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 Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
eAUTOCLAIMS.COM, INC.
(Name of Registrant as Specified In Its Charter)
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(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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(5) Total fee paid:
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[ ] Fee paid previously by written 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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(4) Date Filed:
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eAUTOCLAIMS.COM, INC.
110 E. Douglas Road
Oldsmar, Florida 34677
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NOTICE OF CONSENT SOLICITATION
November 13, 2003
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To the Stockholders of eAutoclaims.com, Inc.:
You are being asked to consider and provide written consent to the
following proposals:
1. To elect four directors to serve until their successors are elected
and qualified; and
2. To approve the appointment of the firm of Goldstein Golub Kessler
LLP as the Company's independent auditors for the fiscal year 2004.
Attached is a consent statement that more fully describes the
proposals. Please give this information your careful attention.
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE PROPOSALS AND
RECOMMENDS THAT STOCKHOLDERS CONSENT TO THEM.
Please act promptly in marking, signing, and dating the enclosed consent card
solicited by your board of directors, and delivering it by facsimile to the
Company (813-749-1040) or returning it in the return envelope provided, which
requires no postage if mailed in the United States.
Only stockholders of record at the close of business on the record date
set by the Board of Directors, October 31, 2003, are entitled to vote on the
proposals.
By order of the Board of Directors
Susan L. Abels
November 13, 2003 Secretary
2
eAUTOCLAIMS.COM, INC.
110 East Douglas Road
Oldsmar, Florida 34677
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CONSENT STATEMENT
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VOTING AND OTHER MATTERS
General
This Consent Statement and related solicitation materials are being
furnished to you in connection with the solicitation of executed consents of the
stockholders of eAutoclaims.com, Inc. by the board of directors. This
information is being released to stockholders on or about November 13, 2003.
We are soliciting consents to act upon the following proposals: (i) to
elect four directors to serve until their successors are elected and qualified,
and (ii) the approval of the appointment of the firm of Goldstein Golub Kessler
LLP as independent auditors for the fiscal years 2003 and 2004.
THE BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE PROPOSALS AND RECOMMENDS THAT
THE STOCKHOLDERS CONSENT TO THEM.
Each member of our Board of Directors who owns shares of our Common Stock
and certain of our largest stockholders have indicated that they will consent to
each of the proposals. These shares total approximately 52% of our outstanding
voting stock as of October 31, 2003, the record date for this consent
solicitation.
An explanation of the consent solicitation process, including the date on
which consents expire and the revocability of consents is provided in the
section of this Consent Statement entitled "Voting Rights and Solicitation."
A form of consent is enclosed. Stockholders are requested to mark, sign,
and date the enclosed form of consent and return it as promptly as possible by
facsimile (813-749-1040) or in the envelope provided with these materials, which
requires no postage if mailed in the United States or Canada.
Voting Securities and Voting Rights
Stockholders of record as of the close of business on October 31, 2003, are
entitled to vote on the proposals. As of the record date, there were 23,542,200
shares of the Company's common stock, par value $.0001 per share (the "Common
Stock"), issued and outstanding. Each share is entitled to one vote on all
issues requiring a stockholder vote. Directors shall be elected by a plurality
of the votes cast.
The Consent Procedures
The matters being considered by the stockholders are being submitted for
action by written consent, rather than by votes cast at a meeting. Section
78.320 of the Revised Statutes of the State of Nevada states that, unless
otherwise provided in the articles of incorporation or the bylaws, any action
required or permitted to be taken at a meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, if written consent
thereto is signed by stockholders holding at least a majority of the voting
power, except that if a different proportion of voting power is required for
such an action at a meeting, then that proportion of written consents is
required.
Our Board set October 31, 2003 as the record date for this Consent
Solicitation. Neither our articles of incorporation nor our bylaws contain any
provision or language in any way limiting the right of stockholders to take
action by written consent.
3
Why is eAuto Soliciting Consents as Opposed to Holding an Annual Meeting?
The Board of Directors believes it would not be in the best interest of
eAuto and its stockholders to incur the cost of holding an annual meeting in
connection with these actions. Based on the foregoing, our Board of Directors
has determined not to call an annual meeting of stockholders, and none will be
held this year.
What Vote is Required?
In the case of this consent solicitation, written, unrevoked consents of
the holders of a majority of the shares of the Common Stock outstanding and
entitled to vote on October 31, 2003, the record date for determining
stockholders entitled to express consent to the actions proposed in this
solicitation, are required for approval of each proposal.
These consents must be delivered to us as described above to effect the
proposals for which stockholder consents are being solicited.
What If I Sign a Consent But Do Not Indicate My Vote?
If a shareholder specifies how the consent card is to be voted with respect
to the proposals, the consent card will be voted in accordance with that
specification. If a shareholder fails to so specify, the consent card will be
deemed a consent to each of the proposals.
How Are Abstentions and Broker Non-Votes Treated?
Consent cards that reflect abstentions, withheld votes, and broker
non-votes will be treated as voted for purposes of determining the affirmative
vote necessary to approve the proposals. As such, abstentions, withheld votes,
and broker non-votes have the effect of votes against the proposals.
What If I Do Not Consent But the Proposal is Still Approved?
Stockholders who do not consent to the approval of the proposals by
execution of the consent card will nonetheless be bound by the proposals if
sufficient written consents are received by us to approve the proposals as set
forth above. No dissenters' or similar rights apply to stockholders who do not
approve the proposals.
How Will Consents Be Solicited?
We will bear the entire cost of solicitation, including the preparation,
assembly, printing, and mailing of this Consent Statement, the consent, and any
additional solicitation material furnished to stockholders. Copies of
solicitation material will be furnished to fiduciaries and custodians holding
shares in their names that are beneficially owned by others. The original
solicitation of consents by mail may be supplemented by a solicitation by
telephone, telegram, or other means by our directors, officers, or employees. No
additional compensation will be paid to these individuals for any of those
services. Except as described above, we do not presently intend to solicit
consents other than by mail.
Can I Revoke My Consent?
A consent executed by a stockholder may be revoked at any time up until
signed unrevoked consents by the holders of a majority of the votes of our
Common Stock outstanding on the consent record date have been delivered to us in
accordance with the Nevada Revised Statutes. To revoke a consent, a stockholder
must deliver a written, signed and dated revocation prior to that time. A
revocation may be in any written form validly signed by the record holder as
long as it clearly states that the consent previously given is no longer
effective. The revocation must be delivered to our principal executive offices
or any other address provided by us for that purpose.
4
When Do Consents Expire?
All consents, regardless of when dated, will expire unless valid, unrevoked
consents constituting the requisite number of outstanding shares of our Common
Stock are delivered to us on or before 60 days of the earliest dated consent
delivered to us.
Delivery of Consent Statement and Annual Report to Households
The Securities and Exchange Commission has implemented a rule permitting
companies and brokers, banks or other intermediaries to deliver a single copy of
an annual report and Consent Statement to households at which two or more
beneficial owners reside. This method of delivery, which eliminates duplicate
mailings, is referred to as "householding." Beneficial owners sharing an address
who have been previously notified by their broker, bank or other intermediary
and have consented to householding, either affirmatively or implicitly by not
objecting to householding, will receive only one copy of the Company's Annual
Report and this Consent Statement.
If you hold your shares in your own name as a holder of record,
householding will not apply to your shares.
Beneficial owners who reside at a shared address, at which a single copy of
the Company's Annual Report and this Consent Statement is delivered may obtain a
separate Annual Report and/or Consent Statement without charge by sending a
written request to: eAUTOCLAIMS.COM, INC., 110 East Douglas Road, Oldsmar,
Florida 34677, Attention: Investor Relations, or by calling the Company at (813)
749-1020. The Company will promptly deliver an Annual Report and Consent
Statement upon receipt of such request.
Not all brokers, banks or other intermediaries may offer the opportunity to
permit beneficial owners to participate in householding. If you want to
participate in householding and eliminate duplicate mailings in the future, you
must contact your broker, bank or other intermediary directly. Alternately, if
you want to revoke your consent to householding and receive separate annual
reports and Consent statements for each beneficial owner sharing your address,
you must contact your broker, bank or other intermediary to revoke your consent.
Annual Report and Other Matters
Our Form 10-KSB for the fiscal year ended July 31, 2003, which was mailed
to stockholders with or preceding this Consent Statement, contains financial and
other information about the Company, but is not incorporated into this Consent
Statement and is not to be considered a part of this Consent Statement materials
or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended. The information contained in the
"Report of the Audit Committee" below shall not be deemed "filed" with the
Securities and Exchange Commission or subject to Regulations 14A or 14C or to
the liabilities of Section 18 of the Exchange Act.
WE WILL PROVIDE UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH STOCKHOLDER OF
RECORD AS OF THE RECORD DATE, A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED JULY 31, 2003 AS FILED WITH THE SEC. ANY EXHIBITS LISTED IN
THE REPORTS ALSO WILL BE FURNISHED UPON REQUEST AT THE ACTUAL EXPENSE INCURRED
BY US IN FURNISHING SUCH EXHIBITS. ANY SUCH REQUESTS SHOULD BE DIRECTED TO OUR
SECRETARY AT OUR EXECUTIVE OFFICES SET FORTH IN THIS CONSENT STATEMENT.
