UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant (X) Filed by a Party Other than the Registrant ( )
Check the Appropriate Box
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
( x ) Definitive Proxy Statement
( ) Soliciting Material Pursuant toss.240.14a-12
PIRANHA, INC.
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Name of Registrant As Specified In Its Charter
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:
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(5) Total fee paid:
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( ) Fee paid previously with preliminary materials.
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( ) 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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Date Filed:
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PIRANHA, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Piranha, Inc.
The 2000 Annual Meeting of Stockholders of Piranha, Inc. (the "Company") will be
held at The Harvey Hotel, 1600 North Central Expressway, Plano, Texas 75074 on
August 18, 2000, at 8:00 a.m. (local time) for the following purposes:
1. To elect six directors of the Company who will serve until their
successors are duly elected and qualified.
2. To ratify the selection of Feldman Sherb & Co., P.C. to serve as
independent public accountants for the Company for the year
ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting.
You have the right to receive this Notice of the Annual Meeting and to vote at
the Annual Meeting if you were a stockholder of record at the close of business
on July 14, 2000. Whether or not you intend to be present in person at the
meeting, please sign the enclosed proxy and return it promptly in the envelope
provided. Full instructions are contained on the proxy card. In the event there
are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies by the Company.
This is an important meeting. To insure proper representation at the meeting
please complete, sign, date and return the proxy card in the enclosed envelope.
Even if you vote your shares prior to the Annual Meeting you may still attend
the Annual Meeting and vote your shares in person.
By Order of the Board of Directors,
Richard S. Berger, Secretary
July 28, 2000
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PIRANHA, INC.
6060 North Central Expressway, Suite 560
Dallas, Texas 75206
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Piranha, Inc. (the "Company") for use at
the Company's 2000 Annual Meeting of Stockholders (the "Meeting") to be held on
August 18, 2000, at 8:00 a.m. (local time) at The Harvey Hotel, 1600 North
Central Expressway, Plano, Texas 75074 and at any adjournments thereof. This
Proxy Statement, the accompanying proxy card and the Company's Annual Report to
Stockholders for the year ended December 31, 1999 are first being sent to
stockholders on or about July 28, 2000 to the stockholders of record on July 14,
2000 (the "Record Date").
We encourage you to vote your shares, either by voting in person at the
Meeting or by granting a proxy (i.e., authorizing someone to vote your shares).
If you properly sign and date the accompanying proxy card or otherwise provide
voting instructions and the Company receives it in time for the Meeting, the
persons named as proxies will vote the shares registered directly in your name
in the manner that you specified. IF YOU GIVE NO INSTRUCTIONS ON THE PROXY CARD,
THE SHARES COVERED BY THE PROXY CARD WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES AS DIRECTORS OF THE COMPANY AND FOR THE OTHER MATTERS LISTED IN THE
ACCOMPANYING NOTICE OF ANNUAL MEETING OF STOCKHOLDERS.
If you are a stockholder of record (i.e., you hold shares directly in
your name), you may revoke a proxy at any time before it is exercised by
notifying the proxy tabulator in writing, by submitting a properly executed,
later-dated proxy or by voting in person at the Meeting. The Company's proxy
tabulator is Continental Stock Transfer and Trust Company, New York, New York.
Any stockholder of record attending the Meeting may vote in person whether or
not he or she has previously voted his or her shares. If your shares are held
for your account by a broker, bank or other institution or nominee ("Broker
Shares"), you may vote such shares at the Meeting only if you obtain proper
written authority from your broker, bank or other institution or nominee and
present it at the Meeting.
PURPOSES OF MEETING
At the Meeting you will be asked to vote on the following proposals:
1. To elect six directors of the Company who will serve until their
successors are duly elected and qualified.
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2. To ratify the selection of Feldman Sherb & Co., P.C. to serve as
independent public accountants for the Company for the year ending
December 31, 2000; and
3. To transact such other business as may properly come before the
meeting.
