ("Gabriel")
beneficially owns 264,210 shares and Ariel Fund Limited ("Ariel Fund")
beneficially owns 380,669 shares. Ariel Management Corp. ("Ariel"), as
Investment Advisor to Ariel Fund, has the voting and dispositive power of
the shares held by Ariel Fund. In addition, Ariel has the sole voting and
dispositive power with respect to 42,221 shares owned by a private
discretionary investment account, so it may be deemed to be the beneficial
owner of 422,890 shares. As the general partner of Gabriel, J. Ezra Merkin
has the voting and dispositive power of the shares held by Gabriel. In
addition, as the sole shareholder and president of Ariel, Mr. Merkin may
be deemed to be the beneficial owner of the shares held by the Ariel Fund
and Ariel (687,100 shares).

(4) As reported to the Company in a Schedule 13G filed with the Commission in
February 1997, these shares are beneficially owned by one or more open or
closed-end investment companies or other

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managed accounts which are advised by direct and indirect investment
advisory subsidiaries ("Advisor Subsidiaries") of Franklin Resources, Inc.
("FRI"). Such advisory contracts grant to such Advisor Subsidiaries,
including Franklin Mutual Advisers, Inc., all voting and investment power
for the securities owned by such advisory clients. Charles B. Johnson and
Rupert H. Johnson, Jr. (the "Principal Shareholders") each own in excess
of 10% of the outstanding common stock of FRI and are the principal
shareholders of FRI. FRI, the Principal Shareholders and each of the
Advisor Subsidiaries disclaim any economic interest or beneficial
ownership of any of these shares.

(5) As reported to the Company in a Schedule 13D filed with the Commission in
August 1997.

(6) Includes 478,193 shares of Common Stock beneficially owned by Oscar
Gruss & Son Incorporated, as to which Mr. Anreder disclaims beneficial
ownership.

(7) Dr. Bloom has sole voting and dispositive power with respect to these
shares, which are held by certain family trusts, IRA accounts,
corporations and partnerships controlled by Dr. Bloom and in the name of
each of his three children, who have granted him a power of attorney with
respect to this investment. Includes shares of Common Stock issuable upon
exercise of stock options that are currently exercisable (6,000 shares)
and that are exercisable within 60 days (3,000 shares).

(8) Includes 77,724 shares of Common Stock issued to Mr. Hassett in his
capacity as Trustee of the Liquidating Estate under the Plan of
Reorganization. Under the Plan of Reorganization and the Restated
Certificate of Incorporation of the Company, the Trustee holds all
undistributed shares of Common Stock for the benefit of holders of allowed
claims and equity interests and has authority under any applicable law to
vote these shares for the benefit of such holders until such time as the
shares have been distributed under the Plan of Reorganization. Mr. Hassett
disclaims beneficial ownership of these shares.

(9) The shares held by Mr. Rosen are also included in the aggregate number of
shares set forth in Note 2. Includes 5,000 shares of Common Stock owned
by Mr. Rosen's spouse and 78,809 shares held by his minor children, as
to which Mr. Rosen shares voting and dispositive power. Includes
478,193 shares of Common Stock beneficially owned by Oscar Gruss & Son
Incorporated, as to which Mr. Rosen disclaims beneficial ownership.
Includes shares of Common Stock issuable upon exercise of stock options
that are currently exercisable (36,334 shares) and that are exercisable
within 60 days (3,000 shares). Does not include 66,666 shares of Common
Stock that are not exercisable within 60 days pursuant to stock options.

(10) Includes shares of Common Stock issuable upon exercise of stock options
that are currently exercisable (6,000 shares) and that are exercisable
within 60 days (3,000 shares).

(11) Includes 25,000 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable. Does not include 50,000 shares of
Common Stock that are not exercisable within 60 days pursuant to stock
options.

(12) Includes 6,667 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable. Does not include 3,333 shares of
Common Stock that are not exercisable within 60 days pursuant to stock
options.

(13) Includes 66,667 shares of Common Stock issuable upon exercise of stock
options that are currently exercisable. Does not include 33,333 shares of
Common Stock that are not exercisable within 60 days pursuant to stock
options.

(14) Includes 478,193 shares of Common Stock beneficially owned by Oscar Gruss
& Son Incorporated, as to which Messrs. Anreder and Rosen disclaim
beneficial ownership. Includes shares of Common Stock issuable upon
exercise of stock options that are currently exercisable (146,668 shares)
and that are exercisable within 60 days (9,000 shares). Does not include
153,332 shares of Common Stock that are not exercisable within 60 days
pursuant to stock options.

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PROPOSAL 1 - ELECTION OF DIRECTORS

NOMINEES FOR TERMS EXPIRING IN 1998

It is proposed to elect six (6) directors of the Company to serve until
the annual meeting of stockholders to be held in 1998 and until their successors
are elected and qualified. All nominees are currently directors of the Company.
At the Meeting, the persons named in the enclosed proxy will vote to elect the
directors listed below, unless the proxy is marked otherwise. Each of the
nominees has indicated his willingness to serve, if elected; however, if any
nominee should be unable to serve, the proxies may be voted for a substitute
nominee designated by the Board of Directors.

