UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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
|_| DEFINITIVE ADDITIONAL MATERIALS
|_| SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE 14A-12
ADAL GROUP, INC.
(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)(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:
|_| FEE PREVIOUSLY PAID 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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ADAL GROUP, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 2005
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TO OUR STOCKHOLDERS:
PLEASE TAKE NOTICE that the annual meeting of stockholders (the "Annual
Meeting") of AdAl Group, Inc. (the "Company"), will be held at the offices of
Loeb & Loeb LLP, the Company's legal counsel, located at 345 Park Avenue, New
York, New York 10154 on May 19, 2005 at 10:00 a.m. local time, for the following
purposes:
1. To elect five directors to hold office for the term specified in the
proxy statement or until their successors are elected and qualified;
and
2. To approve the Board of Directors' appointment of Moore Stephens,
P.C. as the independent public auditor of the Company for the fiscal
year 2005.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment.
The Board of Directors has fixed the close of business on March 31, 2005
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournment. A proxy statement,
which describes the foregoing proposals and a form of proxy accompany this
notice.
By Order of the Board of Directors
/s/ Charles K. Howe
----------------------------------
Secretary
Dated: April 6, 2005
IMPORTANT
Whether or not you expect to attend the Annual Meeting, please execute the
accompanying proxy and return it promptly in the enclosed reply envelope, which
requires no postage. If you grant a proxy, you may revoke it at any time prior
to the Annual Meeting. Also, whether or not you grant a proxy, you may vote in
person if you attend the Annual Meeting.
2
ADAL GROUP, INC.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 2005
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SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
AdAl Group, Inc. (the "Company"), for use at the annual meeting of stockholders
of the Company (the "Annual Meeting") to be held at the offices of Loeb & Loeb
LLP, the Company's legal counsel, located at 345 Park Avenue, New York, New York
10154 on May 19, 2005 at 10:00 a.m., local time, and at any adjournment. In
addition to mail, proxies may be solicited by personal interview, telephone or
telegraph by our officers, directors and other employees, without additional
compensation. We will bear the cost of solicitation of proxies, which are
expected to be nominal. The Board of Directors has set March 31, 2005 as the
record date (the "Record Date") to determine those holders of record of common
stock, par value $.0001 ("Common Stock") who are entitled to notice of, and to
vote at the Annual Meeting. On or about April 19, 2005, the Company's 2004
Annual Report, including financial statements, this Proxy Statement and the
proxy card (the "Proxy Card" or "Proxy") are being mailed to stockholders of
record as of the close of business on March 31, 2005.
If a stockholder specifies how the proxy is to be voted with respect to
any of the proposals for which a choice is provided, the proxy will be voted in
accordance with such instructions. If a stockholder fails to so specify with
respect to such proposals, the proxy will be voted "FOR" Proposals No. 1 and No.
2.
OUTSTANDING VOTING SECURITIES
Only stockholders of record at the close of business on the Record Date
are entitled to vote at the Annual Meeting. As of the close of business on the
Record Date, there were 2,860,001 shares of Common Stock outstanding.
If a quorum is present, in person or by proxy, all elections for Directors
shall be decided by a plurality of the votes cast in respect thereof. If no
voting direction is indicated on the proxy cards, the shares will be considered
votes for all nominees. In accordance with Delaware law, stockholders entitled
to vote for the election of Directors can withhold authority to vote for all
nominees for Directors or can withhold authority to vote for certain nominees
for Directors.
Abstentions may be specified on all proposals submitted to a stockholder
vote other than the election of Directors. Abstentions will be counted as
present for purposes of determining the existence of a quorum regarding the
proposal on which the abstention is noted. Abstentions on the Company's proposal
to approve the appointment of the independent auditors will not have any effect
for or against such proposal.
Brokers holding shares of the Company's Common Stock in street name who do
not receive instructions are entitled to vote on the election of Directors and
the approval of the appointment of the independent auditors. Under applicable
Delaware law, "broker non-votes" (where a broker submits a proxy but does not
have authority to vote a customer's shares on such proposal) on any non-routine
proposal would not be considered entitled to vote on that proposal and will,
therefore, have no legal effect on the vote of that particular matter.