VOTING SECURITIES
You may vote your shares at the Meeting only if you were a stockholder
of record at the close of business on July 14, 2000 (the "Record Date"). On July
14, 2000, there were 9,086,054 shares of Company Common Stock outstanding. Each
share of Company Common Stock is entitled to one vote on each matter to be
presented at the Meeting.
If a majority of the shares entitled to vote are present at the
Meeting, then a quorum has been reached and the Meeting can commence. A share is
present if it is represented in person or by proxy for any purpose at the
Meeting. Abstentions and Broker Shares that are voted on any matter at the
Meeting are included in determining the presence of a quorum for the transaction
of business at the commencement of the Meeting and on those matters for which
the broker, bank or other institution or nominee has authority to vote. If a
quorum is not present at the Meeting, or if a quorum is present but there are
not enough votes to approve of any of the proposals, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of the shares represented at the Meeting in person or by proxy.
The persons named as proxies will vote those proxies for such adjournment,
unless marked to be voted against any proposal for which an adjournment is
sought, to permit further solicitation of proxies. A stockholder vote may be
taken on one or more of the proposals in this Proxy Statement prior to any such
adjournment if there are sufficient votes for approval on such proposal(s).
Each of the six nominees for election as directors who receives a
majority of the affirmative votes cast at the Meeting in person or by proxy in
the election of directors will be elected as directors. Stockholders do not have
cumulative voting rights. Votes that are withheld, abstentions and Broker Shares
that are not voted in the election of directors will not be included in
determining the number of votes cast, and will have no effect on the election of
directors.
INFORMATION REGARDING THIS SOLICITATION
The Company will bear the expense of the solicitation of proxies for
the Meeting, including the cost of preparing, printing and mailing this Proxy
Statement, the accompanying Notice of Annual Meeting and proxy card. The Company
has requested that banks, brokers and other institutions and nominees holding
shares in their names, or in the name of their nominees, which are beneficially
owned by others, forward the proxy materials to, and obtain proxies from, such
beneficial owners. The Company will reimburse such institutions/nominees for
their reasonable mailing expenses.
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In addition to the solicitation of proxies by mail, proxies may be
solicited in person and by telephone, facsimile transmission or telegram by
directors, officers or employees of the Company (without special compensation
for such efforts). Any proxy given pursuant to this solicitation may be revoked
by notice from the person giving the proxy at any time before it is exercised.
Any such notice of revocation should be provided in writing signed by the
stockholder in the same manner as the proxy being revoked and delivered to the
Company's proxy tabulator, Continental Stock Transfer and Trust Company, New
York, New York.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that
certain of the Company's directors, officers and stockholders file with the
Securities and Exchange Commission an initial statement of beneficial ownership
and certain statements of changes in beneficial ownership of Common Stock of the
Company. Based solely on its review of such forms received by the Company and
written representation from the directors and officers that no other reports
were required, the Company is unaware of any instances of noncompliance, or late
compliance, with such filings during the fiscal year ended December 31, 1999.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of the Record Date certain
information with respect to (1) each current director, (2) each nominee for
director, (3) each executive officer and (4) all current directors and executive
officers as a group. All shares reflected below are owned of record and
beneficially by the named person or group and each such person or group has sole
investment power with respect to all such shares. To the Company's knowledge no
other person owns beneficially more than 5% of the Company's outstanding shares
other than FAI General Insurance Company Ltd., Sydney, Australia which owns
beneficially 853,041 shares (9.4%).
.
Name Amount Percent of Class
Edward W. Sample -0- -0-%
Richard S. Berger (1) 1,559,062 17.2
Michael Steele 340,000 3.7
Joseph H. Sherrill, Jr.(1)(2) 325,000 3.6
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Arthur R. Tauder(2) -0- -0-
W. Barger Tygart(2) -0- -0-
R. Don Ashley -0- -0-
Carey Lotzer 660,000 7.3
All executive officers and
directors as a group
(eight persons) 2,884,062 31.7%
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(1) Excludes shares owned by spouse as to which beneficial ownership is
disclaimed.
