Related Party Transactions and Outside Related Director Information


10/11/2005 Proxy Information

In April 2004, the Company acquired USAuto Holdings. In connection with that transaction, each of Stephen J. Harrison, our President and Chief Executive Officer, and Thomas M. Harrison, Jr., our Executive Vice President and Secretary, were issued shares of our common stock and had the right to receive up to an additional 375,000 shares if the Company achieved certain financial targets through December 31, 2004. The Company achieved the financial targets and the Company issued 375,000 shares of common stock to each of Stephen J. Harrison and Thomas M. Harrison, Jr. during the quarter ended March 31, 2005. Stephen J. Harrison and Thomas M. Harrison, Jr. are brothers.

Donald J. Edwards, the former President and Chief Executive Officer and a current director of the Company, was terminated on April 30, 2004. Effective May 1, 2004, the Company entered into an advisory services agreement with an entity controlled by Donald J. Edwards as an advisor to the Company to render advisory services (which services will be personally rendered by Mr. Edwards) in connection with financings, mergers and acquisitions and other related matters involving the Company. In consideration for the advisory services to be provided, the Company will pay to the advisor a quarterly fee of $62,500 for a four-year period. The advisory agreement may be terminated by the Company if the advisor fails or refuses to perform its services pursuant to the agreement, does any act, or fails to do any act, which results in an indictment for or conviction of a felony or other similarly serious offense or upon the written agreement of the advisor. The advisor may terminate the agreement upon written consent of the Company or if the Company is in material breach of its obligations thereunder.

During the fiscal year ended June 30, 2005, the Company sold an airplane to JVR, LLC for a purchase price of $625,000. Joe Russell, the father-in-law of James R. Dickson, our Senior Vice President Claims, owns all of the ownership interests of JVR, LLC.