SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENTS
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
UNITED-GUARDIAN, INC.
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(Name of Registrant as specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) 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 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form
or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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UNITED-GUARDIAN, INC.
230 Marcus Boulevard - P.O. Box 18050 - Hauppauge, NY 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------
To Be Held May 16, 2001
-----------------------
To the Stockholders of UNITED-GUARDIAN, INC.:
You are hereby notified that the annual meeting of the stockholders
of UNITED-GUARDIAN, INC., a Delaware corporation (the "Company"), will be
held at the Huntington Hilton Hotel, 598 Broad Hollow Road, Melville, NY
11747 on Wednesday, May 16, 2001 at 10:00 A.M. local time, for the
following purposes:
1. To elect nine (9) directors to serve until the next annual
meeting of the stockholders and until their respective
successors are elected and qualified;
2. To ratify the selection by the Company of Grant Thornton LLP,
independent certified public accountants, to audit the
financial statements of the Company for the fiscal year ending
December 31, 2001; and
3. To transact such other matters as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 30,
2001 are entitled to notice of and to vote at the meeting.
By order of the Board of Directors
Robert S. Rubinger, Secretary
Dated: April 16, 2001
RETURN OF PROXIES
A Proxy and Business Reply Envelope are enclosed for your use
if you do not plan to attend the Annual Meeting in person. We
urge each stockholder who is unable to attend the Annual
Meeting to vote promptly by signing and returning his or her
proxy, regardless of the number of shares held.
UNITED-GUARDIAN, INC.
230 Marcus Boulevard - P.O. Box 18050 - Hauppauge, NY 11788
(631) 273-0900
Proxy Statement
The enclosed proxy is solicited by the Board of Directors of
UNITED-GUARDIAN, INC. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 A.M., local time,
on Wednesday, May 16, 2001, at the Huntington Hilton Hotel, 598 Broad
Hollow Road, Melville, NY 11747, and at any adjournments thereof. A proxy
granted hereunder is revocable at any time before it is voted by (a) a
duly executed proxy bearing a later date, (b) written notice to the
Secretary of the Company received by the Company at any time before such
proxy is voted at the Annual Meeting, or (c) revocation in person at the
Annual Meeting.
It is anticipated that the mailing of this Proxy Statement and the
accompanying Proxy to Stockholders will commence on or about April 16,
2001.
SOLICITATION OF PROXIES
The persons named as proxies are Dr. Alfred R. Globus and Kenneth H.
Globus.
All shares represented by properly executed, unrevoked proxies
received in proper form and in time for use at the Annual Meeting will be
voted in accordance with the directions specified thereon and otherwise
in accordance with the judgment of the persons designated as proxies. Any
proxy on which no direction is specified will be voted in the favor of
the nominees to the Board of Directors listed in this Proxy Statement and
in favor of the other proposals set forth in the Notice of Annual
Meeting.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting, Proxy Statement, proxy card and other materials enclosed, will
be borne by the Company. In addition to the solicitation of proxies by
use of the mails, officers and employees of the Company may solicit
proxies by telephone, telegram or personal interview. The Company will
request brokerage houses and other custodians, nominees and fiduciaries
to forward soliciting materials to the beneficial owners of stock held of
record by such persons, and will reimburse such persons for their
expenses in forwarding soliciting material.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
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Outstanding Shares And Voting Rights
- ------------------------------------
Only holders of record of the Company's Common Stock, par value $.10
per share ("Common Stock"), at the close of business on March 30, 2001,
will be entitled to notice of and to vote at the Annual Meeting. On March
30, 2001, there were 4,865,839 shares of Common Stock outstanding. Each
outstanding share of Common Stock is entitled to one vote on all matters,
which vote may be given in person or by proxy. There are no cumulative
voting rights.
The nine (9) nominees for director receiving the greatest number of
votes cast by the holders of Common Stock will be elected directors.