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of four directors is to be elected at the meeting. All of the
nominees currently are directors of our company. Each of the nominees has
5
indicated his willingness to serve as a member of the Board of Directors if
elected; however, if any nominee becomes unavailable for election to the Board
of Directors for any reason not presently known or contemplated, a substitute
may be nominated and elected.
Nominees for Director
The following table sets forth certain information regarding our
directors and nominees for directors.
Name Age Position
---- --- --------
Jeffrey D. Dickson 60 Chairman of the Board
Eric Seidel 40 President, Chief Executive Officer, Director
Christopher Korge 49 Director
Nicholas D. Trbovich 43 Director
Jeffrey D. Dickson:
Mr. Dickson has been a director and the chairman of our board of directors
since June 2000. From May 1997 through November 1999, Mr. Dickson was the
president and chief executive officer of First American AMO. From February 1995
through May 1997, Mr. Dickson was the president and chief operating officer of
Salex Corporation. Mr. Dickson has served as an executive vice president of the
American Bankers Insurance Group and president of Interloc Corp. Mr. Dickson was
awarded a Masters of Business Administration degree from Harvard University in
1979.
Eric Seidel:
Mr. Seidel has been a director and our chief executive officer and
president since June 1, 2000. From January 1, 2000 through May 31, 2000, Mr.
Seidel was the chief executive officer and president of eAutoclaims, Inc., which
was the privately held Delaware corporation, which merged with us. From
September 1997 through December 1999, Mr. Seidel was employed as a senior
executive officer of First American AMO. From August 1995 through June, 1997,
Mr. Seidel was a senior executive at Salex Corporation, where, among other
responsibilities, he was responsible for insurance company services. Mr. Seidel
is a past president of the U.S. Junior Chamber of Commerce.
Christopher Korge
Mr. Korge has been a director since June 2000. He is the managing partner
at the law firm of Korge & Korge, P.A. in Miami, Florida. He received his J.D.
degree from Temple School of Law in 1981 and B.S. in Business Administration,
from the University of Florida, in 1977. Mr. Korge's firm represents numerous
Fortune 500 corporations. Mr. Korge serves on numerous boards of directors and
is a major shareholder in various companies including two housing development
companies, and one E commerce company, Intune Group. He is Chairman of Intune.
Mr. Korge is Finance Vice Chairman of the Democratic National Committee. He is
past Co-Chair of the Democratic National Committee Business Council.
Nicholas D. Trbovich, Jr.
Mr. Trbovich, Jr., has been a director of eAutoclaims since June 2000. He
is a director and vice president of AMEX-listed Servotronics, Inc., President of
TSV ELMA, Inc. and TSV Franklinville, Inc. (a Servotronics development
subsidiary), Chairman and CEO of Queen Cutlery and CEO and President of Ontario
Knife Company, (the U.S. Military's largest supplier of edged tools and survival
knives).
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DIRECTORS AND EXECUTIVE OFFICERS
The name, ages and respective positions of the Executive Officers and
Directors of the Company are as follows:
Name Age Position
Eric Seidel 40 Chief Executive Officer,
President and Director
Scott Moore 42 Chief Financial Officer
Stacey Adams 31 Sr. VP of Operations
Dave Mattingly 45 Chief Information Officer
Reed Mattingly 34 Executive Vice President
Jeffrey D. Dickson 60 Chairman of the Board of Directors
Christopher Korge 49 Director
Nicholas D. Trbovich, Jr. 43 Director
Because we are a small company, we are currently dependent on the efforts
of a limited number of management personnel. We believe that, given the
development stage of our business and the large amount of responsibility being
placed on each member of our management team, the loss of the services of any
member of this team at the present time would harm our business. Each member of
our management team supervises the operation and growth of one or more integral
parts of our business.
The Chief Executive Officer/President is elected and can be removed by the
Board of Directors. Directors are elected at the annual meeting of shareholders
to serve for their term and until their respective successors are duly elected
and qualify, or until their earlier resignation, removal from office, or death.
The remaining directors may fill any vacancy in the Board of Directors for an
unexpired term.
Business Experience of Executive Officers
Eric Seidel has been a director and our chief executive officer and
president since June 1, 2000. From January 1, 2000 through May 31, 2000, Mr.
Seidel was the chief executive officer and president of eAutoclaims, Inc., which
was privately held Delaware corporation, which merged with us. From September
1997 through December 1999, Mr. Seidel was employed as a senior executive
officer of First American AMO. From August 1995 through June 1997, Mr. Seidel
was a senior executive at Salex Corporation; a fleet management company serving
Fortune 500 companies, where, among other responsibilities he was responsible
for insurance company services. Mr. Seidel is a past president of the U.S.
Junior Chamber of Commerce.
Reed Mattingly, Executive Vice President. Mr. Mattingly was formerly the
Chief Operating Officer of eAutoclaims and VP Premier Express Claims prior to
its acquisition by eAutoclaims.com in July of 2000. He has 13 years of
experience in the automotive insurance services business. Mr. Mattingly
currently leads our sales and marketing teams. Mr. Mattingly is responsible for
growth in revenue from new and existing clients through the effective marketing
and sales of existing eAutoclaims applications and services as well as
identification and development of alternative revenue generating opportunities.
In the previous position of COO for eAutoclaims.com, he was instrumental in
increasing revenue from approximately 15 million to over 30 million in revenues
by working directly with national accounts and consistently providing excellent
service to clients. He has also built and managed a 24-hour/7 day national claim
reporting call center. Companies under his management have been known for a
"high-tech, high-touch" approach to personalized customer service. He earned a
degree in Business Management from the University of South Carolina.
7
Scott Moore, CPA became our Chief Financial Officer on September 11, 2000.
Mr. Moore is responsible for the internal and external financial reporting of
the Company as well as providing financial insights into business operations.
Mr. Moore was previously a partner in the accounting firm of Harper Van Scoik &
Company in Clearwater, Florida for approximately 3 years and served as the
technical review and quality control partner for the accounting and auditing
practice of the firm. Mr. Moore was with the firm for a total of 12 years. Prior
to that time Mr. Moore was a senior accountant with Deloitte Haskins & Sells.
David Mattingly became our Chief Information Officer in June 2002. He had
previously held the position of VP IT at eAutoclaims since March of 2001. Mr.
Mattingly is responsible for developing new products and keeping the Company's
technology on the `cutting edge.' He oversees and manages all eAutoclaims
technology projects, inclusive of projects in both Network Administration and
Programming departments. Mr. Mattingly also develops and maintains internal
intranet applications and processes that form the `backroom' for claim
processing. Mr. Mattingly has been in the Computer Technology field for over 22
years. He earned a BS Degree in Electronic Engineering Technology from the State
University of New York during his seven-year tour with the United States Air
Force. Mr. Mattingly has several other Computer Technology & Engineering degrees
and is currently enrolled in Devry University's Keller Graduate School of
Management MBA program with a concentration in Information Systems Management.
Stacey Adams, Sr. Vice President Operations. Ms. Adams has been with
eAutoclaims since its inception in December 1999. She is formerly the Operations
Manager of the Royal Care Division. She has over 5 years experience in the
insurance and technology industries. Prior to eAutoclaims Ms. Adams was with a
Senior Customer Account Representative/Account Executive with NetWireless from
April 1998 to February 1999, where she provided technical support and marketing
support for the customers and sales team. Stacey has earned a bachelor's in
communications from Arizona State University and carries agent's license in
Property & Casualty Insurance.
Other Key Employees
In addition to the individuals identified above as "Executive Officers",
the following individuals are considered key employees and certain information
with respect to these key employees is described below:
John Prozinski, Vice President Business Development. Mr. Prozinski joined
eAutoclaims in August 1998. During his time with eAutoclaims he has also held
positions as Regional Sales Manager, National Body Shop Manager, and Director of
Consumer Products. In March of 2002 he was promoted to the Vice President of
Business Development. From August of 1995 through August of 1998 Mr. Prozinski
was a regional sales manager for Ashland, Inc. covering North American and
Canadian. He holds a bachelor's degree from St. John's University and is a past
president of the United States Junior Chamber of Commerce.
Larry C. Colton, Controller. Mr. Colton joined eAutoclaims in December
2000. He has over 25 years experience in accounting and finance, having held a
variety of positions in several industries. Between December 1997 and December
2000, Mr. Colton was Vice President of an asset management division of Sky
Financial Group. He holds a bachelor's degree from Elmhurst College and a
Masters of Business Administration degree from Northern Illinois University.
Mike Probyn, Operations General Manager. Mr. Probyn has been with
eAutoclaims for 3 years and is currently serving as our Operations General
Manager overseeing the Auditing, Claims and Vendor departments. He formerly
served as the Regional Vendor Manager and National Vendor Manager. Prior to
working for eAutoclaims, Mr. Probyn was Co-Owner of a Pest Control Company for
over 15 years and also Past President of the Florida Junior Chamber of Commerce.