(2) Non-employee director.
ELECTION OF DIRECTORS
The Board of Directors of the Company proposes the election of six
directors at the Meeting. Those who are elected as directors will serve until
their successors are duly elected and qualified.
A stockholder can vote for or withhold his or her vote from any or all
of the nominees. In the absence of instructions to the contrary it is the
intention of the persons named as proxies to vote your shares FOR the election
of all the nominees named below. If any of the nominees should decline or be
unable to serve as a director, your shares will be voted for any substitute
nominee proposed by the Board of Directors or the Board of Directors may reduce
the number of directors to be elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT
INFORMATION ABOUT THE NOMINEES
Certain information with respect to each of the six nominees is set
forth below, including their names, ages, a brief description of their recent
business experience and certain other information. All nominees currently serve
as directors of the Company. The business address of each nominee and director
is the Company's principal executive offices. All nominees have been directors
of the Company since April 2000 except for Mr. Berger who has been a director
since 1992.
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Edward W. Sample (age 48) joined the Company in December 1999 after a 29
year career with $30 billion retailer, JC Penney, and is the Company's Chief
Executive Officer. Most recently Sample directed JC Penney's participation in
the Massachusetts Institute of Technology "News in the Future" consortium. The
News in the Future (NiF) research consortium provides a forum for the MIT Media
Laboratory and member companies to explore and exploit technologies that will
affect the collection and dissemination of news. Sample is credited with a
number of technology "firsts" for the retailer, such as: In 1999, under Sample's
direction, JC Penney unveiled the "World's First Commercial Electronic Ink
Display" (USA Today, 5/3/99). Some of Mr. Sample's other notable accomplishments
include: the introduction of the industry's first "web based" kiosk system; the
implementation of one of the countries largest distance learning systems; the
introduction of a digital imaging capture system for the retailer's enormous
merchandise operation; the implementation of an international digital image
transmission system for merchandise procurement, and the first commercial
introduction of the Sony SEPS 2000 camera, utilizing HDTV technology, in 1992.
Richard S. Berger (age 64) founded Classics International Entertainment,
Inc. (now known as Piranha, Inc.) in 1992, and after making several
acquisitions, took it public through an IPO in October 1993. Mr. Berger served
in various executive capacities including the Company's CEO, CFO, Secretary, and
Chairman of the Board until December 1999 when he reorganized the business into
a technology company. He is currently the Company's CFO, Secretary and
Treasurer. Prior to 1992, Mr. Berger served as a CEO, CFO, and Chairman of the
Board of several companies while preparing them for public offerings, private
placements and/or reverse mergers. Some of the industries served by Mr. Berger
were factoring (account receivable financing and billing for physicians and
dentists), cable television, publishing, environmental (waste water treatment,
contaminated soil removal), machining (NASA space shuttle program), retailing,
kiosk development, design and sales, and high technology and internet related
entities.
Michael Steele (age 44), the Company's Chief Information Officer, was the
co-founder of IBP, Inc., a technology corporation dealing in data compression
technology built upon the Linux operating system. Previously, Mr. Steele served
as a Financial Planner with Texas Instruments, Financial Analyst for W.R.Grace
and, since 1997, Infrastructure Building and Project Manager for Ernst and
Young. Mr. Steele has done extensive work in compression software sciences and
has participated in professional training in Java, metrics development and
documentation, new product planning/enhancements, business plan and market
development. Mr. Steele graduated from Texas Tech University, BS 1978, MS 1985.
MS MIS at UTD (in progress).
Joseph H. Sherrill, Jr. (age 59) is the retired President and CEO of R.J.
Reynolds Asia Pacific. He retired in December 1994 from R.J. Reynolds
International after 17 years overseas as a senior executive. Mr. Sherrill last
served as President and CEO of R.J. Reynolds Asia Pacific, based in Hong Kong.