Director Principal Occupation and Business
Nominee Age Since Experience During the Past Five Years
------- ---- --------- -------------------------------------

Julius S. Anreder 63 1997 Mr. Anreder is a partner of Oscar Gruss & Son, the
controlling entity of Oscar Gruss & Son Incorporated, a
member firm of the New York Stock Exchange, Inc.
Mr. Anreder is an Executive Vice President and is the
Secretary of Oscar Gruss & Son Incorporated. He is
Chairman of the Board of New Energy Corporation of
Indiana, and is a Director of American Financial
Enterprises. Mr. Anreder has been with Oscar Gruss &
Son since 1962.

Dr. Leon H. Bloom 73 1994 Since 1980, Dr. Bloom has been President and Chairman
of the Board of L.H.B. Financial Management Co. in
Encino, CA, involved with financial management and
estate planning. He has also been, at various times,
Treasurer of Database Connections, Inc., founder,
President and Chairman of the Board of the California
Medical Investment & Management Association, a Los
Angeles County Commissioner, and a
residential/commercial real estate developer, syndicator
and property manager.

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Director Principal Occupation and Business
Nominee Age Since Experience During the Past Five Years
------- --- -------- -------------------------------------

James P. Hassett 65 1995 From 1989 to 1994, Mr. Hassett served as the court
appointed Trustee for the Company before it emerged
from bankruptcy, and since then he has served as
Trustee for the Liquidating Estate. From May through
July 1996, Mr. Hassett served as a consultant to the
Bankruptcy Court, the Debtor and Creditors Committee
of Nelco, Ltd. Mr. Hassett also served as the court
appointed adviser to the Creditors' Committee for ICS
Cybernetics, Inc., and subsequently as Person-in-Control
from 1988 through 1995. From April through
November 1992, he also served as a director and interim
President and Chief Executive Officer of Intellicall, Inc.

George H. Heilborn 62 1997 Since 1992, Mr. Heilborn has been President and
Chief Executive Officer of G.H. Heilborn and Co.,
Inc. of Hackensack, N.J., involved in investment
banking and financial advisory services for the
leasing and high-technology industries. From 1963
to 1992, Mr. Heilborn was founder, President and
Chief Executive Officer of Information Processing
Systems, Inc. of Hackensack, N.J., a company
specializing in the leasing of medium- and large-
scale computer systems to major corporations.

President and Chief Executive Officer since July 18,
Michael L. Rosen 41 1995 1997. Since 1988, Mr. Rosen has been affiliated with
Oscar Gruss & Son Incorporated, a registered broker-
dealer and in 1996 became Chief Executive Officer of
this firm and serves as a director. In addition to his
work with the Company and Oscar Gruss & Son, Mr.
Rosen operates a variety of real estate development
projects and multi-family rental properties through Park
Square Associates, Inc., of which he is the President and
a major stockholder.

Paul M. Solomon 54 1994 Since 1993, Mr. Solomon has been a principal of
Exponential Business Development Company, Syracuse,
N.Y. From 1991 to 1993 he was Senior Vice President
of GATX Logistics. From 1989 to 1991, he was
Executive Vice President of Itel Distribution Services,
Inc.

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BOARD AND COMMITTEE MEETINGS

During the last fiscal year, the Board of Directors held a total of
four meetings. All directors attended at least 75% of their scheduled Board
meetings and meetings held by Committees of which they were members. In fiscal
1997, the Board had an Audit Committee and a Compensation Committee.

The Audit Committee consists of Messrs. Solomon, Chairman, Bloom and
Rosen. It oversees actions taken by the Company's independent auditors,
recommends the engagement of auditors and reviews the Company's internal audits.
During the last fiscal year, the Audit Committee held two meetings.

The Compensation Committee, consisting of Dr. Bloom, Chairman, and
Messrs. Rosen and Solomon, made recommendations to the Board of Directors with
respect to the compensation of executives of the Company and administered the
Company's 1995 Stock Compensation Plan. During the last fiscal year, the
Compensation Committee held two meetings. At the July 1997 meeting of the Board
of Directors, the Board disbanded the Compensation Committee and determined that
the functions of the Compensation Committee would henceforth be carried out by
the full Board of Directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINATED DIRECTORS.

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PROPOSAL 2 - AMENDMENT TO COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK AND CERTAIN OTHER
AMENDMENTS

The stockholders are being asked to approve a proposed amendment to the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock from ten million (10,000,000) to
twenty million (20,000,000) shares and to delete certain provisions originally
required by the Plan of Reorganization that are no longer applicable. The text
of the proposed amendments is set forth in Appendix I to this Proxy Statement.
The stockholders were asked to vote on an amendment to increase the authorized
shares at last year's annual meeting. Although the proposal received the
affirmative vote of the holders of a majority of the outstanding shares of the
Company, the proposal did not pass because a two-thirds affirmative vote was
required.

As of September 18, 1997, the Company had a total of 10,000,000 shares
of Common Stock authorized of which 6,939,259 shares were issued and
outstanding with 92,408 additional shares being held by the Company as
treasury stock. The remaining 2,968,333 shares constitute shares that are
authorized but unissued. Of these unissued shares, 1,468,333 shares have been
reserved for the Company's "1995 Stock Compensation Plan." The Board of
Directors considers the proposed increase of authorized shares of Common Stock
to be desirable (i) to permit the Company flexibility in using its Common Stock
in any potential future acquisitions of property or securities of other
companies, (ii) to permit possible future dividends in shares of the Company's
Common Stock, and (iii) for other corporate purposes, including adoption of new
employee benefit plans or amendment of existing ones. The Company currently has
no plans to issue any additional shares (other than pursuant to the Company's
1995 Stock Compensation Plan).

