SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 under ss.240.14a -12
EMERGISOFT HOLDING, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
[ ] 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: __________
2) Aggregate number of securities to which transaction applies: ______________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
----------------------------------------------------------------
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5) Total fee paid:____________________________________________________________
[ ] 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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3) Filing Party: _______________________________________________________________
4) Date Filed: _________________________________________________________________
EMERGISOFT HOLDING, INC.
Arlington, Texas
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Friday, August 8, 2003
To the Stockholders:
The 2003 annual meeting of stockholders (the "Annual Meeting") of
Emergisoft Holding, Inc., a Nevada corporation (the "Company"), will be held on
Friday, August 8, 2003, at 9:00 a.m. local time, at the Company's offices
located at 2225 Avenue J, Arlington, Texas 76006, for the following purposes:
(1) To elect five directors to serve until the 2004 annual meeting of
stockholders;
(2) To ratify the appointment of Ernst & Young, LLP as independent auditors of
the Company for the fiscal year ending December 31, 2003;
(3) To ratify the amendment of the 2001 Stock Incentive Plan by increasing the
maximum plan shares to 3,000,000 post-Reverse Stock Split shares; and
(4) To transact such other business as may properly come before such meeting or
any adjournment(s) thereof.
The close of business on July 11, 2003, is the record date for the
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, WE ASK THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE. A SELF-ADDRESSED, POSTPAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE.
By order of the Board of Directors
/s/ Ash Huzenlaub
____________________________________
Ash Huzenlaub
Chairman of the Board,
Chief Executive Officer and President
July 18, 2003
TABLE OF CONTENTS
Page
Notice of Annual Meeting of Stockholders..................................cover
Solicitation and Revocability of Proxies......................................1
Election of Directors (Item 1)................................................2
Information Regarding Nominees...........................................2
Compensation of Directors................................................4
Directors' Meetings and Committees of the Board of Directors.............4
Executive Officers.......................................................6
Executive Compensation...................................................7
Security Ownership of Certain Beneficial Holders and Management.........10
Section 16(a) Beneficial Ownership Reporting Compliance.................11
Transactions with Management and Certain Stockholders...................11
Audit Fees..............................................................11
Appointment of Auditors (Item 2).............................................12
Increase in Number of Shares Under the 2001 Stock Incentive Plan (Item 3)....13
Other Matters (Item 4).......................................................15
Stockholder Proposals........................................................16
[LOGO OMITTED]
EMERGISOFT HOLDING, INC.
2225 Avenue J
Arlington, Texas 76006
(817) 633-6665
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company for use at the Annual Meeting to be held on Friday, August 8,
2003, at 9:00 a.m. local time, at the Company's offices at 2225 Avenue J,
Arlington, Texas 76006, Texas, or at any adjournment(s) thereof. The
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors") will be conducted primarily by mail. In addition, officers,
directors and employees of the Company may solicit proxies personally or by
telephone, or other forms of wire or facsimile communication. The Company will
reimburse brokers, custodians, nominees and fiduciaries for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of common
stock of the Company ("Common Stock").
The costs of the solicitation will be borne by the Company. This proxy
statement and the form of proxy will be first mailed to stockholders of the
Company on or about July 18, 2003.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the proxies will be voted at the Annual Meeting.
At the close of business on July 11, 2003, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding 24,475,658 shares of Common Stock, each share of
which is entitled to one vote. Common Stock is the only class of outstanding
securities of the Company entitled to notice of and to vote at the Annual
Meeting.
The Company's annual report to stockholders for the year ended December 31,
2002, including financial statements, is being mailed herewith to all
stockholders entitled to vote at the Annual Meeting. The annual report does not
constitute a part of the proxy soliciting material.
1
ITEM 1.
ELECTION OF DIRECTORS
Under the Company's Bylaws the Board of Directors may consist of no fewer
than one (1) director, the precise number being fixed by resolution adopted by
the Board of Directors. The Board of Directors has fixed the number of directors
at five (5). Each director elected shall hold office until the annual meeting
next after his or her election and until his or her successor is duly elected
and qualified, or until his or her death or retirement or until he or she
resigns or is removed as provided in the Bylaws. Under the Bylaws, a majority of
the Board of Directors may fill vacancies and newly created directorships
resulting from an increase in the authorized number of directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual Meeting,
the persons named as proxies in the enclosed proxy will vote for the election of
such other person(s) as may be nominated by the Board of Directors.
The following persons have been nominated to serve as directors until the
2004 meeting of stockholders or until their successors are elected and
qualified: Christopher Assif, Ash Huzenlaub, Jeff McCurdy, Jim Ross, and Jason
Sear.