Previous positions included Senior Vice President of Marketing, R.J. Reynolds
International; President and CEO of R.J. Reynolds Tabacos do Brazil; and
President and General Manager of R.J.R. Puerto Rico. Prior experience included
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sales and marketing research positions in the domestic company. Since 1994, Mr.
Sherrill has been active as Board Member, advisor, and investor in numerous
small companies. Currently, Mr. Sherrill serves on the Board of Directors of
Biocryst Pharmaceuticals, Lineshark.com and several private companies.
Arthur R. Tauder (age 60) is Former Vice Chairman - Strategic Planning and
Business Development, McCann-Erickson WorldGroup. One of the architects of
McCann-Erickson's marketing communications expansion, Tauder had been Executive
VP-Operations at McCann-Erickson WorldGroup since its formation in September
1977. McCann-Erickson WorldGroup is the parent organization of McCann-Erickson
Worldwide, the world's largest multinational advertising agency, as well as six
othr marketing communications companies. Tauder first joined the Interpublic
Group of Companies, Inc., McCann-Erickson WorldGroup's publicly owned parent, in
1968 at The Marschalk Company, another Interpublic ad agency. By the time he had
joined McCann-Erickson in 1987, he had already served as General Manager of
Marschalk and as Director of Planning and Budgets at Interpublic. In 1995 he was
promoted to Worldwide Executive VP of the McCann-Erickson Worldwide Advertising
Agency, responsible for planning and business development, training, and
information systems and communications.
W. Barger Tygart (age 64) is the retired Vice Chairman of the Board,
President and Chief Operating Officer, JCPenney. Mr. Tygart joined the JCPenney
Company, Inc., in 1960 advancing to increased levels of responsibility in
various store and district positions and in 1976 was promoted to the company's
New York Office Headquarters. In 1995, Mr. Tygart was elected to the position of
President, Chief Operating Officer and Vice Chairman of the Board and remained
in that position until his retirement in 1998. Mr. Tygart currently serves as a
member of the Board of Directors of Burlington Industries, one of the world's
largest and most diversified manufacturers of softgoods for apparel and interior
furnishings. Mr. Tygart also is a member of the Board of Directors of Monarch
Dental and is active as a consultant in a number of Internet related companies.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Board of Directors created four standing committees in the current
fiscal year. These are The Executive Committee, The Personnel and Compensation
Committee, The Audit Committee and The Corporate Governance Committee. The
functions of these committees and their current members are described below.
During 1999 the Board consisted of only Mr. Berger who took appropriate
corporate action when required.
Executive Committee. This committee oversees the operations of the Board;
often acts on behalf of the board during on-demand activities that occur between
meetings and these acts are later presented for full board review. This
committee also develops agenda items for Board Meetings. The Executive Committee
is comprised of Messrs. Sample (Chairman), Berger and Tauder.
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Personnel and Compensation Committee. This committee reviews and
administers the Company's annual and long-term incentive compensation plans,
makes recommendations in areas concerning personnel relations, and takes action
or makes recommendations with respect to the compensation of Company executive
officers, including those who are directors. The Personnel and Compensation
Committee has assumed the responsibility of the former stock option committee
and is responsible for the administration of the Company's two stock option
plans. The Personnel and Compensation Committee is comprised of Messrs. Tygart
(Chairman), Sherrill and Steele.
Audit Committee. This committee recommends to the Board of Directors
for stockholder approval the independent auditors for the annual audit of the
Company's consolidated financial statements. The committee also reviews the
independent auditors' audit strategy and plans, the scope of their audit, their
fees, the results of their audits as well as non-audit services and related
fees, internal audit reports on the adequacy of internal accounting controls,
the Company's ethics program, the status of significant legal matters, the scope
of the internal auditors' plans and budgets and the results of their audits and
the effectiveness of the Company's program for correcting audit findings. The
Audit Committee is comprised of Messrs. Tauder (Chairman), Sherrill and Tygart,
all of whom are independent as defined in Rule 4200(a)(15) of the NASD's listing
standards. The Audit Committee has adopted a charter, a copy of which is
included as an appendix to this Proxy Statement .