The authorized and unissued shares of the Company's Common Stock will
be available for issuance by the Company in the discretion of the Board without
further stockholder action and without first offering such shares to the
stockholders. The Financial Statements in the 1997 Annual Report to Stockholders
are incorporated herein by reference.

In addition to the amendment to the Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock, the
proposed amendment to the Restated Certificate of Incorporation deletes certain
provisions originally required by the Plan of Reorganization that are no longer
applicable. The Plan of Reorganization and the Restated Certificate of
Incorporation provide that until 6,300,000 of the shares of Common Stock have
been distributed to creditors and prior equity holders pursuant to the Plan of
Reorganization, any matter requiring the approval of stockholders shall require
the approval of a vote of at least two-thirds (2/3) of the then-issued and
outstanding shares of Common Stock. As of July 28, 1997, all but 77,724 shares
issued pursuant to the Plan of Reorganization had been distributed to creditors
and prior equity holders, and accordingly the two-thirds majority requirement is
no longer in effect. As part of the proposed amendment, the Board of Directors
also approved the deletion of the provision in Article 3 that prohibits the
issuance of non-voting equity securities. Although this prohibition was required
under the terms of the Plan of Reorganization and the Bankruptcy Code, the Board
believes it is unnecessary at this time because the Restated Certificate of
Incorporation does not otherwise authorize non-voting securities.

If approved, this amendment will be effected by the prompt filing in
New York of a certificate of amendment to the Restated Certificate of
Incorporation.

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.

PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors is seeking ratification of its appointment of
Price Waterhouse LLP as its independent auditors for the fiscal year ending May
31, 1998, as recommended by the Audit Committee. If a majority of stockholders
voting at the Meeting should not approve the selection of Price Waterhouse LLP,
the selection of independent auditors may be reconsidered by the Board of
Directors.

Price Waterhouse LLP is currently the Company's independent auditors. A
representative of Price Waterhouse LLP is expected to attend the Meeting and be
available to respond to appropriate questions from stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICE WATERHOUSE LLP.

PROPOSAL 4 - STOCKHOLDER PROPOSAL

The Company has received the following proposal for stockholder action
from Mr. Neil Schulman, Conceptual Asset Management Co., 519 Cedar Lane,
Teaneck, New Jersey 07666, the beneficial owner of 500 shares of Common Stock:

Resolved, that the Shareholders of the company, believing that the
value of their investment can be best maximized through the sale of all
of the assets of the company and the distribution of all of the
proceeds to the shareholders, hereby request the Board of Directors to
proceed to adopt a plan of complete liquidation and begin orderly asset
sales and subsequent distributions of cash to shareholders as
expeditiously as possible.

In as much as management has entered into or completed a number of
transactions during the past year, including an ill advised joint
venture proposal into a totally unrelated business line, the proponent
believes that in view of the persistent discount to book value, very
limited history of earnings, and failure of management to bring forth
any credible operating plan together with their admission that the
current business may not be able to grow in the future, the best avenue
to pursue would be a complete liquidation of all assets and
distribution of proceeds to shareholders.

Response of the Board of Directors:

Your Board of Directors believes that the Company's current business
units, together with other opportunities for the use of the Company's resources,
present attractive opportunities for increasing earnings and enhancing
stockholder value.

During the current fiscal year, the Company made a strategic decision
to diversify into real estate financing as an extension of its historical
financing business. In conjunction with this effort, the Company has sold a
substantial portion of its portfolio of leased equipment to provide capital to
facilitate the expansion of the Company's strategic business units, which are
comprised of aircraft, leasing

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equipment trading businesses and real estate finance. The Company's aircraft
business has operated profitably since reorganization, and its leasing business
originated and sold equipment leases profitably during the most recent fiscal
year. The Company has entered into a joint investment agreement with an
experienced real estate investment management firm to provide high-yield,
short-term financing for commercial real estate transactions, which the Board
believes can yield a highly attractive return on a stockholder's investment. The
Company has sold its telecommunications business unit, which did not appear
capable of sustaining significant growth in sales or profitability. In addition,
the Company has a new president and chief executive officer who is also the
chief executive officer of the Company's largest stockholder, and has hired an
experienced chief operating officer/chief financial officer to manage and
further streamline the Company's operations.

Accordingly, in light of the Company's current business units and
prospects, the Board does not believe that liquidation of the Company is in the
best interests of stockholders. The only way to effectively utilize the
Company's current net operating loss carryforwards is to generate taxable income
from ongoing operations. The Board believes that growth of the Company's current
business units and, to the extent feasible, investment of its resources in other
businesses that present opportunities for productive use of capital and the
Company's finance experience, will yield greater value to stockholders than an
immediate sale of its assets.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.