The affirmative vote of the holders of a majority of shares of
Common Stock eligible to vote at the Annual Meeting is necessary for the
approval of the proposal to ratify the selection by the Company of Grant
Thornton LLP to audit the financial statements of the Company for the
fiscal year ending December 31, 2001.
Under Delaware law, shares as to which a stockholder abstains or
withholds authority to vote and shares as to which a broker indicates
that it does not have discretionary authority to vote ("broker
non-votes") will be treated as present at the Annual Meeting for the
purposes of determining a quorum. Proxies marked "Withhold Authority"
with respect to the election of one or more directors will not be counted
in determining who are the nine persons who received the greatest number
of votes in the election of directors. Proxies marked "Abstain" with
respect to the ratification of the selection of Grant Thornton LLP to
audit the financial statements of the Company for the fiscal year ending
December 31, 2001, will have the effect of a vote against ratification.
Principal Stockholders
- ----------------------
The following table sets forth the shares of the Company's Common
Stock owned beneficially by each person who, as of March 1, 2001, owned
of record or is known to have owned beneficially more than 5% of the
outstanding Common Stock.
Name and Address
of Beneficial Owner Amount Beneficially Owned Percentage of Class
- ------------------- ------------------------- -------------------
Dr. Alfred R. Globus 1,551,326 (1) 31.7%
26-53 210th Street
Bayside, NY 11360
Kenneth H. Globus 596,053 (2) 12.2%
19 McCulloch Dr.
Dix Hills, NY 11746
(1) Includes 14,084 shares owned by the Globus Foundation, of which Dr.
Globus is President, and 882 shares owned by the University of Science
and Theology, of which he is President and Director.
(2) Includes currently exercisable options to purchase 10,000 shares of
Common Stock.
Security Ownership Of Management
- --------------------------------
The following information is furnished with respect to ownership of
shares of Common Stock as of March 1, 2001, by each Director and by all
Directors and Officers of the Company as a group (11 persons). Ownership
of shares by the persons named below includes sole voting and investment
power held by such persons.
Name Number of Shares Percent of Class
-------------------- ---------------- ----------------
Dr. Alfred R. Globus 1,551,326 (1) 31.7%
Henry P. Globus 2,940 (2) *
Benjamin Wm. Mehlman 1,587 *
Charles W. Castanza 11,005 (2) *
Robert S. Rubinger 12,037 (2) *
Kenneth H. Globus 596,053 (2) 12.2%
Alan E. Katz 6,000 *
Lawrence F. Maietta 4,000 (2) *
Arthur Dresner 7,000 (2) *
All officers and directors
as a group (11 persons) 2,206,251 (1)(2) 45.0%
* Less than one percent (1%)
(1) Includes 14,084 shares owned by the Globus Foundation of which
Dr. Globus is President, and 882 shares owned by the University
of Science and Theology, of which he is President and Director.
(2) Includes currently exercisable options to purchase the number
of shares of Common Stock set forth after each person's name
and all Officers and Directors as a group: Charles W. Castanza-
10,000; Robert S. Rubinger - 7,000; Kenneth H. Globus - 10,000;
Henry P. Globus - 2,000; Lawrence F. Maietta - 2,000; Arthur
Dresner - 2,000; and all Officers and Directors as a group -
40,000.
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
Nominees For Election As Directors
- ----------------------------------
Nine directors are to be elected to serve until the next Annual
Meeting of Stockholders and until their successors have been elected and
qualified. Set forth in the table below are the names of all nominees
designated by management for election as directors, the principal
occupation or employment of each nominee for the past five years, his
present positions with the Company and the year he was first elected a
director.
Year First
Name and Position Principal Occupation During Elected a
with the Company Age the Past Five Years Director
- --------------- --- --------------------------- ----------
Dr. Alfred R. Globus 80 From July 1988 to date, 1942
C.E.O. and Director Chairman of the Board
and C.E.O. of the
Company. For more than
5 years prior thereto,
Chairman of the Board and
President. From February 1982
to November 1997 Chief Financial
Officer of the Company.