8
Ryan Blade, Vice President Information Technology. Mr. Blade joined
eAutoclaims in September 2000. He has served as a Technical Support Specialist,
a programmer and an IT Department Manager. He was promoted to Vice President
Information Technology in May 2003 and oversees the IT Support, Programming and
Network Administration departments. Formerly he served thirteen years in the
United States Army.
Election
The Company's Bylaws fix the size of the Board of Directors at no fewer
than three and no more than nine members, to be elected annually by a plurality
of the votes cast by the holders of Common Stock, and to serve until the next
annual meeting of stockholders and until their successors have been elected or
until their earlier resignation or removal. Currently there are four Committees
of the Board of Directors and Meetings
Committees of the Board of Directors and Meetings
Our Board of Directors held seven (7) meetings during the fiscal year ended
July 31, 2003. Each of our directors attended at least 75% or more of the
aggregate of (i) the total number of meetings of the Board of Directors held
during fiscal 2003, and (ii) the total number of meetings held by all committees
of the Board of Directors on which such person served during fiscal 2003.
Audit Committee
The Audit Committee, which held four meetings during fiscal 2003 to review
the three 10QSBs and one 10KSB, acts on behalf of the Board to oversee all
material aspects of the Company's reporting, control and audit functions. The
Audit Committee's role includes a particular focus on the qualitative aspects of
financial reporting to shareholders and on Company processes for the management
of the business/financial risk and for compliance with significant applicable
legal, ethical and regulatory requirements. In addition, the Audit Committee
reviews the adequacy of internal account, financial and operating controls and
reviews the Company's financial reporting compliance procedures. During fiscal
2003 Mr. Dickson was Chairman of the Audit Committee. For fiscal 2004 Mr. Korge
is Chairman of the Audit Committee and serves with Mr. Trbovich, Jr. and Mr.
Dickson. See "Report of the Audit Committee"
Compensation Committee
The Compensation Committee, which held two meetings during fiscal 2003 to
review compensation issues and contracts, administers the Company's Stock Option
Plan, establishes the compensation of the Chief Executive Officer and sets
policy for compensation of all senior management and directors. The Compensation
Committee consists of Mr. Dickson, Mr. Trbovich, Jr. and Mr. Korge. During
fiscal 2003, Mr. Dickson served as Chairman of the Compensation Committee. Mr.
9
Trbovich, Jr. became the Compensation Committee Chairperson effective August 1,
2003. See "Board Compensation Committee Report on Executive Compensation."
Nominating Committee
The Company does not currently have a standing nominating committee of the
Board of Directors.
Committee Interlocks and Insider Participation
Mr. Dickson, Mr. Korge, and Mr. Trbovich serve as our audit and
compensation committee members. None of these individuals are employees.
However, Mr. Dickson receives an annual consulting fee of $100,000. Mr. Korge
purchased $300,000 of our debentures in 2001, which were converted into 476,190
shares of our common stock and was also issued 1,000,000 warrants exercisable at
$.63 in connection with the placement of our debentures in 2001. See "Certain
Relationships and Related Transactions". Mr. Trbovich is a director and vice
president of Servotronics, Inc., an AM-EX listed issuer. Other than Mr.
Trbovich, none of our officers or directors serves on the board or is an officer
of any other public company.
Director Compensation
During the eleven months ended June 30, 2003, the board members were paid
$500 plus expenses for each board meeting they attend in person, and $300 for
each board meeting they attend via conference call. Each outside director was
entitled to $1,250 worth of Common Stock to be issued on a quarterly basis at
the fair market value as of the end of each quarter. For the fiscal year ended
July 31, 2003 and 2002, we have issued 55,797 and 35,257 shares, respectively,
to our outside directors under this arrangement.
Those outside Directors are also compensated with stock options at various
points throughout the year. All these options have an exercise price set at the
market value of the stock on the date of the granting of the option. The have an
exercise term of five years and vest after one year. For the fiscal year ended
July 31, 2003, two outside Directors received 12,500 options each quarter, which
were issued on November 8, 2002, January 31, 2003, April 30, 2003 and July 31,
2003 at an exercise prices of $0.23, $0.13, $0.17 and $0.45, respectively, for a
total of 100,000 options. For the fiscal year ended July 31, 2002, four
directors received 12,500 options on both October 31, 2001 and January 31, 2002
with exercise prices $0.47 and $0.73 each, and three outside directors received
12,500 options on both April, 30 2002 and July 31, 2002 at an exercise prices of
$0.51, $0.36, respectively, for a total of 175,000 options. The outside board
members will be issued 12,500 options at the end of each quarter at the market
value at the end of each quarter as compensation for their services. All these
options are exercisable after one year and have terms of five years.
Starting July 1, 2003 the directors' compensation was raised to be
competitive in the industry. The two outside directors received an annual
retainer of $25,000 each. This retainer was paid in stock for the fiscal year
beginning August 1, 2003. Additionally, the two outside directors will receive
$6,000 per year for attending board meetings and $4,000 per committee per year
for attending committee meetings. The committee fee is raised to from $4,000 to
$8,000 per committee per year if they are the Chairperson for the committee. If
they don't attend one or more committee or board meetings their compensation is
reduced accordingly.
Code of Ethics
The Company has adopted a "Code of Business Conduct and Ethics" that
applies to all eAuto employees and Board of Directors, including eAuto's
principal executive officer and principal financial officer, or persons
performing similar functions. A copy of the Company's Code of Business Conduct
and Ethics is attached as an exhibit to this annual report on Form 10-KSB. The
Company intends to post the Code of Business Conduct and Ethics and related
amendments or waivers, if any, on its website at www.eautoclaims.com.
Information contained on the Company's website is not a part of this report.
Copies of the Company's Code of Business Conduct and Ethics will be provided
free of charge upon written request to eAutoclaims.com, Inc., 110 East Douglas
Road, Oldsmar, Florida 34677, attention: Scott Moore.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of the Forms 3, 4 and 5 filed during fiscal 2003
the registrant reasonably believes, except as described below, that each person
who, at any time during the current fiscal year, was a director, officer,
beneficial ownership of more than 10% of our common stock filed the appropriate
form on a timely basis with respect to changes in such owner's beneficial
ownership of our common stock. Mr. Dickson, our Chairman, was delinquent in
filing Form 4s related to the acquisition of 7,954 common shares which occurred
on or about September 2002.
10
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation paid or accrued by us for the
fiscal years ended July 31, 2003, 2002 and 2001 to or for the account of our
Officers that exceed $100,000.
Long-Term Compensation
Annual Compensation Awards Awards Payouts Payouts
----------------------------- ---------- ------------ ---------- --------------- ------------ -------------- ---------- ------------
Long-Term
Other Restricted Securities Incentive All
Name of Individual & Fiscal Annual Stock Underlying Plan Other
Principal Position Year Salary Bonus Compensation Awards Options/SARs Payouts Compensation
(1)
----------------------------- ---------- ------------ ---------- --------------- ------------ -------------- ---------- ------------
Eric Seidel 2001 $162,835 -0- -0- -0- 1,080,000 -0- -0-
President and 2002 $249,398 $37,500 $76,311 -0- 182,870 -0- -0-
Chief Executive Officer 2003 $242,402 $37,500 -0- -0- 165,000 -0- -0-
Scott Moore 2001 $111,539 -0- -0- -0- 222,000 -0- -0-
Chief Financial Officer 2002 $130,726 -0- -0- -0- 106,250 -0- -0-
2003 $131,424 -0- -0- -0- 80,000 -0- -0-
Randy Wright (2) 2001 $118,038 -0- -0- -0- 120,000 -0- -0-
Chief Development Officer 2002 $123,718 -0- -0- -0- 102,778 -0- -0-
2003 $95,556 -0- -0- -0- 30,000 -0- -0-
Gaver Powers (3) 2001 $98,700 -0- -0- -0- 165,000 -0- -0-
Chief Information Officer 2002 $100,946 -0- -0- -0- 99,306 -0- -0-
2003 $45,311 -0- -0- -0- -0- -0- -0-
Reed Mattingly 2001 $95,078 -0- -0- -0- 90,000 -0- -0-
Executive Vice President 2002 $115,932 -0- -0- -0- 100,463 -0- -0-
2003 $104,931 -0- -0- -0- 30,000 -0- -0-
Dave Mattingly 2002 $100,303 -0- -0- -0- 66,204 -0- -0-
Chief Information Officer 2003 $100,185 -0- -0- -0- 30,000 -0- -0-
----------------------------- ---------- ------------ ---------- --------------- ------------ ------------- ---------- -------------
The cost to us of personal benefits, including premiums for life
insurance and any other perquisites, to such executives do not exceed 10% of
such executive's annual salary and bonus.
(1) Other annual compensation, including cell phones is less than 10% of the
officers' salaries and is therefore not disclosed
above.
(2) Mr. Wright resigned in January 2003. (3) Mr. Powers' employment ceased in
October 2002.