EXECUTIVE COMPENSATION AND OTHER MATTERS

COMPENSATION OF DIRECTORS

Each outside director of the Company is paid an annual fee of $12,500,
plus $2,500 for services as chairman of each committee of the Board of which
that person is chairman. Each outside director also receives attendance fees of
$1,500 for each meeting of the Board and $1,000 for each meeting of any
committee (other than telephonic meetings) that he attends, plus travel and
other expenses. Each outside director also receives automatic grants of
nonqualified stock options to purchase 3,000 shares of common stock of the
Company on the date of each annual meeting. The exercise price per share is
generally the fair market value of the common stock on the date as of which the
director is appointed, elected, or re-elected to the Board. Options granted as
of each annual meeting become fully exercisable on the day before the next
occurring annual meeting and can be exercised until the earlier of five years
after the date granted or one year after the director ceases for any reason to
be a member of the Board. At May 31, 1997, 24,000 nonqualified stock options had
been granted to outside directors, with 15,000 of such options currently
exercisable.

- 11 -

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
FOR FISCAL YEARS ENDING MAY 31, 1995, 1996 AND 1997

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- -----------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR ($)(4) ($)(5) ($)(6) OPTIONS(#) TION (7)($)
- --------------------------- ---- ------- ------- ------------ ---------- ----------

Thomas J. Prinzing (1)..................................... 1997 225,000 17,500 --- 100,000 3,938
Former President and 1996 217,500 54,300 241,281 --- 1,500
Chief Executive Officer 1995 150,000 ---- 288,898 --- 1,082

Frank J. Corcoran (2)......................................
Former Senior Vice President, 1997 135,616 --- 75,000 50,000 4,293
Chief Financial Officer, 1996 150,000 --- 145,406 --- 755
Treasurer and Secretary 1995 79,615 12,000 12,923 --- ---

John R. Campbell (3)....................................... 1997 171,875 --- --- 75,000 4,604
Former Executive Vice President 1996 --- --- --- --- ---
1995 --- --- --- --- ---

James J. Mosher............................................ 1997 95,000 4,375 10,000 2,850
Vice President, Secretary 1996 95,000 --- --- --- 947
and Controller 1995 95,000 --- --- --- 945

(1) Mr. Prinzing resigned as President and Chief Executive Officer of the
Company on July 18, 1997. He remains the President of CIS Air.

(2) Mr. Corcoran resigned as Senior Vice President, Chief Financial
Officer, Treasurer and Secretary of the Company on April 11, 1997.

(3) Mr. Campbell became an Executive Vice President of the Company on
October 23, 1996 and resigned from the Company on July 17, 1997.

(4) Includes amounts earned but deferred at the election of the executive,
such as salary deferrals under the Company's 401(k) Plan established
under Section 401(k) of the Code.

(5) Includes the fair market value of 15,000 shares of Common Stock granted
to Mr. Prinzing as a bonus for fiscal 1996 performance and a tax
reimbursement allowance for such grant.

(6) Consists of the following: (a) the amounts shown for Mr. Prinzing
include commissions received as President of CIS Air during fiscal
year 1995 and 1996, and (b) the amounts shown for Mr. Corcoran include
severance payments made in fiscal year 1997 and payments for temporary
living expenses during fiscal year 1995 and 1996.

(7) These amounts represent the Company's payment of matching and
discretionary contributions to the Company's 401(k) Retirement Plan.

- 12 -

OPTION GRANTS OF COMMON STOCK TO EXECUTIVES IN LAST FISCAL YEAR

The following table provides information about grants of options during
the fiscal year ended May 31, 1997, to the executive officers named in the
Summary Compensation Table above, to purchase shares of Common Stock.

STOCK OPTION GRANTS DURING FISCAL YEAR ENDED MAY
31, 1997

NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANT
OPTIONS GRANTED TO EXERCISE DATE
GRANTED(1) EMPLOYEES PRICE(3) EXPIRATION
Name (#) IN 1997(2) ($/SHARE) DATE (4) VALUE($)(5)
------ --------- ------------ --------- ---------- ----------

Thomas J. Prinzing 33,334 10.8 1.97 7/11/99 26,667
33,333 10.8 1.97 5/31/00 26,666
33,333 10.8 1.97 5/31/01 26,666

Frank J. Corcoran (6) 16,667 5.4 1.97 7/11/99 13,334
16,667 5.4 1.97 5/31/00 13,334
16,666 5.4 1.97 5/31/01 13,333

John R. Campbell (7) 25,000 8.1 1.97 7/11/99 20,000
25,000 8.1 1.97 5/31/00 20,000
25,000 8.1 1.97 5/31/01 20,000

James J. Mosher 3,334 1.1 1.97 7/11/99 2,667
3,333 1.1 1.97 5/31/00 2,666
3,333 1.1 1.97 5/31/01 2,666

(1) The numbers in this column represent options to purchase Common Stock.

(2) Percentages indicated are based on a total of 310,000 options granted
to 10 employees during fiscal year 1997.

(3) The exercise price per share is 100% of the fair market value of a
share of Common Stock on the date of grant. The exercise price may be
paid in cash.

(4) All of these options were granted on July 11, 1996 at the exercise
price of $1.97 per share. One-third of the options were exercisable at
the time of the grant ("1996 Options"), one-third of the options became
exercisable on May 31, 1997 ("1997 Options") and the remaining
one-third of the options become exercisable on May 31, 1998 ("1998
Options"). The 1996 Options expire on July 11, 1999, the 1997 Options
expire on May 31, 2000, and the 1998 Options expire on May 31, 2001.
See Notes 6 and 7 below for earlier expiration dates due to
resignations by Messrs. Corcoran and Campbell.

