Each director will hold office until the next annual meeting of stockholders and until his successor is elected and qualified or until his earlier resignation or removal. Each executive officer will hold office until the initial meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected and qualified or until his earlier resignation or removal.
Joshua M. Flum is the son of Jerome S. Flum.
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Camilo Gomez joined the Company in October 2009 to lead a new Quantitative Research effort. Prior to joining the Company, Dr. Gomez was most recently a principal at his firm, Lone Pine Mesa LLC, where he consulted with companies in the area of specialty finance since 2005. PreviouslyPrior to that, he was a Managing Director at Standard & Poor’s Risk Solutions group since 2001. Before S&P, Dr. Gomez was co-founder and Group Head for Financial Analytics for the Center for Adaptive Systems & Applications (“CASA”), a company spun off from the Los Alamos National Laboratory where he had been a researcher. Formed in collaboration with Citibank, CASA provided quantitative analytical consulting services to Fortune 500 companies. A major focus at CASA was to develop scoring and economic response models covering different regions of the globe. Dr. Gomez earned a B.S. in 1980 and a Ph.D. in 1985 from the Massachusetts Institute of Technology.
Patricia A. McParland joined the Company in November 2014 to head the Company’s Marketing effort. She brings more than 20 years of business information industry experience in marketing and product management for industry leaders such as Dun & Bradstreet and Dow Jones & Company as well as smaller companies. Most recently she headed the corporate marketing team at Dun & Bradstreet, performing progressively more challenging roles in marketing communications, product marketing and product management over a 13 year tenure there. From 1992-2000, Ms. McParland worked for Dow Jones & Company, where she provided integral leadership in the redesign of Dow Jones Interactive, a Web-based research service for enterprise customers, and in the creation of Factiva.com, its successor formed by a joint venture with Reuters. Her experience in the information industry includes all aspects of marketing, from product creation through launch, sales enablement, branding, marketing communications and digital marketing. She started her career in marketing communications at NewsNet, a pioneer in online business news. Ms. McParland holds a B.A. in English from the College of William and Mary.
Committees
The Audit Committee
The Audit Committee assists the Board of Directors in fulfilling its responsibility to the shareholders, potential shareholders and investment community relating to corporate accounting, reporting practices of the Company and the quality and integrity of the Company’s financial reporting. To fulfill its purposes, the Committee’s duties include to:
Appoint, evaluate, compensate, oversee the work of, and if appropriate terminate, the independent auditor, who shall report directly to the Committee.
| · | Appoint, evaluate, compensate, oversee the work of, and if appropriate terminate, the independent auditor, who shall report directly to the Committee. |
Approve in advance all audit engagement fees and terms of engagement as well as all audit and non-audit services to be provided by the independent auditor.
| · | Approve in advance all audit engagement fees and terms of engagement as well as all audit and non-audit services to be provided by the independent auditor. |
Engage independent counsel and other advisors, as it deems necessary to carry out its duties.
| · | Engage independent counsel and other advisors, as it deems necessary to carry out its duties. |
In performing these functions, the Audit Committee meets periodically with the independent auditors and management to review their work and confirm that they are properly discharging their respective responsibilities. OurThe Board has adopted a written charter for the Audit Committee, a copy of which iswas annexed hereto.to the Company’s 2013 Proxy Statement and can be found on the Company’s website, http://www.crmz.com, under “Investor Information”.
The Audit Committee currently consists of the Company’s outside independent directors – Andrew Melnick, Jeffrey Geisenheimer, Joshua Flum and Richard James, all of whom, except Mr. Flum, are audit committee financial experts and all of whom are independent, as such terms are defined by the SEC.
Nominating Committee
Due to the Company’s small size and scope of operations, it does not have a separately designated and standing nomination committee at this time, and therefore the entire Board of Directors is responsible for screening and reviewing potential director candidates and nominating and recommending such candidates for election by the stockholders.
Compensation Committee
The Compensation Committee of the Board of Directors is responsible for advising the Board with respect to the compensation of ourthe Company’s employees, including the determination of the compensation for ourthe Chief Executive Officer and ourthe other executive officers, the approval of one or more stock option plans and other compensation plans covering ourthe Company’s employees, and the grant of stock options and other awards pursuant to stock option plans and other compensation plans. The members of the Compensation Committee currently are Messrs. Andrew Melnick, Jeffrey Geisenheimer, Joshua Flum and Richard James and Joshua Flum.James. The Compensation Committee does not currently have a charter.