Option/SAR Grants in Last Fiscal Year
----------------------- ----------------- ------------------- ----------------- --------------------- ---------------------
Percent of Total
Number of Options/SARs
Securities Granted
Underlying to Employees/ Exercise Fair Market Value
Options/SARs Directors or Base At date of Expiration
Name of Individual Granted (1) In Fiscal Year Price Grant Date
----------------------- ----------------- ------------------- ----------------- --------------------- ---------------------
----------------------- ----------------- ------------------- ----------------- --------------------- ---------------------
Eric Seidel 40,000 4.4% $0.15 $0.15 12/21/07
50,000 5.5% $0.10 $0.10 4/7/08
25,000 2.8% $0.21 $0.21 5/16/08
25,000 2.8% $0.39 $0.39 6/14/08
25,000 2.8% $0.52 $0.52 7/25/08
Scott Moore 30,000 3.3% $0.15 $0.15 12/21/07
50,000 5.5% $0.13 $0.13 4/25/08
Randy Wright 30,000 3.3% $0.15 $0.15 12/21/07
Reed Mattingly 30,000 3.3% $0.15 $0.15 12/21/07
Dave Mattingly 30,000 3.3% $0.15 $0.15 12/21/07
----------------------- ----------------- ------------------- ----------------- --------------------- ---------------------
(1) Except as described in the description of Mr. Seidel's employment contract
below, each option granted has a term of 5 years, and vests over three
years.
11
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
The following table provides information with respect to the named officer
concerning exercised and unexercised options in fiscal year ended July 31, 2003.
-------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options/SARs Options/SARs
Name of Acquired on Value at Fiscal Year End (#) at Fiscal Year End($)
Individual Exercise (#) Realized (1) Exercisable/Unexercisable Exercisable/Unexercisable
(2)
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Eric Seidel 677,504 $60,200 357,500/165,000 -0-/$37,000
Scott Moore 81,250 $7,563 139,666 / 187,334 -0-/$25,000
Randy Wright 27,778 $3,611 166,666 / 73,334 $9,000/-0-
Gaver Powers -0- -0- 195,973 / 0 $32,695/-0-
Reed Mattingly 25,463 $3,310 123,334 / 96,666 -0-/$9,000
Dave Mattingly 25,000 $2,107 63,334 / 76,666 -0-/$9,000
--------------------------------------------------------------------------------------------------------
(1) Value Realized represents the market value of the underlying securities on
the exercise date minus the exercise price of such options.
(2) Value Realized represents the market value of the underlying securities on
7/31/03 minus the exercise price of such options.
Employment Contracts and Other Arrangements
Eric Seidel, President and Chief Executive Officer. On March 27, 2003, the
Board of Directors approved an Amended and Restated Employment Agreement with
Mr. Seidel. Mr. Seidel agreed to a salary reduction from his last contract in
order to assist the Company in meeting its financial goals. His previous
agreement specified a salary of $250,000. His new two (2) year agreement
specifies an annual base salary of $185,000, effective February 1, 2003 through
December 31, 2003. From January 1, 2004 through February 1, 2005, his minimum
annual base salary will be $200,000. Mr. Seidel receives bonuses equal to 3% of
the Company's earnings before interest, taxes, depreciation and amortization as
defined by generally accepted accounting principles (GAAP). Mr. Seidel may elect
to receive part or his entire bonus, if any, in shares of our Common Stock
valued at 90% of the then current market value. Each month that the Company is
profitable on a GAAP basis, He also has the right to receive options to purchase
25,000 shares of our common stock, with a term of five years at a strike price
equal to the stock's fair market value at the date of granting. These options
vest over the remaining life of his contract. He continues his entitlement to
reimbursement of ordinary, necessary and reasonable business expenses incurred
in connection with his services. He continues his right to participate in any
retirement, medical, dental, welfare and stock options plans, life and
disability insurance coverage and other benefits afforded our employees. He is
entitled to a $750 per month automobile allowance and $1,000 of personal
allowances. He is entitled to 299% of his current base salary if he loses his
position, unless he is terminated for cause. This contract supercedes the change
of control agreement dated April 9, 2001.
Reed Mattingly, Executive Vice President - Sales. We entered into an
employment agreement with Reed Mattingly. Mr. Mattingly is currently our
Executive Vice President in charge of Sales. This agreement was effective May 1,
2003, and has a term of two (2) years. Under this agreement, Mr. Mattingly is
entitled to an annual base salary of $110,000 through April 30, 2004, and then
$115,500 through April 30, 2005. Mr. Mattingly is entitled to bonus compensation
as determined by the Company. Mr. Mattingly may elect to receive part or his
entire bonus, if any, in shares of our Common Stock valued at 90% of the then
current market value. Mr. Mattingly is entitled to reimbursement for ordinary,
necessary and reasonable business expenses in connection with his services. He
may participate in any retirement, medical, dental, welfare and stock options
plans, life and disability insurance coverages and other benefits afforded our
employees. He is entitled to a $700 per month automobile allowance. During the
term of his agreement and for a period of two (2) years after termination of his
agreement, Mr. Mattingly is subject to a non-competition and restrictive
covenant with us. This agreement supercedes the "Change of Control Agreement"
dated April 9, 2001.
12
M. Scott Moore, Chief Financial Officer. In March 2003, we entered into an
employment agreement with M. Scott Moore, our Chief Financial Officer. This
agreement has a term of two (2) years, and commences on May 1, 2003. Under this
agreement, Mr. Moore is entitled to an annual base salary of $135,000 through
April 30, 2004, and $144,445 through April 30, 2005. Mr. Moore is entitled to
bonus compensation as determined by the Company. Mr. Moore may elect to receive
part or his entire bonus, if any, in shares of our Common Stock valued at 90% of
the then current market value. Mr. Moore is entitled to reimbursement for
ordinary, necessary and reasonable business expenses in connection with his
services. He may participate in any retirement, medical, dental, welfare and
stock options plans, life and disability insurance coverages and other benefits
afforded our employees. He is entitled to an automobile allowance of $400 per
month during the term of his agreement. Mr. Moore was issued options to purchase
50,000 shares of our Common Stock at $0.13 per share, which was the fair market
value of the closing price of our shares as of the date of his agreement. These
options vest in 1/3 installments over each year of employment. These options
have a maximum exercise period of 5 years. All his options vest if the contract
is not renewed or there is a change in control of the Company. If we elect not
to renew this agreement, then he is entitled to nine (9) months severance pay at
his then current base salary. Mr. Moore has agreed not to compete with us during
the term of this agreement and for a period of two (2) years after termination
of this agreement. This agreement supercedes the "Change of Control Agreement"
dated April 9, 2001.
David Mattingly, Chief Information Officer. We entered into an employment
agreement with David Mattingly. Mr. Mattingly is currently our Chief Information
Officer. This agreement was effective May 1, 2003, and has a term of two (2)
years. Under this agreement, Mr. Mattingly is entitled to an annual base salary
of $105,000 through April 30, 2004, and then $110,250 through April 30, 2005.
Mr. Mattingly is entitled to bonus compensation as determined by the Company.
Mr. Mattingly may elect to receive part or his entire bonus, if any, in shares
of our Common Stock valued at 90% of the then current market value. Mr.
Mattingly is entitled to reimbursement for ordinary, necessary and reasonable
business expenses in connection with his services. He may participate in any
retirement, medical, dental, welfare and stock options plans, life and
disability insurance coverages and other benefits afforded our employees. He is
entitled to a $400 per month automobile allowance. During the term of his
agreement and for a period of two (2) years after termination of his agreement,
Mr. Mattingly is subject to a non-competition and restrictive covenant with us.
This agreement supercedes the "Change of Control Agreement" dated April 9, 2001.
Stacey Adams, Senior Vice President - Operations. We entered into an
employment agreement with Stacey Adams. Ms. Adams is currently our Senior Vice
President in charge of operations. This agreement was effective May 1, 2003, and
has a term of two (2) years. Under this agreement, Ms. Adams is entitled to an
annual base salary of $75,000 through April 30, 2004, and then $78,750 through
April 30, 2005. Ms. Adams is entitled to bonus compensation as determined by the
Company. Ms. Adams may elect to receive part or her entire bonus, if any, in
shares of our Common Stock valued at 90% of the then current market value. Ms.
Adams is entitled to reimbursement for ordinary, necessary and reasonable
business expenses in connection with his services. She may participate in any
retirement, medical, dental, welfare and stock options plans, life and
disability insurance coverages and other benefits afforded our employees. She is
entitled to a $400 per month automobile allowance. During the term of her
agreement and for a period of two (2) years after termination of his agreement,
Ms. Adams is subject to a non-competition and restrictive covenant with us. This
agreement supercedes the "Change of Control Agreement" dated April 9, 2001.
Change of Control Shares
On March 27, 2003, as part of a employee and board member retention program
the Board of Directors voted to grant certain employees (Mr. Seidel is not
entitled to participate in the employee retention program) a total of 2,000,000
shares of our common stock or equivalent consideration thereof and the current
and future board members 1,000,000 common shares if there is a change in control
13
of greater than 50% ownership of the Company or a sale of all or substantially
all it's assets. Only those employees and board members employed or on the board
at the time of the change will participate in the compensation.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors administers our Chief
Executive Officer's compensation package. The committee reviews, recommends and
approves changes to our compensation policies and programs, makes
recommendations to the Board of Directors as to the amount and form of executive
officer compensation, and administers our stock option plans.