(5) The fair value of each stock option grant has been estimated on the
date of each grant using the Black-Scholes option pricing model with
the following weighted average assumptions: (i) risk-free interest rate
of 6.6%, (ii) expected life of 46 months, (iii) expected volatility of
42%, and (iv) no expected dividend yield.

(6) Mr. Corcoran resigned as Senior Vice President, Chief Financial
Officer, Treasurer and Secretary of the Company on April 11, 1997.
Options for 33,333 shares have expired pursuant to the terms of his
stock option agreement.

(7) Mr. Campbell resigned as Executive Vice President of the Company on
July 17, 1997. Options for 25,000 shares expired on that date pursuant
to the terms of his stock option agreement. Options for 50,000
shares are exercisable until October 17, 1997.

- 13 -

AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE

The following table provides information on option exercises during the fiscal
year ended May 31, 1997 by the named executive officers and the value of each
such executive officer's unexercised options to acquire Common Stock at May 31,
1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

Number of Securities Value of Unexercised,
Underlying Unexercised In-the-Money
Options at Options Held at
Shares Fiscal Year-End(#) Fiscal Year-End($)(1)
Acquired Value -------------------- ----------------------
On Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ----- ----- ----------- ------------- ----------- -------------

Thomas J. Prinzing --- --- 66,667 33,333 27,333 13,667
Frank J. Corcoran 16,667 4,667 --- --- --- ---
John R. Campbell --- --- 50,000 25,000 20,500 10,250
James J. Mosher --- --- 6,667 3,333 2,733 1,367

(1) Based on the NASDAQ closing price of Common Stock on May 30, 1997 of
$2.38.

EMPLOYMENT AND SEVERANCE AGREEMENTS

THOMAS J. PRINZING. On October 23, 1996, Mr. Prinzing entered into a
letter agreement with the Company concerning salary and severance benefits while
serving as president and chief executive officer. The agreement provided for Mr.
Prinzing to receive a base salary of $225,000 per year.

On May 21, 1997, Mr. Prinzing entered into a letter agreement with the
Company concerning salary, incentive compensation and severance benefits in
connection with resuming his duties as President of the CIS Air Group. Effective
June 1, 1997, the agreement provides for a two-year term and a base salary of
$225,000 per year. Mr. Prinzing is also entitled to receive additional
compensation tied to 0.33 times the difference between the Air Group net
earnings and a minimum return on equity, minus his base salary ("Compensation
Amount"). In addition, the Company agreed to pay severance compensation to Mr.
Prinzing if his employment was terminated by the Company for reasons other than
cause, or, at his option, upon certain changes in his salary, responsibilities
or incentive compensation (a "Severance Event"). If a Severance Event occurs,
Mr. Prinzing is entitled to receive the following until the earlier of 18 months
from the date of the Severance Event or the commencement of full time employment
by another employer: (i) a monthly severance payment equal to the greater of (A)
$18,750, and (B) one-eighteenth of the difference between (1) the Compensation
Amount calculated from the beginning of the fiscal year in which the Severance
Event occurs through the end of the calendar month preceding the Severance
Event, and (2) the total amount of compensation paid to Mr. Prinzing by the
Company from the beginning of the fiscal year in which the Severance Event
occurs through the Severance Event; and (ii) certain continued benefits (life
insurance, medical, health and accident, and disability arrangements)
("Continued Benefits") for up to 18 months. Mr. Prinzing is also entitled to the
following alternate severance benefits if the Company terminates his employment
after November 30, 1997 and prior to May 31, 1999, if the aggregate Air Group
net earnings for the three most-recently completed fiscal quarters does not, on
an annualized basis, yield a return on equity invested by the Company in the CIS
Air Group of at least fifteen percent (15%). Upon such a termination, Mr.
Prinzing is entitled to receive the following until the earlier of 6 months from
the date of the alternate severance

- 14 -

event or the commencement of full time employment by another employer: (i) a
monthly severance payment equal to $18,750; and (ii) Continued Benefits for up
to 6 months.

JONAH M. MEER. On June 9, 1997, Mr. Meer entered into a letter
agreement with the Company concerning salary, benefits, stock options and
severance benefits while serving as chief financial officer and chief operating
officer. Effective June 30, 1997, the agreement provides for a two-year term and
a base salary of $200,000 per year. In addition, the Company agreed to pay
severance compensation to Mr. Meer upon a Severance Event. If a Severance Event
occurs, Mr. Meer is entitled to receive the following until the earlier of three
months from the date of the Severance Event or the commencement of full time
employment by another employer: (i) a monthly severance payment equal to
one-twelfth of his base salary as in effect on the date of the Severance Event;
and (ii) Continued Benefits for up to three months. In addition, if a "change in
control" occurs prior to June 30, 1998, and a Severance Event then occurs, Mr.
Meer is entitled to receive the following until the earlier of the date that is
one year after the date of the "change in control" or the commencement of full
time employment by another employer: (i) a monthly severance payment equal to up
to 6 months base salary, payable in 6 equal monthly installments; and (ii)
Continued Benefits for up to 6 months.