The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee. OurThe Chief Executive Officer assists the Compensation Committee from time to time by advising on a variety of compensation matters, such as assisting the Compensation Committee in determining appropriate salaries and bonuses for ourthe executive officers. The Compensation Committee has the authority to consult with management and to engage the services of outside advisors, experts and others to assist it in its efforts.
Board Leadership Structure and Role in Risk Oversight
OurThe Board of Directors as a whole is responsible for ourthe Company’s risk oversight. OurThe executive officers address and discuss with ourthe Board of Directors ourthe Company’s risks and the manner in which we managethe Company manages or mitigatemitigates such risks. While ourthe Board of Directors has the ultimate responsibility for ourthe Company’s risk oversight, ourthe Board of Directors works in conjunction with its committees on certain aspects of its risk oversight responsibilities. In particular, ourthe Audit Committee focuses on financial reporting risks and related controls and procedures.
Since 1985, Jerome S. Flum has served as ourthe Chairman of the Board and Chief Executive Officer. We do not currently have a lead independent director. At this time, ourthe Board believes that Mr. Flum’s combined role as Chief Executive Officer and Chairman of ourthe Board enables us to benefit from Mr. Flum’s significant institutional and industry knowledge and experience, while at the same time promoting unified leadership and direction for ourthe Board and executive management without duplication of effort and cost. Given ourthe Company’s history, position, Board composition and the relatively small size of ourthe company and management team, at this time ourthe Board believes that we and ourthe shareholders are best served by ourthe current leadership structure.
Report of the Audit Committee
In overseeing the preparation of the financial statements of CreditRiskMonitor.com, Inc. as of December 31, 20122015 and for the years ended December 31, 20122015 and 2011,2014, the Audit Committee met with management to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. Management advised the Committee that all financial statements were prepared in accordance with generally accepted accounting principles, and the Committee discussed the statements with management. The Committee also discussed with CohnReznick LLP, the Company’s outside auditors (“CohnReznick”), the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Committee received the written disclosures and the letter from CohnReznick required by applicable requirements of the Public Company Accounting Oversight Board regarding CohnReznick’s communications with the Committee concerning independence and the Committee discussed CohnReznick’s independence with CohnReznick.
On the basis of these reviews and discussions, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012,2015, for filing with the Securities and Exchange Commission.
Meetings
OurThe Board of Directors held three (3)four (4) meetings during the fiscal year ended December 31, 2012.2015.
The Audit Committee of the Board of Directorsheld one (1) meeting during the fiscal year ended December 31, 2012.2015, prior to the filing of the Company’s Annual Report on Form 10-K.
During 2012,2015, all of ourthe directors, other than Richard James, attended at least 75% of the meetings of the Board and of the committees on which they served.
We doThe Company does not have a formal policy regarding director attendance at ourthe annual meeting of stockholders. However, all directors are encouraged to attend.
Communications with the Board of Directors
Any security holder who wishes to communicate with ourthe Board of Directors or a particular director should send the correspondence to the Board, of Directors, CreditRiskMonitor.com, Inc., 704 Executive Boulevard, Suite A, Valley Cottage, New York 10989, Attention: Corporate Secretary. Any such communication so addressed will be forwarded by the Corporate Secretary to the members or a particular member of the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Such persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.
To the Company’s knowledge, based solely on its review of the copies of such reports received by it with respect to fiscal 2012,2015, or written representations from certain reporting persons, the Company believes that all filing requirements applicable to its directors, officers and persons who own more than 10% of a registered class of the Company’s equity securities have been timely complied with, except that a Form 4 for Jerome Flum and another for Joshua Flum were filed late.with.
Director Independence
OurThe Board of Directors is currently comprised of Jerome S. Flum, Andrew J. Melnick, Jeffrey S. Geisenheimer, Joshua M. Flum and Richard J. James, all of whom, except Mr.Messrs. Jerome S. Flum and Joshua M. Flum, are “independent directors”, as defined by the SEC.