General Compensation Philosophy. Our compensation programs are designed to
directly align compensation with our performance and increases in stockholder
value as measured by our stock price and to enable us to attract, retain and
reward executives and employees needed to accomplish our goals. The committee
believes that executive pay should be linked to our overall performance.
Therefore, we provide an executive compensation program, which includes base
pay, long-term incentive opportunities through the use of stock options, shares
and, in some cases, cash bonuses.
The Compensation Committee is currently evaluating and studying the level
of equity participation by our employees and executives. The Compensation
Committee feels strongly that our employees and executives must have a greater
equity stake in order to more closely align the interest of our employees and
executives with our stockholders. Therefore, it is the intent of the
Compensation Committee to recommend that our executives and employees be issued
significantly more shares of our stock and options in the near future. It is
anticipated that any such issuance of our additional equity to employees and
executives will be performance based, and tied to the market value of our Common
Stock.
Base Salary. Base salary is designed primarily to be competitive with base
salary levels in effect at high technology companies that area of comparable
size and with which we compete for executive personnel. Base salary is set
annually based on job-related experience, individual performance and pay levels
of similar positions at comparable companies. Salaries for executive officers
were generally determined on an individual basis by evaluating each executive's
scope of responsibility, performance, prior experience and salary history, as
well as salaries for similar positions at comparable companies.
Cash Performance Awards. Management believes that cash performance awards,
such as bonuses, should be tied to achievement of performance goals established
by the committee. On June 2, 2003 the board approved a bonus plan based on
achieve certain levels of profitability. If the management team achieves
earnings per share of $0.01 to $0.10 per share then eight senior managers will
split a total bonus pool ranging from $10,000 to $100,000 based on the level of
profitability. The computation was tied to profitability to directly tie the
employee bonuses to goals that will enhance shareholder value.
Stock Options. In order to link the interests of our stockholders and
senior management, we issue stock options. We believe that the practice of
granting stock options is critical to retaining and recruiting the key talent
necessary at all employee levels to ensure our success. Stock options generally
have value for executive officers only if the price of our Common Stock
increases above the fair market value of a share of Common Stock on the grant
date and the officer remains in our employ for the period required for the
options granted to such person to vest.
The number of shares subject to stock options granted is within the
discretion of the Compensation Committee. In determining the size of stock
option grants, the Compensation Committee considers the officer's
responsibilities, the expected future contribution of the officer to the
Company's performance and the number of shares, which continue to be subject to
vesting under outstanding options. For 2003, options were granted to the
executive officers based on their positions and a subjective assessment of
individual performances. Stock options typically have been granted to executive
officers when the executive first joins the Company. At the discretion of the
Committee, executive officers may also be granted stock options to provide
greater incentives to continue their employment with the Company and to strive
to increase the value of the Company's Common Stock.
14
Compensation for the Chief Executive Officer. Mr. Seidel's base salary for
the year 2003 was determined by the employment agreement we assumed with Mr.
Seidel. The Compensation Committee believes that the employment agreement terms
are in a manner consistent with the factors described above for all executive
officers.
Internal Revenue Code Section 162(m) Limitation. Section 162(m) of the
Internal Revenue Code imposes a limit, with certain exceptions, on the amount
that a publicly held corporation may deduct in any year for the compensation
paid or accrued with respect to its five most highly compensated executive
officers. In general, it is the Committee's policy to qualify, to the maximum
extent possible, executives' compensation for deductibility under applicable tax
laws.
Stock Options
We established the 1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan
is intended to provide the employees and directors of the Company with an added
incentive to continue their services to the Company and to induce them to exert
their maximum efforts toward the Company's success. The 1998 Plan provides for
the grant of options to directors and employees (including officers) of the
Company to purchase up to an aggregate of twenty percent (20%) of the number of
shares of Common Stock in the capital of the Company issued and outstanding from
time to time less any shares of Common Stock reserved, set aside and made
available pursuant to the terms of the Company's employee share purchase plan
(the "Share Purchase Plan") and pursuant to any options for services rendered to
the Company. The number of shares of Common Stock subject to options granted to
any one person under the Plan, the Share Purchase Plan and options for services
rendered to the Company may not at any time exceed five percent (5%) of the
outstanding shares of Common Stock. The 1998 Plan is currently administered by
the Board of Directors. The Board determines, among other things, the persons to
be granted options under the 1998 Plan, the number of shares subject to each
option and the option price.
The 1998 Plan allows the Company to grant Non-Qualified Stock Options
("NQSOs") not intended to qualify under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"). The exercise price of NQSO's may not be
less than the fair market value of the Common Stock on the date of grant.
Options may not have a term exceeding ten years. Options are not transferable,
except upon the death of the optionee.
During the fiscal year ended July 31, 2003 we issued 808,000 options to
employees in accordance with the 1998 Plan. In addition, 100,000 options were
granted to board members.
All of these options are subject to vesting and are exercised at the
current market price of our stock as of the date of issuance. We have the right
to increase the total amount of options, which may be issued so long as total
outstanding options do not exceed 15% of the number of our fully diluted
outstanding shares of Common Stock. Furthermore, in lieu of paying cash bonuses,
the employees may be issued shares of our Common Stock at the then fair market
value in an amount not to exceed 50% of that employee's base salary. All of the
options we have issued are subject to immediate vesting and are exercisable in
the event of a change of control, which is defined as a sale of substantially
all of our assets or a merger in which we are not the surviving entity.
As of September 30, 2003, we have issued, or reserved for issuance,
7,137,852 shares of our Common Stock relating to outstanding options and
warrants which are categorized as follows:
Options issued to Directors 1,471,000 (1)
Options issued to Chief Executive Officer 547,500 (2)
Options issued in connection with acquisition of PEC 130,000 (3)
Options issued to Employees 2,484,538 (4)
15
Options issued to Consultants 86,429 (5)
Options Outstanding prior to eAutoclaims.com merger 4,000
Warrants relating to debentures 1,150,000 (6)
Warrants relating to private placement 220,000 (7)
Purchaser's Warrants 780,000 (8)
Agent's Warrants 264,385 (9)
----------
Total 7,137,852
=========
(1) The options issued to our directors have strike prices ranging
from $0.01 to $5.06 and are exercisable through April 9, 2011.
See "Directors and Executive Officers-Directors Compensation".
(2) Mr. Seidel currently owns the following options with the
following terms:
Strike #
# of Options Price Vested Expiration Date
32,500 $2.00 32,500 4/24/05
100,000 $1.22 100,000 12/4/05
40,000 $1.01 40,000 1/10/06
40,000 $2.00 40,000 2/2/06
20,000 $1.26 20,000 3/2/06
50,000 $0.69 50,000 9/18/06
75,000 $0.55 75,000 3/27/07
40,000 $0.15 0 12/21/07
50,000 $0.10 0 4/7/08
25,000 $0.21 0 5/16/08
25,000 $0.39 0 6/15/08
25,000 $0.52 0 7/25/08
25,000 $0.32 0 8/29/08
-------- --------
547,500 357,500
========= =======
During fiscal year ended July 31, 2003, Mr. Seidel exercised
677,504 options at a strike price of $.01. See "Executive
Compensation" and "Directors and Executive Officers -
Employment Contracts and Other Matters".
(3) 65,000 options immediately exercisable at $2.00 per share were
issued to each of Randall K. Wright and Reed Mattingly. See
"Executive Compensation - Employment Contracts and Other
Matters".
(4) Represents options issued to our employees at exercise prices
ranging from $0.01 to $3.38. 1,338,504 shares of these options
are currently exercisable. The remaining options vest over a
three year term. On December 21, 2002, 598,000 options were
granted to various employees with an exercise price of $0.15
per share. Another 85,000 shares were issued to three
employees with a strike price ranging from $0.13 to $0.30 per
share. All these shares vest over three years with a term of 5
years.
16
(5) 65,000 of these options are held by our Chairman, Mr. Dickson,
and are immediately exercisable at $2.00 per share. See
"Certain Relationships and Related Transactions". The other
21,429 options were given to a public relations consultant
with an exercise price of $0.49 per share.
(6) Represents warrants issued to the agents of the debenture investors,
exercisable at $0.63 per share, with a term of 10 years.
(7) Represents warrants issued to purchasers of common stock on
June 17, 2002 with an exercise price of $0.75 per share, with a
term of 5 years.
(8) Represents warrants issued to the purchasers of our Series A
Preferred Stock. Of these warrants, 300,000 are exercisable at
$3.00; 90,000 are exercisable at $1.4625; 90,000 exercisable
at $3.33; and 300,000 are exercisable at $2.60. See "Market
for Common Equity and Related Stockholder Matters - Preferred
Stock and Related Warrants".