Corporate Governance Committee. This committee considers matters of
corporate governance and reviews developments in the governance area as they
affect relations between the Company and its stockholders. It also makes
recommendations to the Board with respect to the size, composition,
organization, responsibilities and functions of the Board and its directors, the
qualifications of directors, candidates for election as directors and the
compensation of directors. The Corporate Governance Committee is comprised of
Messrs. Sherrill (Chairman), Tauder and Tygart.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth for the Company's executive officers and
directors all cash compensation received, being the total compensation received,
during the fiscal year ended December 31, 1999. No compensation was paid or
payable to any executive officer or director for the fiscal years ended December
31, 1997 or 1998 except for Mr. Berger who received $8,000 in 1998 and $32,000
in 1997. No compensation was paid to any of the Company's non-employee directors
in any of the previous three fiscal years.
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Annual Compensation
Name and Title Salary Other(a)
Edward W. Sample $11,667 $ 22,378
Chairman and
Chief Executive Officer
Richard S. Berger -0- -0-
Chief Financial Officer
and Director
R. Don Ashley 10,000 10,646
President and
Chief Operating Officer
Carey Lotzer 27,500 -0-
Chief Science Officer
Michael Steele 26,250 -0-
Chief Information Officer
and Director
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(a) Represents amounts received in connection with the Company's acquisition of
Zideo.com.
Mr. Sample has entered into a contract, dated January 7, 2000, with
the Company which provides for his employment as Chief Executive Officer for an
annual salary of $140,000. The contract provides for a two-year term which is
automatically extended for additional one-year periods unless either the Company
or Mr. Sample elects not to renew. Mr. Sample is entitled to participate in the
Company's insurance and benefit plans on terms available to other senior
executives and is reimbursed for expenses reasonably incurred in performance of
his duties under the contract. Under the contract the Company became committed
to issue Mr. Sample options to acquire 1,500,000 shares of Common Stock at an
exercise price of $.01 per share and additional options to acquire 1,000,000
shares of Common Stock at an exercise price of $1.35 per share. The contract
provides the Company with protection for its intellectual property rights and
Mr. Sample has agreed not to compete with the Company during his period of
employment and for a period of two years thereafter.
Mr. Ashley has entered into a contract, dated January 7, 2000, with
the Company which provides for his employment as President and Chief Operating
Officer for an annual salary of $130,000. The contract provides for a two-year
term which is automatically extended for additional one-year periods unless
either the Company or Mr. Ashley elects not to renew. Mr. Ashley is entitled to
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participate in the Company's insurance and benefit plans on terms available to
other senior executives and is reimbursed for expenses reasonably incurred in
performance of his duties under the contract. Under the contract the Company
became committed to issue Mr. Ashley options to acquire 350,000 shares of Common
Stock at an exercise price of $.01 per share and additional options to acquire
350,000 shares of Common Stock at an exercise price of $1.35 per share. The
contract provides the Company with protection for its intellectual property
rights and Mr. Ashley has agreed not to compete with the Company during his
period of employment and for a period of two years thereafter.
Mr. Lotzer has entered into a contract, dated November 16, 1999,
with the Company which provides for his employment as Chief Science Officer for
an annual salary of $150,000 in the first year and $200,000 in the second year
plus discretionary additional compensation if the Company reaches certain levels
of gross sales. The two-year contract is automatically extended for additional
one-year periods unless either the Company or Mr. Lotzer elects not to renew.
Mr. Lotzer is entitled to participate in the Company's insurance and benefit
plans on terms available to other senior executives and is reimbursed for
expenses reasonably incurred in performance of his duties under the contract.
The Company has agreed to purchase $2,500,000 worth of key man life insurance on
Mr. Lotzer's life with $700,000 payable on his death to his surviving family
members. Under the contract the Company became committed to issue Mr. Lotzer
options to acquire 200,000 shares of Common Stock at an exercise price of $1.35
per share and 100,000 shares of Common Stock at an exercise price of $5.00 per
share if certain gross sales levels are met. The contract provides the Company
with protection for its intellectual property rights and Mr. Lotzer has agreed
not to compete with the Company during his period of employment and for a period
of two years thereafter.