Henry P. Globus 78 From July 1988 to date, 1947
Director business consultant.
For more than five years prior
thereto, Executive Vice President of
the Company.
Benjamin Wm. Mehlman 90 Retired since February 1999. 1964
Director Formerly Counsel to the New York
law firm of Wilfred T. Friedman
P.C., and its predecessor, Friedman
and Shaftan, P.C. for more than
five years prior thereto.
Charles W. Castanza 68 From March 2000 to date, Senior Vice 1982
Senior Vice President President of the Company. From April
and Director 1986 to March 2000, Vice
President of the Company. For more
than five years prior thereto,
Operations Manager of Chemicals &
Pharmaceuticals for the Company.
Robert S. Rubinger 58 From July 1988 to date, Executive 1982
Secretary, Treasurer and Vice President and Secretary. For
Director more than five years prior thereto,
Vice President and Secretary of the
Company. Treasurer of the Company
since May 1994.
Kenneth H. Globus 49 From July 1988 to date, President 1984
President, Chief and General Counsel of the Company.
Financial Officer For more than 5 years prior
and Director thereto, Vice President and
General Counsel of the
Company. Chief Financial Officer
since November 1997.
Alan E. Katz 57 Partner in the law firm of 1994
Director Greenfield Stein & Senior, LLP,
New York, NY since 1984.
Lawrence F. Maietta 43 Partner in the accounting firm of 1994
Director Bonamasssa & Maietta, CPA's,
Brooklyn, NY, since October 1991. For
more than 5 years prior thereto,
partner in the accounting firm of
Wilfred Wyler & Co. Controller of the
Company from October 1991 to November
1997.
Arthur Dresner 59 Engaged as "Of Counsel" to the law 1997
Director firm of Reed Smith, LLP, New York,
NY (formerly McAuley Nissen Goldberg
& Hand) since June 1998. Attorney in
private practice and independent
business consultant since January
1997. For more than 5 years prior
thereto, a Vice President in
corporate development and general
management of International Specialty
Products Inc., Wayne, N.J.
Dr. Alfred R. Globus and Henry P. Globus are brothers. Kenneth H.
Globus is the son of Henry P. Globus and the nephew of Dr. Alfred R.
Globus. There are no other family relationships between any Director or
Officer of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "Act")
requires the Company's officers, directors and persons who own more than
10% of a class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based on (i) a review of copies of Forms
3, 4, and 5 and any amendments thereto furnished to the Company and (ii)
statements signed by each responsible person regarding his or her
obligation to file Forms 3, 4, and 5 during the fiscal year ended
December 31, 2000, the Company believes that all persons subject to the
reporting requirements pursuant to Section 16(a) filed the required
reports on a timely basis with the SEC except as follows: Alfred R.
Globus failed to file a Form 4 on a timely basis in connection with the
disposition of common stock in September 2000. A Form 5 was filed in
connection with this disposition.
Meetings and Compensation
- -------------------------
During the fiscal year ended December 31, 2000, the Board of
Directors held four meetings. All Directors attended all of the meetings.
The Board of Directors has an Audit Committee to meet and review
with the Company's independent auditors the plan, scope and results of
its audits. Members of the Audit Committee are Messrs. Benjamin Wm.
Mehlman, Alan E. Katz, Lawrence F. Maietta, and Arthur Dresner. There was
one meeting of the Audit Committee during the fiscal year ended December
31, 2000. Committee members receive a fee of $500.00 for attending each
meeting.
The Board of Directors has a Stock Option Committee which meets
periodically to grant options under the 1993 Employee Incentive Stock
Option Plan and the Non-Statutory Stock Option Plan For Directors. The
committee consists of two directors. No fee is paid to such committee
members. There were no Stock Option Committee meetings during the fiscal
year ended December 31, 2000.