A plurality of the votes cast in person or by proxy by the holders of
Common Stock is required to elect a director. Accordingly, abstentions and
"broker non-votes" will have no effect on the outcome of the election of
directors assuming a quorum is present or represented by proxy at the Annual
Meeting. A broker non-vote occurs if a broker or other nominee does not have
discretionary authority and has not received instructions with respect to a
particular item. Stockholders may not cumulate their votes in the election of
directors.
Information Regarding Nominees
The following table sets forth information as of July 18, 2003 regarding
the names, ages and principal occupations of the nominees for director positions
to be filled at the annual meeting, other directorships in certain companies
held by them and the date of their first service as a director of the Company.
Each such person has continuously served as a director since the date of his or
her first service. Additional information concerning each nominee follows the
table.
2
Names Principal Occupation
and Directorships Director Since Age
Christopher Assif Vice President of
maxIT Healthcare 10/14/02 41
- --------------------------------------------------------------------------------
Ash Huzenlaub Chairman of the Board,
President, Chief Executive 5/25/01 27
Officer and Director of the
Company
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Jeff McCurdy Attorney in Private
Practice and Director
of the Company 8/29/01 30
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Jim Ross Attorney in Private
Practice and Director
of the Company 11/2/01 42
- --------------------------------------------------------------------------------
Jason Sear Financial Manager of Berlwood
Five, Ltd. and 5/25/01 35
Director of the Company
- --------------------------------------------------------------------------------
Each of the nominees and directors has been engaged in the principal
occupation set forth opposite his name for at least the past five years except
as described below.
CHRISTOPHER ASSIF is a Vice President of maxIT Healthcare, a healthcare
information technology consulting practice specializing in strategic planning,
benefits realization, staffing and implementation support of large enterprise
clinical and financial systems. He also serves as an advisory board member for
MK Capital, a venture capital firm specializing in technology and outsourced
services. Immediately prior to his role with maxIT, Mr. Assif was CEO and a
member of the board of directors of Dynamic Healthcare Technologies Inc., a
NASDAQ listed clinical and diagnostic workflow solutions system provider. The
company, which serviced more than 640 client sites worldwide, merged with Cerner
Corporation. Prior to Dynamic, Mr. Assif held executive management positions
with Cerner Corporation, Baxter International, and SBC Communications.
ASH HUZELAUB joined the Company as its Chairman, President and CEO on May
29, 2002. Mr. Huzenlaub has been associated with the Company for the past two
and a half years, most recently as an independent director. Prior to joining the
Company, Mr. Huzenlaub was employed by Berlwood Five, Ltd., an Arlington, Texas
based investment group. Prior to his engagement by Berlwood, he was employed by
Woodcrest Capital, L.L.C., a Fort Worth based investment company. Mr. Huzenlaub
serves as an advisor to the Texas Christian University Neeley School of Business
and is past President and Chairman of the Texas Run To The Cross (2000-2002), a
benefit for Texas youth projects. He is also a member of the National Eagle
Scout Association. Mr. Huzenlaub graduated in 1998 with a BBA in Finance and
Marketing, with an emphasis in Entrepreneurship, from Texas Christian
University. He was a four year distance runner for Texas Christian University
Track & Field and a Letterman. He completed the Leadership Studies program at
Regents College, London, England, and attended the Caruth Entrepreneurship
Center Certification program at Southern Methodist University.
3
JEFF MCCURDY is a representative of Berlwood Five, Ltd. He graduated from
Texas Christian University with a Bachelor's of Science in 1997 and earned his
Doctorate of Jurisprudence from Texas Wesleyan University in 2001. Mr. McCurdy
is currently a partner in the law firm of McCurdy & McCurdy. Mr. McCurdy is
active in a number of other investments and is a resident of North Texas.
JIM ROSS is a former Marine with nearly 13 years of law enforcement
experience at the local and federal levels. He is currently a personal injury
attorney in private practice in Arlington, Texas. He earned a Bachelor Degree
from Dallas Baptist University and a Juris Doctor Degree from Texas Wesleyan
University School of Law in 2001. He is a member of the American Bar
Association, American Trial Lawyers Association, Texas Trial Lawyers
Association, College of the Texas State Bar and Tarrant County Bar Association.
JASON SEAR a partner of Berlwood Five, Ltd., is involved in several local
and nationwide business enterprises as an investor and executive team member.
Educated in economics at the University of St. Thomas, Mr. Sear sits on several
boards and oversees the financial management of a variety of partnerships and
corporations, primarily related to real estate investment, corporate development
and business finance.