Code of Ethics
The Company’s Board of Directors has adopted a Code of Ethics for itsthe Company’s Principal Executive Officer and Senior Financial Officers. This Code applies to the Company’s Chief Executive Officer, President and Chief Financial Officer (who also is the Company’s principal accounting officer).
The Board unanimously recommends a vote “FOR” all nominees.
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PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item No.ITEM NO. 2 on the Proxy Card)ON THE PROXY CARD)
The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, requires us to hold an advisory vote on the compensation of our executive officers, as disclosed in this proxy statement in accordance with the rules of the Securities and Exchange Commission, or SEC. As described elsewhere in this proxy statement, we try to design our executive officer compensation programs to attract, motivate and retain the key executives who will drive the creation of stockholder value.
Please read the “Executive Compensation” section of this proxy statement, beginning on page 3. That section of the proxy statement, which includes our executive officer compensation tables and related narrative discussion, provides details on our compensation programs and policies for our executive officers. We believe that the Company’s compensation policies and procedures do not create undue risk nor are they excessive in an amount or nature.
We are requesting stockholder approval of the compensation of our executive officers as disclosed in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our executive officers’ compensation. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our executive officers and the philosophy, policies and practices described in this proxy statement.
We are asking our stockholders to indicate their support for our named executive officer compensation through the following resolution:
“RESOLVED, that the stockholders approve the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion in the Company’s proxy statement for its 20132016 annual meeting.”
As provided in the Securities Exchange Act, the vote is not binding on the Board and may not be construed as overruling a decision by the Board, nor creating or implying any additional fiduciary duty by the Board, nor be construed to restrict or limit the ability of stockholders to make proposals for inclusion in proxy materials related to executive compensation.
The Board unanimously recommends a vote “FOR” approval of the compensation of executive officers as described in the tabular disclosure regarding named executive officer compensation in this proxy statement.
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PROPOSAL 3 — ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Item No. 3 on the Proxy Card)
The Dodd-Frank Act also requires us to hold an advisory vote on the frequency of the advisory vote on the compensation of our executive officers described in Proposal 2 in this proxy statement. By voting on this Proposal 3, stockholders may indicate whether they would prefer that we hold a say-on-pay vote every one, two or three years. We believe that our executive compensation is straightforward, uncontroversial and highly unlikely to provide incentives for excessive risk-taking. Accordingly, we ask that you support a frequency of every three years for future stockholder advisory votes on the compensation of our executive officers. We believe that a three-year cycle provides the Board with sufficient time to thoughtfully evaluate and respond to stockholder input and effectively implement changes, as needed, to our executive compensation program.
By voting on this Proposal 3, stockholders may indicate whether they would prefer an advisory vote on executive officer compensation every one, two, or three years. A frequency of one year, two years or three years must receive a majority of the votes represented and entitled to vote at the meeting to be deemed by us as the frequency for the advisory vote on executive officer compensation. The Board will consider the outcome of the vote required by this Proposal 3 when making future decisions regarding the frequency of the “say-on-pay” vote described in Proposal 2 of this proxy statement. However, because this is an advisory vote and not binding on the Board of the Company, the Board may decide that it is in the best interest of our stockholders and the Company to hold an advisory vote on the compensation of our executive officers more or less frequently than the frequency approved by our stockholders. In addition, should the SEC determine that smaller reporting companies such as the Company are exempt from holding a regular “say-on-pay” vote, the Company may elect not to include an advisory vote on executive compensation in future proxy statements.
The Company is presenting the following proposal, which gives you as a stockholder the opportunity to inform the Company as to how often you wish the Company to include a proposal, similar to Proposal 3, in our proxy statement. This resolution is required pursuant to Section 14A of the Securities Exchange Act. While our Board of Directors intends to carefully consider the stockholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature.
“RESOLVED, that the stockholders wish the Company to include an advisory vote on the compensation of the Company’s named executive officers pursuant to Section 14A of the Securities Exchange Act every:
| • year;
• two years; or
• three years.”
|
The Board unanimously recommends a vote of “THREE YEARS” on the proposal to include an advisory vote of the stockholders on the compensation of the Company’s named executive officers pursuant to Section 14A of the Securities Exchange Act either every year, every two years, or every three years.