The Board of Directors formed a Compensation Committee in 1999 for
the purpose of recommending to the Board the compensation for corporate
officers for the ensuing year. Members of the Compensation Committee are
Messrs. Alan E. Katz, Lawrence F. Maietta, and Arthur Dresner. Kenneth H.
Globus serves as advisor to the Committee representing management. The
Committee held one meeting in 2000. Commitee members receive a fee of
$500.00 for attending each meeting.
The Board does not have a Nominating Committee.
Audit Committee Report
- ----------------------
The Audit Committee of the Board of Directors is comprised of four
directors: Benjamin Wm. Mehlman, Alan E. Katz, Lawrence F. Maietta, and
Arthur Dresner. All of the Audit Committee members are independent as
that term is defined in Section 121(A) of the listing standards of the
American Stock Exchange.
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities by reviewing the Company's consolidated
financial reports, its internal financial and accounting controls, and
its auditing, accounting and financial reporting processes generally. In
May 2000, the Board of Directors approved and adopted a written Audit
Committee Charter, which is attached to this Proxy Statement as Exhibit
A.
In discharging its oversight responsibilities regarding the audit
process, the Audit Committee reviewed and discussed the audited
consolidated financial statements of the Company as of and for the year
ended December 31, 2000, with Company management and Grant Thornton LLP
("Grant"), the independent auditors. The Audit Committee received the
written disclosures and the letter from Grant required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committees, discussed with Grant any relationships which might impair
that firm's independence from management and the Company and satisfied
itself as to the auditors' independence. The Audit Committee reviewed and
discussed with Grant all communications required by generally accepted
auditing standards, including Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended.
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the Company's audited
consolidated financial statements be included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000 for
filing with the Securities and Exchange Commission.
/s/ Benjamin Wm. Mehlman /s/ Lawrence F. Maietta
/s/ Alan E. Katz /s/ Arthur Dresner
The foregoing Audit Committee Report shall not be deemed "filed"
with the Securities and Exchange Commission or subject to the liabilities
of Section 18 of the Securities Exchange Act of 1934.
Principal Accounting Firm Fees
- ------------------------------
The following table sets forth the aggregate fees, including out-of-
pocket expenses, billed to the Company for the fiscal year ended December
31, 2000 by the Company's principal accountants, Grant Thornton LLP.
Audit Fees $35,000
Financial Information Systems Design
and Implementation Fees $ 0 (a)
All Other Fees $ 2,500 (a)
-------
$37,500
(a) The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal accountants'
independence.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
- --------------------------
The following table sets forth for the three years ended December
31, 2000 certain information concerning the compensation paid or accrued
to the Chief Executive Officer of the Company and the other executive
officers of the Company whose total salary and bonus for the fiscal year
ended December 31, 2000 exceeded $100,000.
Annual Compensation Long-Term Compensation
----------------------------- ------------------------------------
Awards Payouts
-------------------- ---------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options LTIP Compen-
Position Year* Salary Bonus sation Award(s) /SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)
Alfred R. Globus, 1998 $ 97,015 -- -- 1 -- -- -- --
Chief Executive 1999 $ 98,489 5,000 -- 1 -- -- -- --
Officer 2000 $122,111 5,000 -- 1 -- -- -- --
Kenneth H. Globus, 1998 $150,196 -- -- 1 -- -- -- $2,947 2
President 1999 $165,952 15,000 -- 1 -- 2,000 -- $3,091 2
2000 $179,968 25,000 -- 1 -- -- -- $3,400 2
Robert S. Rubinger, 1998 $102,671 -- -- 1 -- -- -- $2,053 2
Executive Vice 1999 $108,733 5,000 -- 1 -- 2,000 -- $2,275 2
President 2000 $117,940 7,000 -- 1 -- -- -- $2,412 2
* Year ended on December 31 of such year.
