| 1 |
Statement
of Governance. The
business and affairs of the Company occur under the oversight of
the Board
of Directors. The Board of Directors has delegated to management
the
responsibility to manage the day-to-day operations of the Company.
Independent directors should take appropriate care to avoid involvement
in
day to day management issues of the Company, so as not to compromise
their
independent oversight role. The primary focus of the Board of Directors
is
to provide oversight and guidance on policy and strategic direction.
The
Board selects, advises and monitors the Company’s management team to
ensure that the Company’s business is conducted so as to promote the
growth and profitability of the Company. The Board has adopted the
following guidelines which ensure that Directors at all times act
in the
best interests of the Company and its shareholders.
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| 2 |
Functions
of the Board.
In
addition to its general oversight of the business and affairs of
the
Company, the Board also performs a number of specific functions,
including:
|
| (a) |
selecting,
evaluating and compensating the Chief Executive Officer and overseeing
Chief Executive Officer succession planning;
|
| (b) |
providing
counsel and oversight on the selection, evaluation, development and
compensation of senior management;
|
| (c) |
reviewing,
approving and monitoring major financial and business strategies
and
corporate actions;
|
| (d) |
assessing
major risks facing the Company---and reviewing options for their
mitigation; and
|
| (e) |
ensuring
that processes are in place for maintaining the integrity of the
Company---the integrity of the financial statements, the integrity
of
compliance with law and ethics, the integrity of relationships with
customers and suppliers, and the integrity of relationships with
other
stakeholders.
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| 3 |
Responsibilities
and Expectations of the Board. In
addition to the duties of care and loyalty imposed by law, each Director
has the following responsibilities and is expected to comply with
the
following:
|
| (a) |
Each
Director will make every effort to attend each Board and applicable
Committee meeting, except in unavoidable circumstances. Each Director
will
ensure that other existing and planned future commitments do not
interfere
with the Director’s service as a director.
|
| (b) |
A
meeting agenda and where appropriate materials related to agenda
items
will be provided prior to all meetings, and each Director will carefully
review these materials in advance of the relevant
meeting.
|
| (c) |
Each
Director will be an active participant in each meeting of the Board
and
each applicable Committee.
|
| (d) |
Each
Director will hold in confidence non-public information obtained
as a
director.
|
| (e) |
The
Board believes that management speaks for the Company. Individual
Board
members may, from time to time, meet or otherwise communicate with
various
constituencies that are involved with the Company, but it is expected
that
Board members would do this with the knowledge of management and,
in most
instances, at the request of management.
|
| (f) |
Each
Director will be familiar with, and will comply with, the terms of
the
Company’s Code of Business Conduct and Ethics, including applicable rules
regarding trading in the Company’s securities. If an actual or potential
conflict of interest arises for a Director, the Director shall promptly
inform the Chief Executive Officer. All Directors will recuse themselves
from any discussion or decision affecting their personal, business
or
professional interests. The Board shall resolve any conflict of interest
question involving the Chief Executive Officer or a member of senior
management, and the Chief Executive Officer shall resolve any conflict
of
interest issue involving any other officer of the
Company.
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| 4 |
Orientation
and Continuing Updates for Directors. Significant
strategic thought and consideration is given to the identity of
individuals nominated to serve as members of the Company’s Board. The
Company is committed to providing an initial orientation to board
service
with the Company and continuing updates covering such operational,
financial and legal issues as may be appropriate given each Board
member’s
background, experience and education. Without limiting the foregoing,
each
Board member is encouraged to propose such supplemental educational
activities as he or she thinks appropriate for him or herself, including
visits to Company facilities, meetings with Company officers, and
supplemental information regarding operational, financial and legal
matters affecting the Company or his or her role as a Director. Management
is committed to ensuring that such requested supplemental activities
are
effected in a timely manner, either for the individual Director or,
if
management determines appropriate, for the full
Board.
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| 5 |
Board
Composition.
|
| (a) |
Director
Selection and Qualification.
The Chairman of the Board and the Nominating and Corporate Governance
Committee will
establish, and from time to time review with the Board, the requisite
skills and characteristics for new Board members. This assessment
will
include consideration of background, skill needs, diversity, personal
characteristics and business experience. At least annually, the Nominating
and Corporate Governance Committee reviews the qualifications and
backgrounds of the Directors, as well as the overall composition
of the
Board, and recommends to the Board the slate of directors to be selected
by a majority of independent Directors for nomination for election
at the
annual meeting of stockholders.
|
| (b) |
Majority
Independence. The
majority of the Directors on the Board at any time will be Independent
Directors. The definition of an Independent Director is set forth
below at
paragraph 7.
|
| (c) |
Size
of Board.
The number of directors on the Board shall not be so large as to
prevent
the Board from functioning effectively as a body and shall otherwise
meet
the requirements as to size contained in the Articles of Incorporation
and
the By-Laws of the Company.
|
| (d) |
Tenure.