3
HOW YOU CAN VOTE
You may vote your shares by signing the enclosed proxy card and returning
it in a timely manner. Please mark the appropriate boxes on the card and sign,
date and return the card promptly. A postage-paid return envelope is enclosed
for your convenience.
EXECUTION OF THE ACCOMPANYING PROXY CARD WILL NOT AFFECT A STOCKHOLDER'S
RIGHT TO ATTEND THE ANNUAL MEETING AND VOTE IN PERSON. ANY STOCKHOLDER GIVING A
PROXY HAS THE RIGHT TO REVOKE IT BY GIVING WRITTEN NOTICE OF REVOCATION TO THE
SECRETARY OF THE COMPANY AT ANY TIME BEFORE THE PROXY IS VOTED OR BY ATTENDANCE
AT THE ANNUAL MEETING AND ELECTING TO VOTE IN PERSON.
4
SECURITY OWNERSHIP TABLE
The following table sets forth information with respect to the beneficial
ownership of shares of common stock as of April 7, 2005:
o each person or entity who is known by the Company to beneficially own five
percent or more of the Common Stock;
o each director and executive officer of the Company; and
o all directors and executive officers of the Company as a group.
PERCENTAGE
NAME OF BENEFICIAL OWNER NUMBER OF SHARES** OWNERSHIP
------------------------------------ ------------------ --------------
Nicholas A. Shrager 1,397,655(1) 48.84%
Charles K. Howe 727,515(2) 25.42%
Brian Alleman 5,500 *
635 Ravensworth Court
Colorado Springs, CO 80906
John Sanderson 5,500 *
Keith Broome 300,500 10.5%
Steve Goodacre -0- -0-
The C.K. Howe Discretionary
Settlement 2004 172,125 6.02%
All Directors and Executive Officers
as a Group (6 persons) 2,436,670 85.15%
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* Less than one percent
**Reflects 2,861,501 shares outstanding as of April 6, 2005.
Unless otherwise indicated, the address for each named individual is c/o AdAl
Group, Inc., P.O. Box 177, Billhurst Studio, Lingfield Common Road, Lingfield,
Surrey RH7 6B7, United Kingdom.
Unless otherwise indicated, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of common
stock beneficially owned by them. A person is deemed to be the beneficial owner
of securities that can be acquired by such person within 60 days upon the
exercise of options, warrants or convertible securities (in any case, the
"Currently Exercisable Options"). Each beneficial owner's percentage ownership
is determined by assuming that the Currently Exercisable Options that are held
by such person (but not those held by any other person) have been exercised and
converted.
5
(1) Includes 57,375 shares owned by The Nicholas Shrager Family Trust over which
Mr. Shrager is co-Trustee and shares voting and dispositive power over the
shares.
(2) Includes 172,125 shares owned by The C.K. Howe Discretionary Settlement 2004
over which Mr. Howe is co-Trustee and shares voting and dispositive power over
the shares.
6
PROPOSAL NO. 1.
ELECTION OF FIVE DIRECTORS
Five (5) directors will be elected at the Annual Meeting to serve for a
term of one year, until the next Annual Meeting or until their successors have
been duly elected and have qualified. If any nominee is unable to serve, which
the Board of Directors has no reason to expect, the persons named in the
accompanying proxy intend to vote for the balance of those named and, if they
deem it advisable, for a substitute nominee. The five (5) nominees for election
as directors to serve until the next Annual Meeting are: Nicholas A. Shrager,
Charles K. Howe, Brian Alleman, John Sanderson and Keith Broome.
DIRECTORS, EXECUTIVE OFFICERS AND OF THE COMPANY
Set forth below are the names of the directors, executive officers and key
employees of the Company as of April 6, 2005.
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NAME AGE POSITION
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Nicholas A. Shrager 57 Chairman, Chief Executive
Officer, President and Director
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Stephen B. Goodacre 47 Chief Financial Officer and
Treasurer
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Charles K. Howe 70 Executive Vice President,
Secretary and Director
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Brian Alleman 48 Director
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John Sanderson 60 Director
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Keith Broome 55 Director
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There are no family relationships between any director or executive
officer and any other director or executive officer.