1 The amount of personal benefits received by Alfred R. Globus,
Kenneth H. Globus and Robert S. Rubinger for these periods did
not exceed reporting thresholds.
2 Under its 401(k) Plan for all of its employees, the Company
makes a contribution of up to 2% of each employee's weekly pay
for an employee's elective deferral of 4% of weekly pay. This
amount represents the Company's contribution for each year.
Stock Options
- -------------
During the fiscal year ended December 31, 2000 the Company did not
grant Options to purchase Common Stock under either the 1993 Employee
Incentive Stock Option Plan or the Non-Statutory Stock Option Plan For
Directors. The following table sets forth certain information with
respect to options to purchase Common Stock held on December 31, 2000 by
each of the named executives officers in the Summary Compensation table
above.
Value of
Number of Securities Underlying Unexercised in-the-Money
Unexercised Options/SARs at Options/SARs at
December 31, 2000 December 31, 2000
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
Alfred R. Globus 0/0 $ 0/0
Kenneth H. Globus 10,000/0 $41,250/0
Robert S. Rubinger 7,000/0 $28,875/0
Compensation of Directors
- -------------------------
Non-officer directors receive a fee of $1,000.00 for each meeting
attended. All other directors receive $500.00 for each meeting.
APPOINTMENT OF AUDITORS
-----------------------
The firm of Grant Thornton LLP, independent certified public
accountants, of Melville, N.Y., has been selected by the Board of
Directors to be the independent auditors of the Company for the fiscal
year ending December 31, 2001. The selection of such firm is subject to
ratification by the stockholders at the Annual Meeting. Management
believes that the firm is well qualified and recommends a vote in favor
of the ratification.
Representatives of Grant Thornton LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement, if
they desire to do so, and will be available to respond to appropriate
questions.
ANNUAL REPORT TO STOCKHOLDERS
-----------------------------
The Annual Report to Stockholders for the fiscal year ended December
31, 2000 accompanies this Proxy Statement.
STOCKHOLDER PROPOSALS
---------------------
Proposals of stockholders for possible consideration at the 2002
Annual Meeting (expected to be held in May 2002) must be received by the
Secretary of the Company not later than December 17, 2001 to be
considered for inclusion in the proxy statement for that meeting if
appropriate for consideration under applicable securities laws. The proxy
for the 2002 Annual Meeting may confer discretionary authority to the
proxy holders for that meeting with respect to voting on any stockholder
proposal received by the Secretary of the Company after March 2, 2002.
OTHER BUSINESS
--------------
Management of the Company knows of no business other than that
referred to in the foregoing Notice of Annual Meeting and Proxy Statement
that may come before the Annual Meeting.
By order of the Board of Directors
Robert S. Rubinger, Secretary
Dated: April 16, 2001
UNITED-GUARDIAN, INC.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2000, INCLUDING FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES, BUT EXCLUDING EXHIBITS, TO
EACH STOCKHOLDER WHO REQUESTS THE 10-KSB IN WRITING
ADDRESSED TO ROBERT S. RUBINGER, CORPORATE SECRETARY,
UNITED-GUARDIAN, INC., P.O. BOX 18050, HAUPPAUGE, NEW YORK
11788.
UNITED-GUARDIAN, INC.
230 Marcus Blvd. - P. 0. Box 18050 - Hauppauge, NY 11788
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dr. Alfred R. Globus and Kenneth H.
Globus, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of United-Guardian, Inc.
held of record by the undersigned on March 30, 2001 at the annual meeting
of stockholders to be held on Wednesday, May 16, 2001, 10:00 a.m. local
time at the Huntington Hilton Hotel, 598 Broad Hollow Road, Melville,
N.Y. 11747, or any adjournment thereof.
1. ELECTION OF DIRECTORS.
_ _
FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote for |_|
(except as marked to the all nominees listed below contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.)