PROPOSAL 4 — RATIFICATION OF THE APPOINTMENT OF COHNREZNICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM NO. 43 ON THE PROXY CARD)
Upon the recommendation of the Audit Committee, the Board has selected CohnReznick LLP to serve as our the Company’s independent registered public accounting firm for 2013.2016. In taking this action, the Board considered CohnReznick LLP’s independence with respect to the services to be performed and other factors, which the Board believes is advisable and in the best interest of the stockholders.
CohnReznick LLP served as our the Company’s independent registered public accounting firm for the years ended December 31, 20112015 and 2012,2014, and has no financial interest of any kind in us except the professional relationship between auditor and client.
Lou Pizzileo,Stephen Ebinger, a partner of CohnReznick LLP, will be in attendance at the meeting. He will have an opportunity to make a statement if he wishes to do so, and will be available to respond to appropriate questions. We are asking ourthe stockholders to ratify the selection of CohnReznick LLP as ourthe Company’s independent registered public accounting firm for 2013.2016. Although ratification is not required by ourthe Company’s Bylaws or otherwise, the Board is submitting the selection of CohnReznick LLP to ourthe stockholders for ratification because we value ourthe stockholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice.
In the event that ourthe stockholders fail to ratify the selection, it will be considered a recommendation to the Board to consider the selection of a different firm. Even if the selection is ratified, the Board may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and ourthe stockholders.
The aggregate fees incurred by CohnReznick LLP for professional services rendered to the Company for the last two fiscal years are as follows:
| | Fiscal Year Ended | | |
| | December 31, | | | Fiscal Year Ended December 31, | |
| | 2012 | | | 2011 | | | 2015 | | | 2014 | |
Audit fees (1) | | $ | 90,000 | | | $ | 76,500 | | | $ | 95,000 | | | $ | 92,500 | |
Audit related fees (2) | | | 7,500 | | | | - | | | | - | | | | - | |
Tax fees (3) | | | 22,700 | | | | 9,000 | | | $ | 10,000 | | | $ | 10,000 | |
All other fees | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | |
Total fees | | $ | 120,200 | | | $ | 85,500 | | | $ | 105,000 | | | $ | 102,500 | |
(1) | Consists of fees for services provided in connection with the audit of the Company’s financial statements and review of the Company’s quarterly financial statements. |
2017
(2) | Consists of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.” |
(3) | Consists of fees for preparation of Federal and state income tax returns, as well as assistance with an IRS audit.returns. |
The engagement of CohnReznick LLP for the 20122015 and 20112014 fiscal years and the scope of audit-related services, including the audits and reviews described above, were all pre-approved by the Audit Committee.
The policy of the Audit Committee is to pre-approve the engagement of the Company’s independent auditors and the furnishing of all audit and non-audit services.
The Board unanimously recommends a vote “FOR” ratification of CohnReznick LLP as ourthe Company’s independent registered public accounting firm for 2013.2016.
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STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at ourthe next annual meeting of stockholders pursuant to the provisions of Rule 14a-8 of the Securities and Exchange Commission, promulgated under the Securities Exchange Act of 1934, as amended, must be received at ourthe Company’s offices in Valley Cottage, New York by February 10, 20142017 for inclusion in ourthe Company’s proxy statement and form of proxy relating to such meeting.
To be in proper form, a stockholder’s proposal or nomination must comply with Rule 14a-8 of the Securities and Exchange Commission. A stockholder who wishes to submit a proposal or nomination is encouraged to seek independent counsel about compliance with SEC and other requirements. The Company will not consider any proposal or nomination that does not meet the requirements of Rule 14a-8 of the Securities and Exchange Commission
OTHER BUSINESS
While the accompanying Notice of Annual Meeting of Stockholders provides for the transaction of such other business as may properly come before the meeting, we have no knowledge of any matters to be presented at the meeting other than those listed as Proposals 1, 2 3 and 43 in the notice. However, the enclosed proxy gives discretionary authority in the event that any other matters should be presented.
FORM 10-K
This proxy statement is accompanied by a copy of ourthe Annual Report on Form 10-K for the year ended December 31, 20122015 (excluding exhibits) and the Charter of our Audit Committee.. We may charge a fee equal to ourthe Company’s reasonable expenses in furnishing the exhibits.