SEVERANCE AGREEMENTS. On October 23, 1996, the Company entered into
severance compensation agreements with John R. Campbell and James J. Mosher, in
which the Company agreed to pay severance compensation to such executive
officers upon the occurrence of a Severance Event. If a Severance Event occurs,
each of these executive officers is entitled to receive the following benefits:
(i) a severance payment equal to the number of months (indicated below) of base
salary as in effect on the date of the Severance Event, payable, at the
executive officer's option in a lump sum or in equal monthly installments; and
(ii) Continued Benefits until the earlier of the number of months indicated
below from the date of the Severance Event or the commencement of full time
employment by another employer.

Executive Officer Months of Benefits
----------------- ------------------

John R. Campbell 12 months
James J. Mosher 6 months

On July 17, 1997, Mr. Campbell resigned as Executive Vice President of
the Company. Mr. Campbell has asserted that his resignation was for "good
reason" as defined in his severance compensation agreement and that he is
entitled to the severance benefits described above.

EMPLOYEE BENEFITS PROGRAMS

The Company has a 401(k) plan that matches employee pretax
contributions on a semi-monthly basis at the rate of 50% of the first 2% of
eligible compensation. In addition, the Company may make an annual discretionary
contribution, based on participants' eligible compensation, once a year, for all
employees with at least one year of service and who are on the payroll as of
December 31 of a given year. The vesting schedule for employer contributions is
as follows: 10% after one (1) year; 20% after two (2) years; 30% after three (3)
years; 40% after four (4) years; and 100% after five (5) years. Employees may
elect to defer up to 15% of their compensation.

- 15 -

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

The Compensation Committee consisted of Dr. Bloom, Chairman, and
Messrs. Rosen and Solomon. None of the members were officers or employees of the
Company during the last completed fiscal year, but Mr. Rosen serves as the
president and chief executive officer of Oscar Gruss & Son Incorporated, the
Company's largest stockholder, and is a director of that firm. At the July 1997
meeting of the Board of Directors, the Board disbanded the Compensation
Committee and determined that the functions of the Compensation Committee would
henceforth be carried out by the full Board of Directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Committee")
consists entirely of non-employee directors. The Committee has the authority to
review and make recommendations to the Board concerning compensation paid or
awarded to the Company's executive officers and to make grants of stock or stock
options pursuant to the Company's 1995 Stock Compensation Plan (the "1995
Plan").

The base compensation of Thomas J. Prinzing, President and Chief
Executive Officer during fiscal 1997, was established by an agreement dated
October 23, 1996. That agreement provided for a base salary of $225,000, the
same salary Mr. Prinzing had received since being appointed acting President and
Chief Executive Officer in 1995. The Compensation Committee approved salaries
for other executive officers based on Mr. Prinzing's recommendations.

The Compensation Committee also approved a bonus pool for senior
executives. The pool was equal to a percentage of the amount by which the
Company's reported net income for fiscal 1997 exceeded net income projected by
the fiscal 1997 business plan approved by the Board of Directors. The pool was
to be allocated 25% to the Chief Executive Officer and 75% to senior executives
(including the Chief Executive Officer) pursuant to the recommendations of the
Chief Executive Officer. Based on the Company's results for fiscal 1997, $35,000
was allocated to this bonus pool.

The Committee during the fiscal year also considered the desirability
of tying a portion of management's compensation to improvements in the Company's
stock value. In July 1996, pursuant to the 1995 Plan, the Committee awarded
options to purchase 100,000 shares of Common Stock to Mr. Prinzing and options
to purchase 210,000 shares to nine other officers. The Committee determined the
recipients of the options and the number of shares to be awarded to officers
other than the Chief Executive Officer based on the recommendations of the Chief
Executive Officer. One-third of the options were exercisable immediately,
one-third on May 31, 1997 and one-third on May 31, 1998. All options will be
exercisable for three years from the date they become exercisable. The Committee
decided it was appropriate to make a portion of the options immediately
exercisable in light of the passage of time between the approval of the 1995
Plan and the Committee's action in awarding the options.

Finally, the Committee also recommended to the Board of Directors that
the Company enter into severance agreements with four key senior executives,
including the Chief Executive Officer, Executive Vice President, Chief Financial
Officer, and Controller. The Committee concluded that such arrangements were
necessary to retain these executives.

- 16 -

The Committee has reviewed the application of the Internal Revenue
Code's $1 million annual limit on deductible compensation for certain
executives. The Committee does not anticipate that any deductions will be lost
as a result of this limitation in the foreseeable future.

Compensation Committee

Dr. Leon H. Bloom, Chairman
Michael L. Rosen
Paul M. Solomon

PERFORMANCE GRAPH

The following line graph compares the percentage change in the total
cumulative stockholder return on the Company's Common Stock since March 29, 1995
with the cumulative total return on the NASDAQ Market Index and the capital
stocks of a peer group (the "Peer Group") of the following companies: AT&T
Capital Corporation, Capital Associates, Inc., Comdisco, Inc., LDI Corporation,
Leasing Solutions, Inc., and PLM International, Inc. Two of these companies,
AT&T Capital Corporation and LDI Corporation, are not included in the Peer Group
during the fiscal year ended May 31, 1997 as they were acquired by other
companies during this period and information is no longer available for them.
Although the Company's Common Stock did not begin trading on NASDAQ until May
16, 1995, the Company is required by the Securities and Exchange Commission to
include trading information from The Pink Sheets(R) and the OTC Bulletin Board
since January 9, 1995, the day the Company's registration statement on Form 10
became effective. The first point on the graph is the initial trading price on
March 29, 1995, the date of the first reported trade, as obtained from The Pink
Sheets(R). The closing prices for March and April 1995 were obtained from the
National Quotation Bureau, Inc.