Dr. Alfred R. Globus Charles W. Castanza Arthur Dresner
Henry P. Globus Robert S. Rubinger Alan E. Katz
Benjamin Wm. Mehlman Kenneth H. Globus Lawrence F. Maietta
2. PROPOSAL TO APPROVE THE APPOINTMENT OF GRANT THORNTON LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2001.
_ _ _
FOR |_| AGAINST |_| ABSTAIN |_|
In their discretion, the proxies are authorized to vote upon
matters incident to the conduct of the meeting and upon such other
business (which the Board of Directors did not know, prior to
making this solicitation, would come before the meeting) as may
properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted FOR proposals 1 and 2.
DATED:___________________________ 2001
--------------------------------------
Signature
--------------------------------------
Signature
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership
please sign in partnership name by
authorized person.
Please mark, sign, date and return the proxy card promptly, using
the enclosed envelope.
Exhibit A
---------
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
UNITED-GUARDIAN, INC.
1. Organization
There shall be a committee of the board of directors ("Board") of
United-Guardian, Inc. ("Corporation") to be known as the Audit Committee
("Committee"). The Committee shall be composed of three or more
directors, the majority of whom shall be independent of the management of
the Corporation and free of any relationship that, pursuant to applicable
regulations, or in the opinion of the Board, would interfere with their
exercise of independent judgment as a Committee member.
2. Purpose
The primary function of the Committee is to assist the Board in
fulfilling its oversight responsibilities by reviewing: (a) the financial
reports and other financial information provided by the Corporation to
the Securities and Exchange Commission and/or the American Stock
Exchange, (b) the Corporation's systems of internal controls regarding
finance and accounting; and (c) the Corporation's auditing, accounting
and financial reporting processes generally. The Committee's primary
duties and responsibilities are to:
(a) Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system, as
set forth above;
(b) Review and appraise the audit efforts of the Corporation's
independent auditors; and
(c) Encourage a free and open means of communication among the
independent accountants, the Corporation's senior management and the
Board.
3. Meetings
The Committee shall meet at least once annually to review the results for
the prior fiscal year, or more frequently as circumstances require. The
Committee may ask members of management or others to attend meetings and
provide pertinent information as necessary, possibly in separate
executive sessions to discuss any matters that the Committee or
management believes should be discussed privately. In addition, the Chair
of the Committee shall meet in person or by conference call with the
independent accountants and management quarterly to review the 10-Q prior
to its filing or prior to the release of earnings. The Chair of the
Committee shall then inform the entire Committee in person or by
conference call of the results of this review.
4. Responsibilities and Duties
To fulfill its responsibilities and duties the Committee shall:
(a) Meet in person or by conference call with the independent
auditors and senior management of the Corporation to review the
scope of the proposed audit for the current year and the audit
procedures to be utilized;
(b) At the conclusion of the audit, the Committee shall meet with
the independent auditors to review:
(1) significant findings during the year and any comments or
recommendations of the independent auditors, including the
status of previous audit recommendations;
(2) difficulties encountered in the course of audit work,
including any restrictions on the scope of activities or
access to required information;
(3) changes required in the planned scope of the internal
audit plan for the current year;
(4) the effectiveness of the accounting and financial controls
of the Corporation and any recommendations by the
independent auditors for the improvement of such controls;
and
(5) the results of the monitoring of compliance with the
AICPA's Code of Ethical Conduct;
(c) 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. Any changes in accounting
principles also should be reviewed;
(d) Provide sufficient opportunity for the independent auditors to
meet with the members of the Committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the
Corporations's financial and accounting personnel;
(e) Submit the minutes of all meetings of the Committee to, or
discuss the matters discussed at each Committee meeting with,
the Board;
(f) Inquire of management about significant risks or exposures and
assess the steps management has taken to minimize such risk to
the Corporation;
(g) 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; and
(h) Review annually, and if deemed advisable by the Committee,
amend the Committee's Charter.