(9) Represents warrants issued to Thomson Kernaghan and Greenfield
Investments, as Agents, exercisable at $4.50. See "Market for
Common Equity and Related Stockholder Matters - Preferred
Stock and Related Warrants".
The following table sets forth information with respect to our common stock
that may be issued upon the exercise of outstanding options, warrants, and
rights to purchase shares of our common stock as of September 30, 2003.
(c)
Number of Securities
Number of Securities (b) Remaining Available for
To be Issued Upon Weighted Average Future Issuance Under
Exercised of Exercise Price of Equity Compensation Plan
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants, and Rights Warrants, and Rights Reflected in Column (a))
------------- --------------------- --------------------------------------------
Equity Compensation
Plans Approved by
Stockholders (1) 2,624,218 $0.95 907,112 (4)
Equity Compensation
Plans Not Approved by
Stockholders (2) (3) 5,030,249 $023 N/A
---------
Total 7,654,467 $0.48
=========
__________________________
(1) Includes options issued to our Chairman of the Board at $.01, and options
issued to employees.
(2) Includes 3,000,000 shares that may be issued in connection with a change of
control,
(3) Exclude 2,418,385 warrants issued to investors in connection with capital
raising transactions not approved by our stockholders.
(4) Based on a Board of Directors imposed limit of 15%, not the 20% shown in the
approved plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information with respect to the beneficial
ownership of our Common Stock as of September 30, 2003, by:
o each person who we know beneficially owns more than 5% of our Common Stock;
o each of our directors and each individual who serve as our named executive
officers individually; and
o all of our directors and executive officers as a group.
17
Name and Address of Amount and Nature of Percentage
Beneficial Owner (1), (14) Beneficial Ownership (2)(13)
-------------------------- -------------------- -----------
Eric Seidel (3) 1,442,592 6.04%
Scott Moore (4) 264,750 1.12%
Reed Mattingly (5) 386,832 1.63%
Dave Mattingly (6) 111,038 0.47%
Jeffrey D. Dickson (7) 1,175,550 4.79%
Nicholas D. Trbovich, Jr. (8) 242,894 1.03%
Christopher Korge (9) 1,841,431 7.46%
Canadian Advantage Limited Partnership 2,991,504 12.71%
(10) 1,137,330 4.83%
Advantage (Bermuda) Fund, Ltd. (11) 1,315,680 5.59%
Entrade, Inc. (12)
Directors and officers 5,465,087 20.59%
as a group (10 persons) (13)
(1) Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.
Unless otherwise noted, each such person is deemed to be the
beneficial owner of shares of Common Stock held by such person on
September 30, 2003, and any shares of Common Stock which such
person has the right to acquire pursuant to securities exercisable
or exchangeable for, or convertible into, Common Stock, within 60
days from such date. The address of each beneficial owner is in
care of the Company, 110 East Douglas Rd, Oldsmar, Florida 34677.
(2) Based on 23,542,200 shares of Common Stock outstanding at the
close of business on September 30, 2003. This amount excludes
shares of our Common Stock underlying the conversion rights of our
Series A Preferred Stock and excludes 7,137,852 shares reserved
for outstanding options and warrants. 1,000,000 warrants issued to
Mr. Korge were included (see note 9 below).
(3) 400,000 shares of our Common Stock were issued to Mr. Seidel as
founder shares. He acquired 12,341 in open market purchases and
exercised 777,504 of options granted to him by the company and
transferred 104,753 shares to his ex-wife in a divorce. This
amount also includes vested options to acquire 357,500 Common
Shares at exercise prices between $0.55 and $2.00. This amount
excludes options, which are not vested over the next 60 days, to
acquire 190,000 Common Shares at an exercise price of $0.10 to
$0.52, which vest through May 21, 2005. See "Executive
Compensation - Employment Contracts and Other Matters".
(4) Mr. Moore's ownership consists of (i) 1,500 common shares acquired
in open market purchase, (ii) 81,250 common shares acquired through
exercising options at $.01 per share, and (iii) vested options to
acquire up to 182,000 common shares at an exercise price between
$0.55 and $2.69. This amount excludes unvested options for 145,000
common shares at exercise prices between $0.13 and $2.00, which
vest through April 25, 2006. See "Executive Compensation -
Employment Contracts and Other Matters".
(5) Mr. Reed Mattingly's ownership consists of (i) 64,000 of our common
shares issued to him in connection with the Premier Express Claims, Inc.
merger, (ii) the issuance of 125,701 shares in satisfaction of a promissory
note plus interest related to the Premier Express Claims, Inc. merger,
(iii) the exercise of options to acquire 40,000 shares at an exercise price
of $.01, (iv) 25,463 shares of our common stock acquired by exercising
options at a price of $0.01 per share, and (v) options to acquire up to
131,668 shares at exercise prices between $0.55 to $2.00. This amount
excludes unvested options to acquire up to 88,332 common shares at exercise
prices of $0.15 to $2.00, which vest through December 21, 2005. See
"Executive Compensation".
(6) Mr. Dave Mattingly's ownership consists of (i) 25,000 of our
common shares issued to him when he exercised his option to
purchase 25,000 shares at $.01 per share, (ii) 1,500 shares that
he purchased on the open market, (iii) the exercise of options to
acquire 16,204 shares at an exercise price of $.01, and (v)
options to acquire up to 68,334 shares at exercise prices between
$0.55 and $3.38. This amount excludes unvested options to acquire
up to 71,666 common shares at exercise prices of $0.15 to $2.00,
which vest through December 21, 2005. See "Executive
Compensation".
(7) Includes160,000 shares of our Common Stock issued to Mr. Dickson
as founder shares and 18,550 shares acquired in the open market.
Also includes options to acquire up to 900,000 shares of our
Common Stock at $0.01 and 97,000 shares at a price between $0.90
and $5.06. See Directors and Executive Officers - Director
Compensation".
(8) Mr. Trbovich, Jr.'s ownership consists of (i) 98,814 shares issued
to him for his service on the board, (ii) 2,080 shares that he
purchased on the open market, (iii) 10,000 shares owned by Mr.
Trbovich's wife, of which he disclaims beneficial ownership, and
(iv) options to acquire up to 132,000 shares at exercise prices
between $0.36 and $5.06. This amount excludes unvested options to
acquire up to 50,000 common shares at exercise prices of $0.13 to
$0.45, which vest through July 31, 2004. See Directors and
Executive Officers - Director Compensation".
18
(9) Mr. Korge's ownership consists of (i) 488,090 common shares relating to
the conversion of $300,000 of our convertible debentures, which matured on
September 30, 2001 at a conversion price of $0.63, (ii) 98,814 shares
issued to him for his service on the board, (iii) 15,000 shares that he
purchased on the open market, (iv) 107,527 shares purchased from the
Company in August 2003, (v) warrants to acquire up to 1,000,000 shares of
our Common Stock at a conversion price of $0.63 in connection with the
issuance of our convertible debentures, and (vi) options to acquire 132,000
shares at exercise prices between $0.36 and $5.06 for services as a
director. This amount excludes unvested options to acquire up to 50,000
common shares at exercise prices of $0.13 to $0.45, which vest through July
31, 2004. See Directors and Executive Officers - Director Compensation".
(10) Represents shares received upon the conversion of preferred shares
in March 2002 as reported on a Schedule 13D on or about March 26,
2002. John Pennington has investment decision-making authority for
this entity.
(11) Represents shares received upon the conversion of preferred shares
in March 2002 as reported on a Schedule 13D on or about March 26,
2002. John Pennington has investment decision-making authority for
this entity.
(12) Represents shares acquired privately in December 2001 as reported
on a Schedule 13G filed on or about December 13, 2001.
(13) Includes outstanding options and warrants to acquire up to
3,000,502 shares of our Common Stock issued to our officers and
directors, which are currently exercisable.
(14) Excludes warrants to acquire 641,220 shares of our common stock
and excludes shares of our common stock currently held or relating
to the conversion of our Series A Preferred Stock owned by
Governor's Road, LLC. David Sims as the director of Navigator
Management, which is the general partner of this fund, is the
natural person who controls and has investment making decision
authority over our securities owned by Governors Road, LLC and its
affiliates. Mr. Sims disclaims beneficial ownership of all of
these shares. Each of these entities has entered into an agreement
which provides that such entity will not acquire any additional
shares of our Common Stock in the open market or, convert our
Series A Preferred Stock into the Common Stock or exercise
warrants if the effect of such a purchase, exercise or conversion
would be to increase such entity's equity ownership position above
4.9%. Accordingly, because it is not anticipated that any of these
entities will acquire beneficial ownership within the next 60 days
of shares of our Common Stock underlying warrants or conversion
privileges of our Series A Preferred Stock such amounts are
excluded from the above tables.
* Less than .1%.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of the eAutoclaims (Del.) merger, we assumed obligations under
a Consulting Agreement with Jeffrey D. Dickson. This agreement was effective
December 1, 1999 and is renewable on an annual basis. Mr. Dickson agreed to
provide Mr. Seidel, our Chief Executive Officer, day-to-day advisory services
concerning management, capitalization, corporate structure, organizational,
industrial and regulatory issues. In addition, Mr. Dickson agreed to serve as
our Chairman of the Board of Directors, as well as Chairman of our Audit and
Compensation Committees.