Compensation of Directors
Directors receive no cash remuneration for serving on the Board of
Directors of the Company. Pursuant to the Company's 2001 Non-Employee Directors'
Stock Option Plan (the "Directors' Plan"), directors of the Company who are not
officers or employees of the Company or any of its subsidiaries ("Nonemployee
Directors"), who are serving as a Director on January 1 of each year, beginning
January 1, 2002 will automatically be granted a nonqualified stock option to
purchase 2,500 shares of Common Stock. Non-employee directors first elected or
appointed to the Board on or after January 1, 2002 will automatically be granted
a non-qualified stock option to purchase 12,500 shares of Common Stock upon the
date of such election or appointment. Each option will have an exercise price
equal to the fair market value of the Common Stock on the date of grant. The
exercise price may be paid in cash, in shares of Common Stock (valued at fair
market value at the date of exercise), or by a combination of such means of
payment. Generally, the fair market value of a share of Common Stock on a
particular date is equal to the mean between the closing high bid and low asked
quotations for the trading day on the NASDAQ or prior to the date of grant.
All options granted under the Directors' Plan have a maximum term of ten
years and those granted on each January 1 vest one year from date of grant.
Those granted upon first election or appointment of a director will vest in five
equal annual installments beginning on the first anniversary of the date of
grant. Upon the occurrence of a "change of control," each option will be
exercisable in full.
Directors' Meetings and Committees of the Board of Directors
The Board of Directors held five meetings and took action by written
consent eleven times during 2002. Each director attended at least 75% of the
aggregate total meetings of the Board of Directors and any committee on which
such director served which occurred during his or her tenure, except Cameron
Ware attended only two of three 2002 board meetings that took
4
place during his tenure as director. Mr. Ware resigned as a director effective
June 9, 2002. The Company has the following standing committees:
Audit Committee Report
The Audit Committee of the Company's Board of Directors is responsible for
assisting the Board of Directors of the Company in monitoring the integrity of
the financial statements of the Company, compliance by the Company with legal
and regulatory requirements and the independence, selection and performance of
the Company's internal and external auditors. The consolidated financial
statements of the Company for the year ended December 31, 2002 were audited by
Ernst & Young LLP.
As a part of its activities, the Committee has:
o Reviewed and discussed the audited financial statements of the
Company with management; and
o Reviewed and discussed the quarterly reviewed condensed financial
statements of the Company with management.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements of the Company for the year ended December 31, 2002 be included in
applicable filings with the SEC on Form 10-K.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached as Exhibit A hereto.
The Audit Committee currently consists of Jason Sear, as Chairman, Jeff
McCurdy and Jim Ross. The Audit Committee met informally throughout the year in
advance of meetings of the Board of Directors. None of the directors on the
Audit Committee are independent.
Finance Committee
The Finance Committee, which currently consists of Messrs. Sear and
Huzenlaub met informally throughout the year in advance of meetings of the Board
of Directors. The Finance Committee's principal functions are (i) to monitor the
financial position of the Company on a regular, frequent and consistent basis,
in particular the Company's working capital position and capitalization
requirements; (ii) to consider, develop and recommend to the Board, when
appropriate, strategies for obtaining working capital and additional
capitalization; (iii) explore strategic alliances with third parties providing
financial, in addition to operational, assistance; and (v) to retain such legal
counsel, investment advisors and experts as it may believe necessary to the
performance of their duties.
Compensation Committee
5
The Compensation Committee, which currently consists of Messrs. Sear,
McCurdy and Ross met informally throughout the year in advance of meetings of
the Board of Directors. The Compensation Committee's principal function is to
evaluate and set levels and types of compensation for the Company's employees.
Legal Committee
The Legal Committee, which currently consists of Messrs. Sear, McCurdy and
Ross met informally throughout the year in advance of meetings of the Board of
Directors. The Legal Committee's principal function is to assist management in
the review of legal actions concerning the Company.
Executive Officers
The following information is provided with respect to the current executive
officers of the Company.
Executive Officers
Name Age Position(s) Held with the Company
Ash Huzenlaub 27 Chairman of the Board, President, Chief Executive
Officer and Director of the Company
Ann Crossman 39 Controller, Treasurer and Secretary
6
Executive Compensation
The following Summary Compensation Table sets forth the annual and
long-term compensation for the Company's Chief Executive Officer and the
Company's two most highly compensated executive officers other than the Chief
Executive Officer. No other executive employed by the Company received salary
and bonus in excess of $100,000 during 2002.
Long Term Compensation
Annual Compensation Awards
------------------------------------ -------------------------
Name and Principal Other Annual Restricted Securities All Other
Position Bonus Compensation Stock Underlying Compensation
Year Salary ($) ($) ($) Awards ($) Options (#) ($)
---- ---------- -------- ------------ ---------- ----------- -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Ash Huzenlaub (1) 2000 - - - - - -
Chairman of the
Board, Chief
Executive Officer
and President
2001 - - - - - -
2002 61,410 - - - 650,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
Dan Witte (2) 2000 128,500 - - - - -
Former Chairman
of the Board,
Chief Executive
Officer and
President
2001 159,375 - - - - -
2002 82,381 - - - - 48,750 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Jay Flynn (3) 2000 - - - - - -
Vice President of
National Sales
2001 - - - - - -
2002 120,000 125,000 - - 500,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------
(1) Ash Huzenlaub was elected Chief Executive Officer and President of the
Company on May 29, 2002.