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| |
| ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS |
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| Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. |
| |
| VOTE BY MAIL |
| Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | KEEP THIS PORTION FOR YOUR RECORDS |
| |
| |
| DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends | For | Withhold | For All | To withhold authority to vote for any | |
you vote FOR the following: | All | All | Except | individual nominee(s), mark “For All | |
| | | | Except” and write the number(s) of the | |
| | | | nominee(s) on the line below. | |
1. | Election of Directors | | | | | |
| Nominees: | 0 | 0 | 0 | | |
1. | Election of Directors | ☐ | ☐ | ☐ | | |
| Nominees: | | | | | |
01) Jerome S. Flum | 02) Andrew J. Melnick | 03) Jeffrey S. Geisenheimer | 04) Joshua M. Flum | 05) Richard J. James | |
The Board of Directors recommends you vote FOR the following proposal: proposals 2. and 3.:: | For | Against | Abstain |
| | | |
2. To hold an advisory, non-binding vote onapprove the compensation of ourto the Company’s named executive officers. | For
0 ☐ | Against
0 ☐ | Abstain
0
| | ☐ |
The Board of Directors recommends you vote 3 YEARS on the following proposal:
3. To have an advisory, non-binding vote to determine the frequency of future advisory votes on the compensation of our named executive officers.
| 1
Year
0
| 2
Years
0
| 3
Years
0
| Abstain
0
| |
The Board of Directors recommends you vote FOR the following proposal:
4.3. To ratify the selection of CohnReznick LLP as ourthe Company’s independent registered public accounting firm for the year ending December 31, 2013. 2016. | For
0 ☐ | Against
0 ☐ | Abstain
0
| | ☐ |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
| Yes | No | |
| | | |
Please indicate if you plan to attend this meeting | ☐ | ☐ | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
| | | | | | |
Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and Form 10-K are available at www.proxyvote.com.
CREDITRISKMONITOR.COM, INC.INC
Annual Meeting of ShareholdersStockholders
July 17, 201328, 2016
This proxy is solicited by the Board of Directors
The shareholder(s)stockholder(s) hereby appoint(s) Lawrence Fensterstock, as proxy, with the power to appoint his substitute, and hereby authorize him to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of CREDITRISKMONITOR.COM, INC. that the shareholder(s)stockholder(s) is/are entitled to vote at the Annual Meeting of ShareholdersStockholders to be held at 11:009:30 AM, EST on July 17, 201328, 2016 at 190 Willis Ave., Mineola,704 Executive Boulevard, Suite A, Valley Cottage, New York, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors'Directors’ recommendations.
Continued and to be signed on reverse side
21
Appendix A
CREDITRISKMONITOR.COM, INC.
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee is appointed by the Board of Directors to assist the Board in monitoring the integrity of the financial statements of the Company and the independence and performance of the Company's external auditors. The members of the Audit Committee shall meet the independence and experience requirements of the NASDAQ Stock Market, Inc. (i.e., Members shall have no relationship to the Company that may interfere with the exercise of their independence from management and the Company. All Audit Committee members will be financially literate, and at least one member will have accounting or related financial management expertise.)
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in fulfilling their responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of financial reports of the Company. In so doing, it is the responsibility of the Audit Committee to maintain free and open communication between the directors, the independent auditors, and the financial management of the Company.
Responsibilities
The Committee serves as the representative of the Board of Directors for the general oversight of Company affairs in the area of financial accounting and reporting and the underlying internal controls. Through its activities, the Committee will facilitate open communication among directors, the Company's independent auditors and the Company's management.
The Committee will assist the Board of Directors in discharging its fiduciary responsibilities to shareholders, providing assurance as to the independence of the Company's outside auditors and the adequacy of disclosure to shareholders and to the public.