In consideration for these consulting services Mr. Dickson is entitled to
an annual consulting fee of $100,000, payable every two (2) weeks. In addition,
Mr. Dickson is entitled to a non-interest bearing $126,500 line of credit that
was originally established in fiscal year 2000. As of July 31, 2003, $78,431 is
still outstanding under this arrangement, after $30,000 of service credits as
described above. Mr. Dickson is spending a substantial amount of his time
dealing with administrative matters, investor relations and public relations.
This frees up Mr. Seidel's time to focus on sales and marketing. The Company and
Mr. Dickson have agreed that $3,000 per month of his consulting fee will be
withheld by the Company and used to reduce the outstanding balance under the
line of credit. No further borrowings will be made under this line of credit.
We have entered into employment agreements with all of our senior
management. For description of these employment agreements and related rights to
our stock options, see "Executive Compensation - Employment Contracts and Other
Arrangements."
In fiscal year ended 2003 and 2002, we issued 412,521 and 234,277 shares,
respectively, of our Common Stock to Michael T. Cronin, Esq., who is a partner
in the law firm which serves as our corporate and securities counsel, in
19
consideration for $118,525 and $105,040 of his services charged at normal hourly
rates. All other charges incurred by us for other employees of his firm are paid
in cash. As of July 31, 2003, all these common shares have been earned.
In July 2001, we executed debenture agreements totaling $650,000. These
debentures bear interest at Libor plus 3% and matured on September 30, 2001.
Once these debentures mature they are converted to Common Stock at the lesser or
(i) $1.00 or (ii) 75% of the average of the closing bid price of our Common
Stock in 30 trading days immediately preceding the conversion date, but in no
event shall the floating conversion price be less than $0.75. A purchaser of
$100,000 of these convertible debentures is the brother-in-law of Mr. Seidel.
Investors who purchase $300,000 or more of the debentures have a conversion
price equal to the lesser of (i) $.63 or (ii) 75% of the average of the closing
bid price of our Common Stock in the 30 trading days immediately preceding the
conversion date, but in no event shall the floating conversion price be less
than $0.63. Holders of these convertible debentures are granted piggyback
registration rights.
Christopher Korge, one of our directors, purchased $300,000 of these
debentures. Upon the September 30, 2001 maturity date, we converted the $300,000
face amount of debentures acquired by Mr. Korge into 476,190 shares of our
Common Stock (a $0.63 conversion price). In consideration for Mr. Korge's
purchasing and facilitating the placement of these debentures, we have agreed to
issue Mr. Korge, or his assigns, warrants to acquire 1,000,000 shares of our
Common Stock and Mr. Seidel's brother-in-law warrants to acquire 150,000 shares
of our Common Stock, both at an exercise price of $0.63 per share.
In connection with the issuance of shares of our Common Stock in August
2003, Christopher Korge, one of our directors acquired 107,527 shares at a fixed
price of $.279 per share. In addition, the brother-in-law of Mr. Seidel, our
CEO, acquired 35,842 shares at a fixed price of $.279.
Limitation of Directors Liability; Indemnification of Directors, Officers,
Employees, and Agents
Our articles of incorporation eliminate the personal liability of any
director of our company to us or our stockholders for money damages for breach
of fiduciary duty as a director or officer, to the fullest extent allowed by the
General Corporation Law of Nevada, or NGCL. Under the NGCL, directors and
officers will not be individually liable to us or our stockholders for any
damages as a result of any act or failure to act in his capacity as a director
or officer unless it is proven that (a) his act or failure to act constituted a
breach of his fiduciary duties as a director or officer; and (b) his breach of
those duties involved intentional misconduct, fraud, or a knowing violation of
law. The effect of these provisions in our articles of incorporation is to
eliminate our rights and the rights of our stockholders (through stockholders'
derivative suits on our behalf) to recover money damages from a director for all
actions or omissions as a director (including breaches resulting from negligent
or grossly negligent behavior) except in the situations described above. These
provisions do not limit or eliminate our rights or the rights of our
stockholders to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
Our articles of incorporation require us to indemnify and advance expenses
to any person who incurs liability or expense by reason of such person acting as
a director of our company, to the fullest extent allowed by the NGCL. This
indemnification is mandatory with respect to directors in all circumstances in
which indemnification is permitted by the NGCL, subject to the requirements of
the NGCL. In addition, we, in our sole discretion, may indemnify and advance
expenses, to the fullest extent allowed by the NGCL, to any person who incurs
liability or expense by reason of such person acting as an officer, employee, or
agent of our company, except where indemnification is mandatory pursuant to the
NGCL, in which case we are required to indemnify to the fullest extent required
by the NGCL.
20
Report of the Audit Committee
The Board of Directors has appointed an Audit Committee, which consisted of
three directors during fiscal 2003. A copy of the Audit Committee Charter is
attached to this proxy statement as Exhibit "A".
The primary responsibility of the committee is to oversee our (a) financial
reporting process on behalf of the board of directors, (b) system of internal
accounting and financial controls, (c) outside auditors' independence and
performance, and (d) compliance with any legal compliance and ethics programs as
may be established from time to time by the board of directors. Management has
the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. The independent auditors
are responsible for auditing the financial statements and expressing an opinion
on the conformity of those audited financial statements with generally accepted
accounting principles.
In fulfilling its oversight responsibilities, the committee reviewed the
audited financial statements with management and the independent auditors. The
committee discussed with the independent auditors the matters required to be
discussed by Statement of Auditing Standards No. 61. This included a discussion
of the auditors' judgments as to the quality, not just the acceptability of the
company's accounting principles and such other matters as are required to be
discussed with the committee under generally accepted auditing standards. In
addition, the committee received from the independent auditors written
disclosures and the letter required by Independence Standards Board Standard No.
1. The committee also discussed with the independent auditors the auditors'
independence from management and our company, including the matters covered by
the written disclosures and letter provided by the independent auditors.
The committee discussed with our independent auditors the overall scope and
plans for their audits. The committee meets with the independent auditors, with
and without management present, to discuss the results of their examinations,
their evaluations of our company, the internal controls, and the overall quality
of the financial reporting. The committee held four meetings during fiscal 2003.
Based on the reviews and discussions referred to above, the committee
recommended to the board of directors, and the board approved, that the audited
financial statements be included in the Annual Report on Form 10-KSB for the
fiscal year ended July 31, 2003 for filing with the Securities and Exchange
Commission. The committee and the board of directors also have recommended the
selection of the independent auditors.
Management of the Company is responsible for the Company's financial
reporting process including its system of internal controls, and for the
preparation of financial statements in accordance with generally accepted
accounting principles. The Company's independent auditors are responsible for
auditing those financial statements. The responsibility of the Audit Committee
is to monitor and review these processes. It is not the Committee's duty or the
Audit Committee's responsibility to conduct auditing or accounting reviews or
procedures. None of the members of the Audit Committee are accountants or
auditors by profession or experts in the fields of accounting or auditing.
Therefore, the members have relied, without independent verification, on
management's representation that the financial statements have been prepared
with integrity and objectivity and in conformity with accounting principles
generally accepted in the United States of America and on the representations of
the independent auditors included in their report on the Company's financial
statements. The Committee's oversight does not provide it with an independent
21
basis to determine that management has maintained appropriate accounting and
financial reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Committee's considerations and
discussions with management and the independent auditors do not assure that the
Company's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards or that the Company's independent accountants are in fact
"independent."
The report of the audit committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
November 13, 2003 Christopher Korge, Chairman
Nicholas D. Trborich, Jr.
Jeffrey D. Dickson
22
PROPOSAL 2 - RATIFY THE APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The Company's Board of Directors has appointed Goldstein Golub Kessler LLP
as independent accountants to audit the financial statements of the Company for
the year July 31, 2004. The Company has not had any changes in or disagreements
with its independent accountants or accounting or financial disclosure issues.
The Board of Directors recommends a vote FOR the ratification of the appointment
of Goldstein Golub Kessler, LLP as the Company's independent certified public
accountant for fiscal year 2004.
Compensation of Auditors
Audit Fees. Goldstein Golub Kessler LLP billed the Company an aggregate of
$83,500 in fees and expenses for professional services rendered in connection
with the audit of the Company's financial statements for the fiscal year ended
July 31, 2002 and the reviews of the financial statements included in each of
the Company's Quarterly Reports on Form 10-Q during the fiscal year ended July
31, 2003.
Financial Information Systems Design and Implementation Fees. Goldstein
Golub Kessler LLP did not provide the Company any professional services for
financial information systems design or implementation for the fiscal year ended
July 31, 2003.
All Other Fees. Goldstein Golub Kessler LLP billed the Company an aggregate
of $23,444 in fees and expenses during the year ended July 31, 2003, primarily
for the following professional services:
Audit related services $18,444 (1)
Taxes $ 5,000
(1) Audit related services include due diligence investigations related to
the Company's acquisitions, registration statements and related
offerings, accounting advice and other audits, including benefit
plans.