(2) Dan Witte was elected Chief Executive Officer and President of the Company
in November 2001 and served in this capacity for the Company until his
resignation in May 2002.
(3) Jay Flynn was elected Vice President of National Sales in February 2002 and
served as a Vice President of Emergisoft through December 2002. He is now
employed as a Senior Territory Director and, as of January 1, 2003, is no longer
an officer of Emergisoft.
(4) Mr. Witte received $48,750 in severance compensation upon his resignation in
May 2002.
7
Stock Options Granted in 2002
The following table contains information concerning stock option grants by
the Company made to the executive officers named in the Summary Compensation
Table appearing above during the fiscal year ended December 31, 2002. No stock
appreciation rights were granted to individuals during 2002. Each option has a
maximum term of either 5 or 10 years, as indicated, subject to earlier
termination in the event of the option holder's cessation of employment with the
Company
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price per Expiration
Name Granted in 2002(1) Share ($) Date
- ---- ------- ---------- --------- ----
Ash Huzenlaub (2) 650,000 37% .76 8/1/07
- --------------------------------------------------------------------------------
Dan Witte (3) - - - -
- --------------------------------------------------------------------------------
Jay Flynn (4) 500,000 28% .76 8/1/07
- --------------------------------------------------------------------------------
- ---------------------------
(1) The aggregate number of options granted to employees in 2002 was 1,771,038.
(2) The options vest as to 250,000 option shares on August 1, 2002, then 100,000
shares each year thereafter
(3) Mr. Witte was not granted any stock options in 2002.
(4) The options vest as to one-fifth of the option shares on each of August 1,
2002; August 1, 2003; August 1, 2004; August 1, 2005 and August 1, 2006.
8
Report on Repricing of Options/SARs
The Company did not adjust or amend the exercise price of stock options or
SARs previously awarded to any of the named executive officers during the last
completed fiscal year.
Aggregated Option Exercises and Fiscal Year-End Option Values
The following table contains certain information concerning the value of
unexercised options at December 31, 2002.
Number of Securities Underlying Value of Unexercised
Unexercised In-The-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Year-End (#) Year-End ($)
- -
Shares
Acquired on Value Exercisable Unexercisable Exercisable ($) Unexercisable ($)
----------- ------------- --------------- -----------------
Name Exercise (#) Realized
------------ --------
Ash Huzenlaub - - 250,000 400,000 0 0
- --------------------------------------------------------------------------------------------------------------------
Dan Witte (2) - - - - - -
- --------------------------------------------------------------------------------------------------------------------
Jay Flynn - - 100,000 400,000 0 0
- --------------------------------------------------------------------------------------------------------------------
- --------------------------
(1) The fair market value of the shares underlying the options does not exceed
the exercise price of the options.
(2) Mr. Witte's options were terminated upon his resignation from the Company.
9
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 31, 2003 (unless otherwise indicated) by
(i) each person known by the Company to own beneficially five percent or more of
its outstanding Common Stock, (ii) the Company's Chief Executive Officer and
each of the Company's other two most highly compensated executive officers,
(iii) each of the Company's directors and (iv) all executive officers and
directors of the Company as a group.
Directors, Executive Officers
and 5% Shareholders Beneficial Share Ownership
Number of Percent of Outstanding
Directors Shares Shares
Ash Huzenlaub (1)............................ 308,602 1.25%
Christopher Assif (2)........................ 50,000 *
Jeff McCurdy (3)............................. 2,500 *
Jim Ross (4)................................. 2,500 *
Jason Sear (5)............................... 2,500 *
Executive Officers not named above
Ann Crossman (6)................................3,250 *
Directors and executive officers as a group...391,019 1.59%
Holders of 5% or more not named above
Berlwood Five, Ltd. (7).....................23,500,913 95.43%
Berlwood Three, L.L.C. (8)..................23,500,913 95.43%
- ---------------
* Indicates less than 1%
(1) Includes 250,000 shares of common stock issuable upon exercise of options.
(2) Includes 50,000 shares of common stock issuable upon exercise of options.
(3) Includes 2,500 shares of common stock issuable upon exercise of options.
(4) Includes 2,500 shares of common stock issuable upon exercise of options.
(5) Includes 2,500 shares of common stock issuable upon exercise of options.
(6) Includes 3,250 shares of common stock issuable upon exercise of options.
(7) The address of Berlwood Five, Ltd. is 1201 North Watson Road, Suite 100,
Arlington, Texas 76006. Includes 150,000 shares of common stock issuable upon
exercise of warrants.