Mr. Steele has entered into a contract, dated November 17, 1999,
with the Company which provides for his employment as Chief Information Officer
for an annual salary of $150,000. The contract provides for a two-year term
which is automatically extended for additional one-year periods unless either
the Company or Mr. Steele elects not to renew. Mr. Steele is entitled to
participate in the Company's insurance and benefit plans on terms available to
other senior executives and is reimbursed for expenses reasonably incurred in
performance of his duties under the contract. The Company has agreed to purchase
$2,500,000 worth of key man life insurance on Mr. Steele's life with $700,000
payable on his death to his surviving family members. Under the contract the
Company became committed to issue Mr. Steele options to acquire 200,000 shares
of Common Stock at an exercise price of $1.35 per share and 100,000 shares of
Common Stock at an exercise price of $5.00 per share if certain gross sales
levels are met. The contract provides the Company with protection for its
intellectual property rights and Mr. Steele has agreed not to compete with the
Company during his period of employment and for a period of two years
thereafter.
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For the year 2000 each Company director will receive $ 2,000 for each
director's meeting attended in person and $ 300 for each director meeting
attended by telephone conference call as well as reasonable hotel, airfare and
miscellaneous expenses with a per diem meal allowance of $50. During the fiscal
years ended December 31, 1999, 1998 and 1997 no such fees were paid.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent members of the Board of Directors of the Company have
selected Feldman Sherb & Co., P.C. as independent accountants for the Company
for the year ended December 31, 2000. This selection is subject to ratification
or rejection by the stockholders of the Company. If the stockholders ratify the
selection of Feldman Sherb & Co., P.C. as the Company's accountants, said firm
also will be for the independent public accountants for all of the Company's
subsidiaries.
Feldman Sherb & Co., P.C. has advised the Company that neither the firm nor
any present member or associate has any material financial interest, direct or
indirect, in the Company or its subsidiaries. It is not expected that a
representative of the firm will be present or available to answer questions at
the Meeting but one would have an opportunity to answer questions if he or she
chose to attend.
Unless marked to the contrary, the shares represented by the enclosed proxy
card will be voted FOR ratification of the appointments of Feldman Sherb & Co.,
P.C. as the independent public accountants for the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RATIFY THE
SELECTION OF FELDMAN SHERB & CO., P.C. AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
action at the Meeting. If any matters do come before the Meeting on which action
can properly be taken, it is intended that the proxies shall vote in accordance
with the judgment of the person or persons exercising the authority conferred by
the proxy at the Meeting.
2001 ANNUAL MEETING OF STOCKHOLDERS
The Company expects that the 2001 Annual Meeting will be held in August
2001, but the exact date, time and location have yet to be determined. A
stockholder who intends to present a proposal at that annual meeting must submit
the proposal in writing to the Company's Secretary at its principal executive
officers in Dallas, Texas, and the Company's Secretary must receive the proposal
no later than March 28, 2001, in order for the proposal to be considered for
inclusion in the Company's proxy statement for that meeting. The submission of a
proposal does not guarantee its inclusion in the Company's proxy statement or
presentation at the meeting.
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Rule 14a-4 of the SEC's proxy rules allows a company to use
discretionary voting authority to vote on matters coming before an annual
meeting if the company does not have notice of the matter at least 45 days
before the date corresponding to the date on which the company first mailed its
proxy materials for the prior year's annual meeting or the date specified by an
overriding advance notice provision in the Company's by-laws. The Company's
by-laws do not contain such an advance notice provision and thus for the
Company's 2001 annual meeting stockholders must submit written notice to the
Company on or before June 12, 2001.
By order of the Board of Directors
Richard S. Berger, Secretary
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THE PIRANHA, INC. AUDIT COMMITTEE CHARTER
Introduction: Statement of Policy
The Piranha, Inc. Audit Committee shall provide assistance to the corporate
directors in fulfilling their responsibility to the stockholders and investment
community relating to corporate accounting and reporting practices of the
Company and the quality and integrity of the financial reports of the Company.