- 17 -

[THE GRAPH OMITTED CONTAINS THE FOLLOWING INFORMATION:]

3-29-95 5-31-95 8-31-95 11-30-95 2-29-96 5-31-96 8-30-96 11-29-96 2-28-97 5-30-97
------- ------- -------- --------- --------- ---------- -------- -------- ------- -------

The Company 100 189.14 142.86 121.71 125.14 107.43 103.43 107.43 142.86 136.00
NASDAQ Market Index 100 104.10 118.98 119.65 124.19 139.31 128.11 144.72 146.25 156.72
Peer Group 100 101.91 118.79 141.69 140.92 155.75 151.86 189.21 178.95 207.36

Notes: 1. Assumes $100 invested on March 29, 1995.
2. The indices are calculated on a monthly basis and assume
dividends reinvested.

THE FOREGOING GRAPH SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE
INTO ANY FILING OF THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

- 18 -

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is a party to certain agreements with James P. Hassett, as
Trustee for the Liquidating Estate. These agreements were all entered into prior
to Mr. Hassett's appointment to the Board of Directors.

MANAGEMENT SERVICES AGREEMENT. On December 21, 1994, the Trustee, on
behalf of the Liquidating Estate, entered into an agreement (the "Management and
Services Agreement") with the Company, pursuant to which the Company, directly
and through its affiliates, provides certain administrative services to the
Liquidating Estate. Under the Management and Services Agreement the Company
provides: (i) billing and collection (through a "lockbox" arrangement) of
accounts receivable to the extent requested by the Trustee; (ii) to the extent
requested by the Trustee, record keeping and accounting services for the
Liquidating Estate and cooperates with the accounting firm of Price Waterhouse
LLP in its preparation of tax returns for the Liquidating Estate; (iii)
assistance to the Trustee in the analysis, negotiation, and resolution of
unresolved claims, and (iv) an office for the Trustee and secretarial services
to assist the Trustee in the discharge of the Trustee's duties.

As compensation for the Company's performance under the Management and
Services Agreement, the Liquidating Estate pays to the Company a fee, comprised
of: (i) the allocable share of the Company's direct costs for employees'
salaries, employees' fringe benefits, office space and other direct charges
required for its performance under the Management and Services Agreement; plus
(ii) 10% of the foregoing aggregate payments; plus (iii) reasonable
out-of-pocket disbursements of the Company incurred directly in the performance
of its duties under the Management Services Agreement. The Company provides the
foregoing services under the Trustee's supervision, direction and guidance. The
amount received by the Company for the period from June 1, 1996 through May 31,
1997 was $539,000.

The Trustee in his sole discretion has the authority at any time, with
or without cause, to terminate the Management and Services Agreement as to
future services by the Company and/or to enter into other agreements with other
entities that may perform the same or similar functions for the Liquidating
Estate. In the event of a termination by the Trustee, the Company will be
entitled only to payments accrued up to the date of termination. Absent such
termination of the Management and Services Agreement, the Company will be bound
by the Management and Services Agreement until the entry of the final decree
closing the Chapter 11 cases in which the Company was involved.

- 19 -

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company's executive officers, directors, and ten percent beneficial
owners of Common Stock are required to file reports of ownership and change of
ownership with the Securities and Exchange Commission under the Exchange Act.
Mr. Hassett, as Trustee of the Liquidating Estate, filed a Form 4 (Statement of
Changes in Beneficial Ownership) late to reflect a distribution made by the
Liquidating Estate in October 1996. Mr. Hassett disclaims beneficial ownership
of any of the shares held by the Liquidating Estate. Mr. Solomon filed a Form 4
late, and did not file a Form 5 (Annual Statement of Changes in Beneficial
Ownership), to reflect the purchase of 20,000 shares in January 1997. Mr.
Prinzing filed a Form 4 late to report the receipt of two shares distributed by
the Liquidating Estate in August 1996 for the benefit of his daughter. Mr. Rosen
did not file Forms 4 or Form 5 to report his entitlement to receive 286 shares
in September 1996 and 2,658 shares in February 1997. Emanuel Gruss did not
timely file a Form 3 to report the beneficial ownership of shares
disclosed in Amendment No. 4 to Schedule 13D filed with the Commission by Mr.
Gruss and others in September 1996 and did not file a Form 4 or 5 to reflect
the acquisition of additional shares disclosed in Amendment No. 6 to Schedule
13D filed with the Commission by Mr. Gruss and others in March 1997.

- 20 -

OTHER MATTERS

The Board of Directors knows of no other business that may come before
the Meeting. If any other business is properly presented at the Meeting, it is
the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters.

Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the securities laws that might incorporate
future filings, the report of the Compensation Committee and the performance
graph included in this Proxy Statement shall not be incorporated by reference
into any such filing.

THE COMPANY IS PROVIDING A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED MAY 31, 1997, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES, TO EACH OF THE COMPANY'S STOCKHOLDERS OF RECORD ON SEPTEMBER 18,
1997. IN THE EVENT THAT EXHIBITS TO SUCH FORM 10-K ARE REQUESTED BY ANY HOLDERS
UPON RECEIPT OF A WRITTEN REQUEST MAILED TO THE COMPANY'S OFFICES, ONE NORTHERN
CONCOURSE, P.O. BOX 4785, SYRACUSE, NEW YORK 13221-4785, ATTENTION: JONAH M.
MEER, A FEE WILL BE CHARGED FOR REPRODUCTION OF SUCH EXHIBITS. REQUESTS FROM
BENEFICIAL OWNERS OF COMMON STOCK MUST SET FORTH A GOOD FAITH REPRESENTATION AS
TO SUCH OWNERSHIP.

SOLICITATION OF PROXIES

All costs of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, the Company's directors, officers, and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians, and fiduciaries will be
requested to forward proxy soliciting material to the beneficial owners of
Common Stock held in their names, and the Company will reimburse them for their
out-of-pocket expenses incurred in connection with the distribution of proxy
materials.

PROPOSALS FOR THE 1998 ANNUAL MEETING

Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Syracuse, New York not later than June 5, 1998 for inclusion in the proxy
statement for that meeting.

By Order of the Board of Directors,

JAMES J. MOSHER, Secretary

October 3, 1997

THE BOARD OF DIRECTORS HOPES THAT YOU WILL ATTEND THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE PROMPTLY. IF YOU ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES.

- 21 -

ANNEX I

CERTIFICATE OF AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
CONTINENTAL INFORMATION SYSTEMS CORPORATION

Under Section 805 of the Business Corporation Law

It is hereby certified that:

FIRST: The name of the Corporation is CONTINENTAL INFORMATION SYSTEMS
CORPORATION.

SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State on June 11, 1968 and a Restated Certificate of
Incorporation was filed on December 21, 1994 (as amended, the "Certificate").

THIRD: The amendment of the Certificate effected by this certificate of
amendment is to increase the aggregate number of shares which the Corporation
shall have the authority to issue by authorizing 10,000,000 additional shares,
$.01 par value per share, of the same class as the presently authorized shares,
and to delete certain provisions which are no longer required to carry out a
plan of reorganization under chapter 11 of the Bankruptcy Code.

FOURTH: To accomplish the foregoing amendment, Article 3 is deleted in
its entirety and replaced with the following:

The aggregate number of shares which the Corporation shall have
authority to issue is Twenty Million (20,000,000), $.01 par value per
share, all of which are to be designated as Common Stock.

FIFTH: The foregoing amendment of the Certificate was authorized by the
vote of the Board of Directors at a meeting of the Board of Directors of the
Corporation, followed by the vote of the holders of at least a majority of the
issued and outstanding shares of the Corporation entitled to vote on the
amendment of the Certificate.

- 22 -

IN WITNESS WHEREOF, the undersigned have subscribed this document on
this ____ day of October, 1997 and do hereby affirm, under penalties of perjury,
that the statements contained herein have been examined by the undersigned and
are true and correct.

---------------------------------------
Michael L. Rosen
President and Chief Executive Officer

---------------------------------------
Jonah M. Meer
Senior Vice President, Chief Financial Officer
and Chief Operating Officer

- 23 -

26
PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

CONTINENTAL INFORMATION SYSTEMS CORPORATION

The undersigned hereby appoints Michael L. Rosen and Jonah M. Meer as attorneys
and proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of common stock of Continental Information
Systems Corporation standing in the name of the undersigned with all powers
which the undersigned would possess if present at the Annual Meeting of
Stockholders of the Company to be held October 28, 1997 and at any and all
continuations and adjournments thereof.

(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3, AND AGAINST PROPOSAL 4.

1. ELECTION OF DIRECTORS NOMINEES: Julius S. Anreder, Dr. Leon H. Bloom, James P. Hassett, George H. Heilborn, Michael L.
Rosen, and Paul M. Solomon

FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee, write each such
listed to the right AUTHORITY nominee's name in the space below).
(except as marked to vote for all
to the contrary) nominees listed ----------------------------------------------------------------------------------------
to the right
[ ] [ ]

2. Approval of amendments to Restated 3. Ratification of Price Waterhouse as the 4. Stockholder proposal to request that
Certificate of Incorporation, including independent auditors of the corporation. the Board proceed to adopt a plan
increase of the number of authorized of complete liquidation of the
common shares, $.01 par value per share, Company.
from ten million (10,000,000) to twenty
million (20,000,000)

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]

5. In their discretion, the Proxies are authorized to vote upon Please sign exactly as name appears hereon. When shares are held
such other business as may properly come before the meeting. by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, please give full corporate name
and have a duly authorized officer sign, stating title. If a
partnership, please sign in partnership name by authorized
person.

Dated: , 1997
------------------------------------------

---------------------------------------------------
(Signature)

---------------------------------------------------
(Signature if held jointly)

PLEASE VOTE, SIGN, DATE, AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.