(8) The address of Berlwood Three, L.L.C. is 1201 North Watson Road, Suite 100,
Arlington, Texas 76006. Includes 150,000 shares of common stock issuable upon
exercise of warrants. Berlwood Three, L.L.C. is the general partner of Berlwood
Five, Ltd.
10
Section 16(a) Beneficial Ownership Reporting Compliance
Compliance with Section 16(a) of the 1934 Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company during, and with respect to, fiscal 2002, the Company believes that
during fiscal 2002 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were in
compliance with section 16(a) with the exception of the following transactions:
o On February 15, 2002, Berlwood Five, Ltd. purchased 3,750,000 shares of
common stock and filed the applicable Form 4 one day late on March 11,
2002. Berlwood Three, L.L.C. also reported its indirect acquisition of
these 3,750,000 shares a day late on March 11, 2002.
o Berlwood Three, L.L.C. failed to report its indirect acquisition, through
Berlwood Five, Ltd., of 1,875,005 shares of common stock on September 19,
2002; 937,503 shares of common stock on November 13, 2002; and 937,503
shares of common stock on December 23, 2002 on a Form 4 until December 30,
2002.
o On March 1, 2002, Jay Flynn, who owned shares of common stock and options
on shares of common stock, was elected officer of the Company and failed to
file a Form 3 reporting this election until August 2, 2002.
o On January 1, 2002, Cameron Ware, then a director of the Company,
acquired an option to acquire 2,500 shares of common stock and this
acquisition was not reported on a Form 4 until May 16, 2002. On February
28, 2002, Mr. Ware's term as officer of Infosphere Incorporated, a company
that directly owned 2,386,048 shares of the Company's common stock, ended.
Mr. Ware failed to file a Form 4 reporting that he no longer indirectly
owned these 2,386,048 shares until March 11, 2002.
Transactions with Management and Certain Stockholders
In October 2002, we paid our director, Christopher Assif, $10,000 in
business consulting fees. There were no other transactions entered into between
the Company and certain of its officers, directors and stockholders and their
affiliates for the year ended December 31, 2002.
Audit Fees
Audit Fees.
The aggregate fees for professional services rendered by Ernst & Young LLP
in connection with their audit of our consolidated financial statements and
reviews of the consolidated financial statements included in our Quarterly
Reports on Form 10-Q for the 2001 and 2002 fiscal years were approximately
$175,000 and $180,415, respectively.
11
Audit-Related Fees
All of the aggregate fees billed in each of the 2001 and 2002 fiscal years
for assurance and related services by Ernst & Young LLP that are reasonably
related to the performance of their audit of our consolidated financial
statements and reviews of the consolidated financial statements included in our
Quarterly Reports on Form 10-Q for the 2001 and 2002 fiscal years are included
under Audit Fees above.
Tax Fees
All of the aggregate fees billed in either of the 2001 and 2002 fiscal
years for professional services rendered by Ernst & Young for tax compliance,
tax advice and tax planning are included under Audit Fees above.
All Other Fees.
All of the aggregate fees for all other services rendered by Ernst & Young
LLP in the 2002 fiscal year are included under Audit Fees above and can be
sub-categorized as follows:
o Attestation Fees. All of the aggregate fees for attestation services
rendered by Ernst & Young LLP for matters such as comfort letters and
consents related to SEC and other registration statements, audits of
employee benefit plans, agreed-upon procedures, due diligence pertaining to
acquisitions and consultation on accounting standards or transactions are
included under Audit Fees above.
o Other Fees. All of the aggregate fees for all other services, such as
consultation related to tax planning and compliance, improving business and
operational processes and regulatory matters, rendered by Ernst & Young LLP
in the 2002 fiscal year was are included under Audit Fees above.
100% of the services described under the headings Audit Fees, Audit-Related
Fees, Tax Fees and All Other Fees were approved by the Audit Committee.
ITEM 2.
APPOINTMENT OF AUDITORS
The Board of Directors appointed Ernst & Young LLP, independent public
accountants, to audit the consolidated financial statements of the Company for
the year ending December 31, 2003. The Company is advised that no member of
Ernst & Young LLP has any direct or material indirect financial interest in the
Company or, during the past three years, has had any connection with the Company
in the capacity of promoter, underwriter, voting trustee, director, officer or
employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Nevada
law, an abstention would have the same effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether a
majority had been achieved.
12
The Board of Directors recommends that stockholders vote "FOR" ratification
of this appointment.
In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting, and will be
offered the opportunity to make a statement if such representative desires to do
so and will be available to respond to appropriate questions.
ITEM 3.
APPROVAL OF INCREASE IN NUMBER OF SHARES
RESERVED UNDER THE 2001 STOCK INCENTIVE PLAN
On December 19, 2001, the Board of Directors adopted the 2001 Stock
Incentive Plan ("2001 Plan"), subject to stockholder approval, which was given
at the 2002 Annual Meeting of Stockholders, on June 21, 2002.