The Board does not believe it should establish term limits. While
term
limits could help ensure that fresh ideas and viewpoints are available
to
the Board, they hold the disadvantage of losing the contribution
of
directors who over time have developed increasing insight into the
Company
and its operations and therefore provide an increasing contribution
to the
Board as a whole. As an alternative to term limits, the Nominating
and
Corporate Governance Committee, in consultation with the Chief Executive
Officer, will review each Director’s continuation on the Board every three
(3) years. This will also allow each Director the opportunity to
conveniently confirm his/her desire to continue as a member of the
Board.
|
| (e) |
Retirement.
No person shall be nominated to stand for election to, nor be elected
to,
fill a vacancy in the Board of Directors if such person would attain
the
age of 70 during the term of service for which he or she is being
elected.
Each employee of the Company who is also a Director of the Company
shall,
upon retirement or other termination of employment, offer to submit
a
letter of resignation as a Director which offer shall be considered
and
acted upon by the Board of Directors as described in Section 5(g)
below.
In the absence of such offer of resignation, such employee’s date of
termination of employment shall be deemed the effective date of
resignation from the Board.
|
| (f) |
Leadership.
The Directors shall annually elect a Chairman from among the Directors.
The Company’s policy as to whether the role of the Chief Executive Officer
and Chairman should be separate is to adopt the practice which best
serves
the Company’s needs at any particular time.
|
| (g) |
Change
of Occupation/Business Association.
Any Director who, in the future, experiences a change in his or her
principal occupation or primary business affiliation from that in
which
the Director was engaged when last elected to the Board, should promptly
offer to submit a letter of resignation as a Director to the Chief
Executive Officer and to the Nominating and Corporate Governance
Committee. The Board, with input from the Nominating and Corporate
Governance Committee and the Chief Executive Officer, will consider
whether to accept the offer to submit a letter of resignation based
on the
effect such change in occupation or primary business affiliation
may have
on that Director’s ability to serve and to be an effective Board member.
For this purpose, retirement is considered a change of
employment. In
the case of a person who retires from or otherwise ceases to be employed
by the Company, the Board, upon the recommendation of the Nominating
and
Corporate Governance Committee with input from the Chief Executive
Officer, will consider whether to accept the offer to submit a letter
of
resignation based on the effect of such person’s continued service as a
Board member upon management transition and succession. The Board
may
accept the offer and, if such offer is accepted, direct the letter
of
resignation to be submitted, and thereby cause such person’s resignation
to become effective, on any date not later than one (1) year after
such
person’s retirement or other termination from employment, which date shall
be determined by the Board.
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| 6 |
Director
Compensation Guidelines.
|
| (a) |
The
Compensation Committee shall
produce an annual report on executive compensation. This report shall
be
included in the Company’s annual proxy statement.
|
| (b) |
The
Nominating and Corporate Governance Committee shall annually review
director compensation and make such recommendations to the Board
relating
thereto as the Nominating and Corporate Governance Committee determines
appropriate.
|
| (c) |
Audit
Committee members may not receive any remuneration from the Company
other
than compensation for Board service. Board compensation for Audit
Committee members may reflect the greater time commitment involved
in
Audit Committee membership.
|
| (d) |
In
determining compensation for Independent Directors regard must be
had to
those Directors’ independent status. Payments to a Director, to an
immediate family member or to organizations with which a Director
or an
immediate family member is affiliated, including charitable contributions
to organizations affiliated with any of them, may actually or by
appearance compromise the Director’s independent status (see
paragraph 7 below).
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| 7 |
Independent
Directors.
|
| (a) |
For
a Director to be considered an “Independent Director”, the Board must
annually determine that he or she has no relationship which would
interfere with the exercise of independent judgement in carrying
out the
responsibilities of a director.
|
| (b) |
The
basis for the Company’s determination of each Director’s independence
shall be set forth in the Company’s annual proxy statement; provided,
however that no Director shall be an Independent Director if he or
she:
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| · |
is
or has in any of the last three years been employed by the Company
or any
parent or subsidiary of the Company;
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| · |
has
a family member (any person who is a relative by blood, marriage
or
adoption or who has the same residence) who is, or has in any of
the last
three years been, an executive officer of the Company or any parent
or
subsidiary of the Company;
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| · |
during
the current or any of the past three fiscal years accepted, or had
a
family member who accepted, payments from the Company or any of its
affiliates in excess of $60,000, other than compensation for board
service, benefits under a tax-qualified retirement plan or
non-discretionary compensation;
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| · |
is
a partner in, or a controlling shareholder or an executive officer
of, any
organization to which the Company made, or from which the Company
received, payments (other than those arising solely from investments
in
the Company’s securities) that exceed 5% of the recipient’s consolidated
gross revenues for that year, or $200,000, whichever is more, in
the
current fiscal year or any of the past three fiscal
years;
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| · |
is,
or has in the last three years been, employed as an executive officer
of
an entity where any of the executive officers of the Company sit
on the
compensation committee of the entity; or
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| · |
is,
or was in the past three years, a partner or employee of the Company’s
outside auditor and worked on the Company’s
audit.
|
| (c) |
The
ownership of stock in the Company by Directors is encouraged and
the
ownership of a substantial amount of stock is not in itself a basis
for a
Director to be considered as not independent, provided that it may
preclude participation on the Audit Committee of the
Company.