In so doing, it is the responsibility of the Audit Committee to maintain free
and open means of communication between the directors, the independent auditors,
the internal auditors, and the financial management of the Company.
I. Membership
The Piranha, Inc. Audit Committee ("Committee") shall be composed of not less
than three members of the Board of Directors, a majority of which shall be
"independent" as defined in NASDAQ Listing Standard Rule 4200(a)(15) so long as
the Company shall be and remain a small business filer in accordance with the
rules and regulations of the Securities and Exchange Commission. The members of
the Committee shall be selected by the Board of Directors, taking into account
prior experience in matters to be considered by the Committee and their probable
availability at times required for consideration of such matters.
Each member of the Committee shall be able to read and understand fundamental
financial statements, including a company's balance sheet, income statement and
cash flow statement or be able to do so within a reasonable period of time after
his appointment to the Committee. In addition, at least one member of the
Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
At all times the Committee's membership shall meet the requirements of the audit
committee policy of NASDAQ, unless the Company is no longer listed on NASDAQ.
Accordingly, those members of the Committee who are required to be independent
shall at all times meet the standards set forth in Rule 4200(a)(15) referred to
above, free from relationships that, in the opinion of the Board of Directors,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
II. Procedural and Administrative Matters A.
Selection of Chairperson
The Committee shall select a chair within 30 days of their appointment. The
Committee should agree on a procedure of its own choosing for selection of the
chair and then proceed accordingly. This task must be resolved within the
Committee. There are no rules or requirements to be met by the chair other than
being a Committee member. Past experience on the Committee is not a requirement.
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B. Chairperson Responsibilities
The Committee Chairperson shall call Committee
meetings (or telephone meetings) as required, arranging for a meeting room and
notifying Committee members of time and place.
The Chairperson shall preside at all meetings of the Committee.
With guidance from the Committee, the Chairperson shall establish a schedule for
the work of the Committee and shall assign areas to be worked on by the members
thereof.
The Chairperson shall coordinate submission and review of findings and
recommendations of Committee members, obtain Committee agreement on reports and
have reports prepared and submitted to the Board.
III. Responsibilities and Activities of the Audit Committee
The following sets forth the scope of the Committee's responsibilities and how
it shall carry out those responsibilities.
A. Oversight of the financial statements and relations with the independent
auditors.
1. Instruct the independent auditors that the Board of Directors is
the client in its capacity as the stockholders' representative.
2. Advise the independent auditors that they have ultimate
accountability to the Board and the Committee and that the Board
and the Committee have ultimate authority and responsibility to
select, evaluate and replace where necessary the outside
auditors.
3. Have the independent auditors meet with the Board at least
annually so the Board has a basis on which to recommend the
independent auditors' appointment to the stockholders or to
ratify its selection of the independent auditors.
4. Have financial management and the independent auditors analyze
significant financial report issues and practices on a timely
basis.
5. Have financial management and the independent auditors discuss
with the Committee:
(a) qualitative judgments about whether current or proposed
accounting principles and disclosures are appropriate, not
just acceptable.
(b) aggressiveness or conservatism of accounting principles and
financial estimates.
6. Have the independent auditors provide the Committee with:
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(a) independent judgments about the appropriateness of the
Company's current or proposed accounting principles and
whether current or proposed financial disclosures are clear.
(b) views on whether the accounting principles chosen by
management are conservative, moderate, or aggressive as they
relate to income, asset, and liability recognition, and
whether these accounting principles are commonly used.
(c) reasons why accounting principles and disclosure practices
used for new transactions or events are appropriate.
(d) reasons for accepting or questioning significant estimates
made by management.
(e) views on how selected accounting principles and disclosure
practices affect stockholder and public attitudes about the
Company.