The 2001 Plan provides an opportunity for directors, officers, key
employees, and consultants of the Company to acquire shares of the Common Stock
or to receive compensation which is based upon appreciation in the value of the
Common Stock to aid the Company in retaining and obtaining key personnel of
outstanding ability.
The 2001 Plan is administered by the Compensation Committee appointed by
the Board of Directors. The Committee has full power to select, from among the
persons eligible for awards, the individuals to whom awards will be granted, to
make any combination of awards to any participant and to determine the specific
terms of each grant, subject to the provisions of the 2001 Plan. Directors,
officers, key employees and consultants of the Company or a subsidiary of which
the Company owns a majority of the outstanding shares of voting stock or voting
interest, are eligible to receive grants under the 2001 Plan; provided, however,
that incentive stock options may only be granted to employees of such entities.
The 2001 Plan permits the granting of incentive stock options ("ISO's") and
non-qualified options ("NQO's") (collectively "Options"). To qualify as ISO's,
options must meet additional federal income tax requirements, including a
limitation that the aggregate fair market value of ISO's that first become
exercisable by an optionee during any calendar year may not exceed $100,000.
Further, ISO's cannot be granted to any owner of 10% or more of the total
combined voting power of all classes of stock of the Company or its
subsidiaries, unless the ISO's (i) have an exercise price of 110% of the fair
market value of the Common Stock on the date of grant, and (ii) may not be
exercised more than five years from the date of grant thereof.
An Option entitles the grantee to purchase a number of shares of Common
Stock at a price ("Exercise Price"), which will be not less than 100% of the
fair market value of a share of Common Stock on the date the Option is granted.
The Exercise Price must be paid in full with cash or, unless otherwise provided
by the award agreement, by delivery of previously owned Common Stock valued at
its fair market value on the exercise date.
The term of each Option is fixed by the Committee but may not exceed ten
years from the date of grant. The Committee determines at which time or times
each Option may be
13
exercised. Options are evidenced by option agreements, the terms and provisions
of which may differ. No Option is transferable by the optionee other than by
will or by the laws of descent or distribution, unless the Committee authorizes
all or a portion of the Option to be granted to immediate family members or to
an entity involving immediate family members, subject to certain restrictions.
In the event of termination of employment by reason of death, an NQO may
thereafter be exercised by the optionee's estate, or by such person who acquires
the right to exercise such Option by inheritance, bequest or by reason of such
optionee's death (to the extent it was then exercisable) for one year after such
death.
In the event of termination of employment by reason of permanent
disability, an NQO may thereafter be exercised (to the extent it was then
exercisable) within one year after such termination. An ISO expires, unless
exercised, one year after the date that the optionee is terminated due to the
determination by the Company that the optionee is disabled.
In the event of termination of employment by reason other than death or
disability of the optionee, ISO's and NQO's terminate, unless exercised, three
months after such termination. In the case of willful or gross misconduct on the
part of the optionee as determined by the Company, both ISO's and NQO's expire
immediately upon the receipt by the optionee of notice of termination.
A Stock Appreciation Right may be granted in connection with all or any
portion of a previously or contemporaneously granted Option or not in connection
with an Option. A Stock Appreciation Right entitles the Participant to receive
upon exercise or payment the excess of (1) the Fair Market Value of a specified
number of shares of the Stock at the time of exercise over (2) a specified price
which shall be not less than the Option exercise price for that number of shares
in the case of a Stock Appreciation Right granted in connection with a
previously or contemporaneously granted Option, or in the case of any other
Stock Appreciation Right not less than one hundred percent (100%) of the Fair
Market Value of that number of shares of Stock at the time the Stock
Appreciation Right was granted. A Stock Appreciation Right granted in connection
with an Option may only be exercised to the extent that the related Option has
not been exercised. The exercise of a Stock Appreciation Right results in a pro
rata surrender of the related Option to the extent the Stock Appreciation Right
has been exercised.
Upon exercise or payment of a Stock Appreciation Right, the Company will
pay to the Participant the appreciation in cash or shares of Stock (at the
aggregate Fair Market Value on the date of payment or exercise) as provided in
the Stock Incentive Agreement or, in the absence of such provision, as the
Committee may determine.
Each Stock Appreciation Right granted under the Plan is exercisable at such
time or times, or upon the occurrence of such event or events, and in such
amounts, as the Committee shall specify in the Stock Incentive Agreement;
provided, however, that subsequent to the grant of a Stock Appreciation Right,
the Committee, at any time before complete termination of such Stock
Appreciation Right, may accelerate the time or times at which such Stock
Appreciation Right may be exercised in whole or in part.