23
DEADLINES FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR OUR NEXT ANNUAL MEETING
Stockholders are entitled to present proposals for action at our 2004
Annual Meeting of Stockholders if they comply with the requirements of the proxy
rules promulgated by the Securities and Exchange Commission. Proposals of
shareholders of the Company that are intended to be presented for consideration
at the Company's 3004 Annual Meeting of Stockholders must be received by the
Company no later than July 31, 2004, and must otherwise comply with the
requirements of Rule 14a-8 of the Securities and Exchange Commission, in order
that they may be considered for inclusion in the Information Statement and form
of proxy relating to that meeting.
24
EXPENSES OF SOLICITATION
The Company will bear the expenses of preparing and mailing this consent
material, as well as the cost of any required solicitation. In addition to this
solicitation of consents, the officers, directors and regular employees of the
Company, without receiving any additional compensation therefore, may solicit
consents by mail, telephone, or personal contact. The Company will also request
stockholders, banks and other fiduciaries to forward proxy material to their
principals or customers who are the beneficial owners of shares and will
reimburse them for reasonable out-of-pocket expenses incurred.
BY ORDER OF THE
BOARD OF DIRECTORS
Jeffrey D. Dickson
Chairman of the Board
November 13, 2003
Oldsmar, Florida
25
eAUTOCLAIMS.COM, INC.
CONSENT BY STOCKHOLDER TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
EAUTOCLAIMS.COM, INC.
The undersigned, a stockholder of record of eAutoclaims.com, Inc. on
October 31, 2003, hereby consents, pursuant to Section 78.320 of the Nevada
Revised Statutes, with respect to all shares of common stock, par value $.001
per share, of eAutoclaims.com, Inc. held by the undersigned and as indicated
below, to the following actions without a meeting, without prior notice and
without a vote.
THE COMPANY STRONGLY RECOMMENDS THAT THE STOCKHOLDERS CONSENT TO THE
FOLLOWING RESOLUTIONS:
PLEASE MARK YOUR VOTES.
1. FOR [ ] or WITHHOLD [ ] Election of the
directors as nominated by Management:
Jeffrey D. Dickson
Eric Seidel
Christopher Korge
Nicholas D. Trbovich, Jr.
If you wish to withhold your consent for any
individual nominee, strike a line through
that nominee's name in the list at right.
2. FOR [ ] or WITHHOLD [ ] Appointment
of the firm of Goldstein Golub
Kessler LLP as the Company's
independent auditors in the fiscal
year 2004
PLEASE SIGN, DATE AND RETURN THIS CONSENT
PROMPTLY USING THE ENCLOSED ENVELOPE.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS
ON THIS CONSENT. If shares are registered
in more than one name the signatures of all
such persons are required. A corporation
should sign in its full corporate name by a
duly authorized officer, stating his title.
Trustees' guardians, executors and
administrators should sign in their
official capacity giving their full title
as such. If a partnership, please sign in
the partnership name by authorized persons.
MAKE SURE THAT THE NAME ON YOUR
CERTIFICATE(S) AND THE NUMBER OF SHARES ARE
EXACTLY AS YOU INDICATE BELOW.
-------------------------
Number of Common Shares
---------------------------------------------
Signature
---------------------------------------------
Print Name
---------------------------------------------
Dated
---------------------------------------------
Signature (if held jointly)
---------------------------------------------
Title or authority, if applicable
*THIS IS YOUR CONSENT CARD*
26
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
eAutoclaims.com, Inc.
as adopted November 12, 2003, effective January 31st, 2004
The purpose of the audit committee is to provide assistance to the board of
directors in fulfilling its oversight of (a) the integrity of our financial
statements and financial reporting, (b) the integrity and effectiveness of our
disclosure and internal controls, (c) our compliance with applicable law,
regulatory requirements and our Company's code of conduct and other compliance
policies and (d) the independence, qualifications and performance of our
external auditors The Committee relies on the expertise and knowledge of
management and the public accounting firm in carrying out its oversight
responsibilities. Management of the Company is responsible for determining the
Company's financial statements are complete, accurate and in accordance with
Generally Accepted Accounting Principals (GAAP). The public accounting firm is
responsible for auditing the Company's financial statements. It is not the duty
of the Committee to plan or conduct audits, to determine that the financial
statements are complete and accurate and are in accordance with GAAP, to conduct
investigations, or to assure compliance with laws and regulations or the
Company's internal policies, procedures and controls.
Responsibilities of the Committee
Oversight of Integrity of Financial Statements and Financial Reporting
Financial Statements: The audit committee reviews with management and external
auditors our annual and quarterly financial statements prior to the filing of
each annual or quarterly report. This review includes matters required to be
reviewed under legal and regulatory requirements. In reviewing the annual and
quarterly reports, the committee reviews the process for quarterly
certifications by the chief executive and chief financial officers of the
Company.
Reporting Issues: The audit committee reviews with management and external
auditors significant financial reporting issues and judgments made in connection
with the preparation of financial statements, including: critical accounting
policies, major issues regarding accounting and auditing principles, major
accounting policy changes, any audit problems and management's responses, the
effect of regulatory and accounting initiatives, any off-balance sheet financing
structures, any unusual methods of acquiring or holding interests in other
entities and the effect of alternative GAAP methods on our financial statements.
Oversight of Integrity and Effectiveness of Disclosure and Internal Controls
Review of Disclosure Committee Activity: The audit committee reviews with
management and external auditors the processes employed by our Company to ensure
our disclosure and internal controls are effective.
Internal Controls: The audit committee reviews with management management's
opinions relating to the design and effectiveness of disclosure and internal
controls, recent evaluations of the adequacy of these controls, whether or not
management is aware of any significant deficiencies in the design or operation
of our internal controls, instances of fraud involving management or other
employees having a significant role in our internal controls and significant
changes made relating to these controls. The committee also advises management
on the scope of external auditor review of disclosure and financial controls
policies and procedures, including the adequacy of these reviews, their material
findings and managements' responses.
Oversight of Compliance Program
Compliance Program: The audit committee reviews the effectiveness of our
Company's system for monitoring compliance with laws, regulations and our
compliance policies, including our code of conduct. This includes regular
reviews of our compliance policies, the material risks and related processes
being monitored, relevant training, compliance activity and management follow-up
and disciplinary actions relating to compliance issues. The committee also
reviews and evaluates the processes used by the Company to communicate our code
of conduct and other compliance policies to all associates and to inform
associates of the mechanisms available to them for reporting concerns.
1
Management Reports: The audit committee discusses with management the status and
results of significant management investigations into compliance-related issues.
It also receives reports from the general counsel regarding significant legal
and compliance matters, including material litigation, other potentially
material contingent liabilities and material reports or inquiries received from
regulators or governmental agencies.
Oversight of External Auditor
Selection: The audit committee selects, evaluates and, when appropriate,
replaces our external auditor. It is responsible for establishing a clear
understanding with management and the external auditor that the external auditor
is ultimately accountable to the audit committee.
Controls: The committee or its Chairperson approves the annual budget for all
audit and non-audit, tax services to be provided. The audit committee
pre-approves all engagements of the external auditor to provide non-audit
services. The committee's general policy is to restrict the engagement of the
external auditor to the provision of audit and tax-related services. The
committee will not approve the external auditor to be the provider of the
following non-audit services (as interpreted by the SEC): bookkeeping and other
services related to our accounting records or financial statements; financial
information systems design and implementation; appraisals or valuation services,
fairness opinions or contribution-in-kind reports; actuarial services; internal
audit outsourcing services; management functions or human resources; broker or
dealer, investment adviser or investment banking services; legal services or
expert services unrelated to the audit; and any other services determined by law
to be prohibited. The audit committee will ensure that the lead and reviewing
partners assigned to our Company's audit are rotated no less frequently than
every five years.
Membership of the Committee
The membership of the Committee shall consist of at least two directors who are
generally knowledgeable in financial and auditing matters. Each member shall be
free of any relationship that, in the opinion of the Board, would interfere with
his or her individual exercise of independent judgment. Applicable laws and
regulations shall be followed in evaluating a member's independence. The
Chairperson shall be appointed by the full Board.
Meetings of the Committee
Meetings: The audit committee meets at least four times each year in conjunction
with the board of directors meetings. In addition, at or immediately prior to
each of those meetings, the committee reviews the proposed Form 10-KSB or 10-QSB
filing and associated earnings release.
Management Staffing: The primary senior management liaison to the audit
committee is the CFO. The CEO is also invited to all committee meetings. No
other directors or members of Company management attend committee meetings other
than pursuant to the express invitation of the chair of the audit committee.
Authority of the Committee
Authority and Delegation: With regard to all matters described in this charter
as being within the authority of the audit committee, rather than those matters
in which the committee makes recommendations to the board of directors, the
committee has the full power and authority to act on behalf of the board.
Outside Advisors: The audit committee has the authority to retain legal,
financial or other advisors as it deems appropriate. In the event the committee
determines in its sole authority to retain any such advisors, the committee has
the sole authority to approve the firm's scope of assignment, fees and other
terms of retention.
2