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| 8 |
Committees.
The
by-laws allow the Board to appoint and to disband any Committee not
specifically required, and the Board may do so at any time. The following
is a summary description of the primary committees of the
Board:
|
| (a) |
Audit
Committee.
The Audit Committee shall consist of at least three Directors. All
members
of the Audit Committee shall be Independent Directors and shall comply
with all qualification requirements for audit committee members under
any
rules of the SEC and the NASDAQ from time to time in force.
|
| (b) |
Nominating
and Corporate Governance Committee.
All members of the Nominating and Corporate Governance Committee
shall be
independent directors and shall comply with all qualification requirements
under any rules of the SEC and the NASDAQ from time to time in force.
|
| (c) |
Compensation
Committee.
All members of the Compensation Committee must be Independent Directors
and must comply with all qualification requirements under any rules
of the
SEC and the NASDAQ from time to time in
force.
|
| (d) |
Executive
Committee.
The Executive Committee is responsible for exercising the powers
of the
Board in the management of the business and affairs of the Corporation
when the Board is not in session.
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| 9 |
Executive
Sessions of Independent Directors.
|
| (a) |
The
Independent Directors will hold regular executive sessions without
management in order to promote open discussion among the Independent
Directors.
|
|
(b)
|
The
Board may have an Independent Director designated as the lead Independent
Director, who would be responsible to coordinate and facilitate
the
discussions of the other Independent Directors at Executive Sessions.
Service as lead Independent Director shall be rotated
periodically.
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| 10 |
Board
Access to Management and Professional Advisors.
|
| (a) |
Directors
shall have full access to officers and key employees of the Company.
While
essential in order for Directors to keep abreast of Company affairs,
Directors will use their discretion to ensure that access is not
disruptive to the business operations of the Company.
|
| (b) |
The
Board welcomes regular attendance at each Board meeting of executive
officers and other members of senior management of the Company. The
Board
encourages management to schedule presentations at Board meetings
by
managers who can provide additional insight into the items being
discussed
because of personal involvement in these areas or who have future
potential that management believes should be given exposure to the
Board.
|
| (c) |
When
requested by the Board, the Company’s primary outside attorneys and
registered public accountants shall make periodic presentations to,
and be
available to consult with, the Board.
|
| (d) |
The
Directors and the Independent Directors acting as a group may, where
appropriate, retain independent professional
advisors.
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| 11 |
CEO
Selection, Evaluation and
Succession.
|
| (a) |
The
following criteria shall be employed when selecting a Chief Executive
Officer:
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| · |
deep
knowledge of the markets in which the Company
operates,
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| · |
keen
knowledge of, and clarity of vision for, the
Company,
|
| · |
demonstration
of exemplary leadership skills and ethical
conduct,
|
| · |
ability
to lead and develop a corporate culture committed to excellence,
and
|
| · |
such
other criteria as the Board may deem
appropriate.
|
| (b) |
The
performance of the Chief Executive Officer will be reviewed by the
Compensation Committee at least annually. Such review will follow
recommendations from the Compensation Committee with respect to long
and
short term corporate goals and performance of the Chief Executive
Officer.
|
| (c) |
The
Board shall approve and maintain a succession plan for the CEO and
for
other officers or key employees, including succession in the event
of an
emergency or crisis for the CEO, based upon the recommendations of
the
Compensation Committee. The Chief Executive Officer should make available
to the Compensation Committee and the full Board his or her
recommendations and evaluations of potential successors at all senior
management positions, including Chief Executive
Officer.
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| 12 |
Board
and Committee Meetings.
|
| (a) |
The
Chairman of the Board, and the Committee Chairman, as appropriate,
determine the frequency and length of meetings of the Board, and
Committees, respectively, subject to the following goals: the Board
of
Directors meets at least five times annually; the Audit Committee
meets at
least six times annually; the Compensation Committees meet at least
two
times annually; and the Nominating and Corporate Governance Committee
meets at least two times annually; each in regularly scheduled sessions.
Executive Committee meetings are scheduled as needed. In person attendance
at regular Board and Committee meetings is strongly
encouraged.
|
| (b) |
At
the beginning of the year, the Chairman can prepare for the Board
a
schedule of meetings expected during the year. The Chairman of the
Board
will establish the agenda for each Board meeting. Each Board member
is
free to suggest the inclusion of items on the agenda. Each Board
member is
free to raise at any Board meeting subjects that are not on the agenda
for
that meeting.
|
| (c) |
The
chair of each Committee, in consultation with the appropriate members
of
management and staff, will develop the Committee’s agenda. Each Committee
member is free to suggest the inclusion of items on the agenda. Each
Committee member is free to raise at any Committee meeting subjects
that
are not on the agenda for that meeting.
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