14
A Stock Appreciation Right is not transferable or assignable except by will
or by the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant, or in the event of the
Disability of the Participant, by the legal representative of the Participant.
The Committee may award shares of common stock ("Restricted Stock") to any
person eligible to participate in the 2001 Plan. At the time of the grant of
such Restricted Stock, a certificate representing the shares shall be registered
in the name of the recipient, but shall be held by the Company for the
employee's account. The employee has the beneficial ownership of the stock
including the right to vote and, unless the Committee decides otherwise, the
right to receive dividends. In addition to any other restrictions the Committee
may place on Restricted Stock, the Committee may, in its discretion, provide
that Restricted Stock shall vest upon the passing of a restriction period and
the satisfaction of certain vesting conditions as determined by the Committee.
The Committee may require a cash payment from the participant in an amount no
greater than the aggregate Fair Market Value of the shares of stock awarded
determined at the date of grant in exchange for the grant of a Restricted Stock
Award or may grant a Restricted Stock Award without the requirement of a cash
payment. Restricted Stock may, in the Committee's discretion, be subject to
forfeiture, in whole or in part, in the event that vesting conditions
established by the Committee are not met.
18,000,000 shares of the Company's Common Stock were reserved exclusively
for issuance under the 2001 Plan (the "Maximum Plan Shares"). On February 27,
2002, the Board of Directors approved a 20-for-1 reverse stock split, leaving
only 900,000 Maximum Plan Shares.
On July 19, 2002, the Board of Directors increased the number of Maximum
Plan Shares from 900,000 to 3,000,000 post-reverse stock split shares of the
Company's Common Stock, subject to stockholder approval at the 2003 Annual
Meeting.
The Board of Directors recommends that the stockholders vote FOR the
proposal to ratify the increase in the number of Maximum Plan Shares under the
2001 Stock Incentive Plan.
ITEM 4.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
15
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for inclusion in the proxy
material and for presentation at the Company's 2004 Annual Meeting of
Stockholders must forward such proposal to the Secretary of the Company at the
address indicated on the second page of this proxy statement, so that the
Secretary receives it no later than December 31, 2003.
By Order of the Board of Directors
/s/ Ash Huzenlaub
------------------
Ash Huzenlaub
Chairman of the Board,
Chief Executive Officer and President
July 18, 2003
16
PROXY
EMERGISOFT HOLDING, INC.
2225 AVENUE J
ARLINGTON, TEXAS 76006
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
EMERGISOFT HOLDING, INC. FOR THE ANNUAL MEETING
OF STOCKHOLDERS ON AUGUST 8, 2003
The undersigned hereby appoints Ann Crossman and Clarence White and each of
them as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to vote all shares of Emergisoft Holding, Inc. Common
Stock which the undersigned may be entitled to vote at the annual meeting of
stockholders to be held at 9:00 a.m. on Friday, August 8, 2003 at 2225 Avenue J,
Arlington, Texas, and at any adjournment thereof, upon the matters set forth on
the reverse side and described in the accompanying Proxy Statement and upon such
other business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED HEREIN. AS TO SUCH OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES LISTED HEREON
ACCORDING TO THEIR DISCRETION.
Please mark your votes as indicated in this example: /X/
PROPOSAL 1: ELECTION OF DIRECTORS
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed to the right to vote for listed
all nominees(except to the right
as marked to contrary)
Nominees:
Christopher Assif Ash Huzenlaub
Jeff McCurdy Jim Ross
Jason Sear
INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees strike through the nominee's name above.
PROPOSAL 2: APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR THE COMPANY
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3: APPROVAL OF INCREASE IN NUMBER OF SHARES RESERVED UNDER THE 2001
STOCK INCENTIVE PLAN
/ / FOR / / AGAINST / / ABSTAIN
Please check the following box if you plan to attend the annual meeting of
stockholders in person. / /
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED "FOR" PROPOSAL 1, "FOR" PROPOSAL 2, AND "FOR" PROPOSAL 3 AND IN
ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH RESPECT TO
ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING. YOU MAY REVOKE THIS
PROXY AT ANY TIME PRIOR TO A VOTE THEREON.
Dated: _____________________, 2003 ______________________________
Signature
______________________________
Signature
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON. WHEN SIGNING AS
ATTORNEY-IN FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. JOINT OWNERS SHOULD EACH SIGN. IF A CORPORATION, SIGN IN
CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
Exhibit A
EMERGISOFT HOLDING, INC.
CHARTER FOR THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
I. Purpose
The Audit Committee is appointed by the Board of Directors of the Company
to assist the Board in fulfilling its oversight responsibilities. The
Committee's primary duties and responsibilities are to:
o Oversee management's conduct of the Company's financial reporting
process and systems of internal accounting and financial controls to
ensure: (i) the integrity of the Company's financial statements; (ii)
the Company's compliance with legal and regulatory requirements; and
(iii) proper performance of the Company's internal audit function.
o Select, determine the compensation of and monitor the independence
and performance of the Company's outside auditors.
o Provide an avenue of communication among the outside auditors,
management and the Board.
o Prepare the report that SEC rules require be included in the
Company's annual proxy statement.