In carrying out these responsibilities, the Audit Committee will:
| · | Obtain the full Board of Directors' approval of this Charter and review and reassess this Charter as conditions dictate (at least annually). |
| · | Review and recommend to the Board of Directors the independent auditors to be selected to audit the financial statements of the Company and its subsidiaries. |
| · | Have a clear understanding with the independent auditors that they are ultimately accountable to the Board of Directors and the Audit Committee, as the shareholders' representatives, who have the ultimate authority in deciding to engage, evaluate, and it appropriate, terminate their services. |
| · | Meet with the independent auditors and senior management of the Company to review the scope of the proposed audit and timely quarterly reviews for the current year and the procedures to be utilized, the adequacy of the independent auditor's compensation, and at the conclusion thereof review such audit or review, including any comments or recommendations of the independent auditors. |
| · | Review with the independent auditors and senior management, the adequacy and effectiveness of the accounting, financial, operating and information systems controls of the Company, and elicit any recommendations for the improvement of such internal control procedures or particular areas where new or more detailed controls or procedures are desirable. Particular emphasis should be given to the adequacy of such internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper. Further, the Audit Committee periodically shall review Company policy statements to determine their adherence to the code of conduct. |
| · | Inquire of management and the independent auditors about significant risks or exposures and assess the steps management has taken to minimize such risks to the Company. |
| · | Receive communications from the independent auditors prior to the filing of the Form 10-Q matters described in Statement on Auditing Standards No. 61. Communication with Audit Committees, including significant adjustments, management judgments and accounting estimates, significant new accounting policies, disagreements with management and any other matters required to be communicated to the Audit Committee when they have been identified in the conduct of interim financial reporting review. The chair of the Audit Committee may represent the entire Audit Committee for purposes of this review. |
| · | Review the financial statements contained in the annual report to shareholders with management and the independent auditors to determine that the independent auditors are satisfied with the disclosure and content of the financial statements to be presented to the shareholders. Review with management and the independent auditors the results of their timely analysis of significant financial reporting issues and practices, including changes in, or adoptions of, accounting principles and disclosure practices, and discuss any other matters required to be communicated to the Committee by the auditors. Also review with management and the independent auditors their judgments about the quality, not just acceptability, of accounting principles and the clarity of the financial disclosure practices used or proposed to be used, and particularly, the degree of aggressiveness or conservatism of the organization’s accounting principles and underlying estimates, and other significant decisions made in preparing the financial statements. |
| · | Provide sufficient opportunity for the independent auditors to meet with the members of the Audit Committee without members of management present. Among the items to be discussed in these meetings are the independent auditors’ evaluation of the Company’s financial and accounting personnel, and the cooperation that the independent auditors received during the course of the audit. |
| · | Report the results of the annual audit to the Board of Directors. If requested by the Board of Directors, invite the independent auditors to attend the full Board of Directors meeting to assist in reporting the results of the annual audit or to answer other directors’ questions. |
| · | On an annual basis, obtain from the independent auditors a written communication delineating all their relationships and professional services as required by the Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. In addition, review with the independent auditors the nature and scope of any disclosed relationships or professional services and take, or recommend that the board of directors take, appropriate action to ensure the continuing independence of the auditors. |
| · | Review the report of the Audit Committee in the Annual Report on Form 10-K disclosing whether or not the committee had reviewed and discussed with management and the independent auditors, as well as discussed within the Audit Committee (without management or the independent auditors present), the financial statements and the quality of accounting principles and significant judgments affecting the financial statements. In addition, disclose in the proxy statement that the Audit Committee has: |
| 1. | reviewed and discussed the audited financial statements with management; |
| 2. | discussed with the independent auditors the matters required to be discussed by SAS No. 61; |
| 3. | received certain disclosures from the auditors regarding the auditors’ independence as required by the Independence Standards Board Standard No. 1, and discussed with the auditors the auditors’ independence; and |
| 4. | concluded whether, based on such review and discussions, anything has come to the attention of the members of the Audit Committee that caused the Audit Committee to believe that the audited financial statements included in the Company’s Annual Report on Form 10-K for the year then ended contain an untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading. |
| · | Submit the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each committee meeting with, the Board of Directors. |
| · | Investigate any matter brought to its attention within the scope of its duties, with the power to retain outside counsel for this purpose if, in its judgment, that is appropriate. |
| · | Review the Company’s disclosure in the proxy statement for its annual meeting of shareholders that describes that the Committee has a charter and has satisfied its responsibilities under this Charter for the prior year. In addition, include a copy of this Charter in the appendix to the proxy statement at least triennially or the year after any significant amendment to the Charter. |
4