7. Have the independent auditors provide the Committee with the
receipt of formal written statements delineating all
relationships between the auditors and the Company consistent
with Independence Standards Board Standard 1 and engage in a
dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact the
objectivity and independence of the auditor.
8. Make recommendations to the Board regarding appropriate actions
to oversee the independence of the outside auditors.
9. Recommend to the Board the selection of the Company's auditors
and the annual fees to be paid for services rendered by them,
review each proposed audit plan developed by management and the
auditors, periodically review the performance of the auditors,
and recommend to the Board any proposed retention or discharge of
the auditors.
10. Review the Company's annual and quarterly financial statements
and reports including compliance with the Company's accounting
and financial management systems and reports with generally
accepted accounting principles.
11. Periodically review the Company's system of internal controls,
including its risk management policy and any accompanying
insurance coverage, and make recommendations to the Board for
changes it considers desirable.
B. Actions taken on the Board's behalf that require Board notification but not
Board approval.
1. Review and approve the scope of the Company's audit and that of
its subsidiaries as recommended by the independent auditors and
management.
2. Review and approve the operations of the Company's employee
benefit and stock option plans as and when they are implemented.
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3. Answer questions raised by stockholders during annual
stockholders' meetings on matters relating to the Committee's
activities if asked to do so by the meeting chairperson.
4. Ask management to have the internal audit staff study a
particular area of interest or concern to the Committee.
C. Matters requiring the Committee's review and study before making a
recommendation for Board action.
1. Appointment of the independent auditors.
2. Implementation of major accounting policy changes.
3. SEC registration statements to be signed by the Board.
4. The auditors' reports and financial statements prior to
publication in the annual report.
D. Matters requiring the Committee's review and study before providing summary
information to the Board.
1. Accounting policy changes proposed or adopted by organizations
such as the Financial Accounting Standards Board (FASB), the SEC, and
the American Institute of Certified Public Accountants (AICPA), or by
comparable bodies outside the U.S.
2. The independent auditors' assessment of the strengths and
weaknesses of the Company's financial staff, systems, controls, and
other factors that might be relevant to the integrity of the financial
statements.
3. Quarterly financial statement review before publication.
4. The performance of management and operating personnel.
5. Gaps and exposures in insurance programs.
6. Reports about the Company or its subsidiaries submitted by
agencies of governments in countries in which the Company or its
subsidiaries operate
7. Periodic SEC filings and the adequacy of programs and procedures
to assure compliance with SEC and NASDAQ rules and regulations
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PIRANHA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS. The undersigned hereby appoints Edward
W. Sample, Richard S. Berger and Michael Steele, or any of them, the attorneys
and proxies of the undersigned, with full power of substitution, for and in the
name of the undersigned to represent and vote the shares of the undersigned at
the Annual Meeting of Stockholders of the Corporation, to be held at The Harvey
Hotel, 1600 North Central Expressway, Plano, Texas 75074 on August 18, 2000, at
8:00 a.m. (local time), and at any adjournment or adjournments thereof, in
accordance with the Notice and Proxy Statement received upon the following
matters:
1. Grant of authority to vote for election of directors
( ) FOR all nominees listed below (except as marked to the contrary)
Edward W. Sample
Richard S. Berger
Michael Steele
Joseph H. Sherrill, Jr.
Arthur R. Tauder
W. Barger Tygart
( ) Withhold authority to vote for all above nominees
( ) Withhold authority to vote for the following (print names below):
2. Ratification of the appointment of independent auditors
( ) For ( ) Against ( ) Abstain
3. Transacting such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" ITEMS 1
AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
(Continued and to be signed on reverse side)
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If you plan to attend the Annual Meeting in Person, please indicate the number
of stockholders attending: ( ).
Dated: , 2000
-------------------------------------------(Seal)
-------------------------------------------(Seal)
Signature(s) of Stockholders
(Sign exactly as name appears hereon. If shares are registered in the names of
two or more, all should sign. Executors, administrators, trustees, guardians,
etc. should so indicate. A proxy by a corporation should be signed in its name
by an executive officer).