The Committee has the authority to conduct any investigation to enable it
to fulfill its responsibilities. It shall have direct access to all Company
personal and to the outside auditors and the power to retain independent
counsel, accountants and others to assist the Committee.
II. Composition and Meetings
The Committee's composition shall meet the independence requirements of any
securities exchange upon which the Company's securities are listed. The
Committee shall meet at least four times annually and shall be comprised of
not less than three directors, each of whom shall be independent and free
from any relationship that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee
shall have accounting or related financial management expertise.
Committee members shall be appointed by the Board. If a Committee Chair is
not designated by the Board or present at a meeting, the members of the
Committee may designate a Chair by majority vote of the members of the
Committee who are present. A majority of the members of the Committee shall
constitute a quorum.
III. Responsibilities and Duties
The Committee's principal responsibly is one of oversight. The Company's
management is responsible for preparing the Company's financial statements
and the outside auditors are responsible for auditing and/or reviewing
those financial statements. In carrying out its oversight responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
outside auditors work. The Committee's specific responsibilities are as
follows:
o The outside auditors are ultimately accountable to the Committee. In
connection therewith, the Committee shall:
(i) Request from the outside auditors annually and review a formal
written report describing: such firm's internal quality-control
procedures; any material issues raised by the most recent
internal quality-control review, or peer review, of the firm or
by an inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with such issues; and all relationships between the
outside auditors and the Company.
(ii) Discuss with the outside auditors any disclosed relationships
between such firm and the Company and their impact on the outside
auditors' independence.
(iii)Present its conclusions with respect to the outside auditors to
the full Board and recommend that the Board take appropriate
action in response to the outside auditors' report.
o The Committee shall review and discuss with management and the outside
auditors, the audited financial statements to be included in the Company's
Annual Report on Form 10-KSB, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results of
Operation," prior to filing with the Securities and Exchange Commission
("SEC"), or the Annual Report to Shareholders if distributed prior to the
filing of Form 10-KSB, and review and consider with the outside auditors
the matters required to the discussed by Statement on Auditing Standards
("SAS") No. 61. The Committee shall review with management and the outside
auditors any impact
on the financial statements of any new or proposed changes in accounting
principals or legal or regulatory requirements.
o The Committee, prior to filing each quarterly report on Form 10-QSB with
the SEC, shall review with management and the outside auditors the
Company's interim financial results to be included in such, and the matters
required to be discussed by SAS No. 61.
o The Committee shall discuss earnings press releases, as well as financial
information and earnings guidance provided to analysts and rating agencies.
o As appropriate, the Committee shall obtain advice and assistance from
outside legal accounting or other advisors.
o The Committee shall discuss policies with respect to risk assessment and
risk management.
o At least quarterly, the Committee shall meet separately and discuss with
management, the internal auditors (or other personnel responsible for the
internal audit function) and the outside auditors the quality,
appropriateness and adequacy of the Company's internal controls and
accounting principals applied in its financial reporting. The Committee
will meet separately with the chief executive and chief financial officers
of the Company at least annually to review the financial affairs of the
Company at such time as it deems appropriate to review the outside
auditors' examination and management report, and may do so in executive
session when and as deemed appropriate.
o The Committee shall review with the outside auditor any audit problems or
difficulties and management's response.
o The Committee shall set clear hiring policies for employees or former
employees of the outside auditors.
o The Committee shall review and evaluate the independence, performance and
compensation of the outside auditors, and annually make the appointment of
the outside auditors or approve any discharge or replacement of the outside
auditors should circumstances warrant. Any and all engagements of the
outside auditors, whether for auditing or non-auditing services, shall be
subject to approval by the Committee.
o The Committee shall review and reassess the adequacy of this Charter a
least annually. The charter shall be submitted to the Board for approval
and shall be published in accordance with SEC regulations.
o The Committee shall submit a report to shareholders for inclusion in the
Company's annual proxy statement as required by SEC rules.
o In addition to the above responsibilities, the Committee will undertake
such other duties as the Board delegates to it, and will report at least
annually to the Board regarding the Committee's examinations and
recommendations.
IV. Minutes, Reports and Evaluation
The Committee will maintain written minutes of its meetings that will be
filed with the minutes of the meetings of the Board.
The Committee will report periodically to the Board regarding the
Committee's activities, which will be incorporated as a part of the minutes
of the Board at which those activities are presented.
On an annual basis, a performance evaluation of the Committee shall be
undertaken by the full Board.