BUSINESS EXPERIENCE
Nicholas A. Shrager, age 57, is the Chairman, Chief Executive Officer and
President of the Company. Mr. Shrager was one of the two co-founders and
directors of Advanced Aluminium Group Limited in 2003, serving as Chief
Executive Director of the company and each of its subsidiaries. He has served as
Chairman of Riverside Business Solutions, a consulting firm, since 1999. From
1994 to 1999, Mr. Shrager was a consultant with Riverside Management Consultants
Limited, assisting clients in the areas of corporate strategy, acquisitions and
marketing. From 1991 to 1994, Mr. Shrager was a Director of Old Nick's, a
successful enterprise focusing on retail liquor and beer sales. From 1987 until
its sale in 1991, Mr. Shrager served as Chairman of The Shrager Group, a timber
business in the United Kingdom. Mr. Shrager received an MBA from Southbank
University in London where he specialized in international marketing.
7
Stephen B. Goodacre, age 47, is the Chief Financial Officer and Treasurer
of the Company. Since April 2002, Mr. Goodacre has been a Director of Blackwater
Consulting Ltd., a financial recruitment and consultancy business. Mr. Goodacre
was employed by Lehman Brothers Inc. from 1990 to 2002, where he held various
positions including Head of International Management Accounting, Finance &
Operations, Director of Lehman's Global Equity Derivatives operation and Head of
European Expense Management. Mr. Goodacre was promoted to Vice President in 1994
and Senior Vice President in 2000. Prior to joining Lehman, he spent seven years
with Philip Morris, serving last as UK Financial Planning Manager.
Charles K. Howe, age 70, is a Director, Executive Vice President and
Secretary of the Company. Mr. Howe was one of the two co-founders and directors
of Advanced Aluminium Group Limited in 2003. Since 1985, he has been a director
of CH Resources Ltd, a business consultancy, through which he has held
directorships in a number of private manufacturing companies. From 1971 to 1985,
he was a board member and then Chief Executive Officer of Crystalate Holdings
plc, a United Kingdom public company primarily engaged in the production of
plastic moulding and the business of acoustic and electronic components,
particularly for the telephone industry.
Brian Alleman, age 48, is a Director of the Company. Mr. Alleman has been
a partner with Tatum CFO Partners LLP, a national partnership of 400 career
CFO's which provides accounting and financial services to clients through
advisory or employment relationships since August 2002. In this capacity, Mr.
Alleman served as Chief Financial Officer of Polar Molecular Holding
Corporation, a developer of fuel additives, from August 2003 to August 2004.
From 1989 to July 2002, he was employed by TCW Capital, a private equity firm.
Through his connection with TCW Capital Mr. Alleman served from April 1993 to
June 2002 as Chief Financial Officer of Centuri Corporation, a leading U.S.
manufacturer of model rockets and small gas powered and electric radio
controlled airplanes, becoming Chief Operating Officer in August 2000.
John Sanderson, age 60, is a Director of the Company. Mr. Sanderson
recently retired as the managing director of Legg Mason Limited, London, which
he established in 1995 as the London subsidiary of Legg Mason (NYSE: LM), an
investment banking firm based in Baltimore, Maryland. From 1967 until 1995, Mr.
Sanderson worked for Kidder Peabody & Co. (and associated firms) in London,
where, in 1988 he was appointed managing director and Head of Equities in
London, responsible for the United Kingdom, the Middle East and Scandinavia. He
was also a member of Kidder, Peabody's management counsel and chaired its
European management committee.
Keith Broome, age 55, is a Director of the Company. From 1977 until
February 2005, Mr. Broome was managing director of the companies that were part
of Guilform Holdings Limited, which were all companies involved in the
manufacture of aluminum products. He has a strong engineering background coupled
with hands-on financial experience gained from managing Guilform Holdings
Limited for the past 28 years. On January 8, 2002, GFM Realisations Ltd. (f/k/a
Guilform Ltd.), a corporation formed under the laws of England and Wales
("GFM"), went into receivership, a process similar to Chapter 11 in the United
States, and subsequently liquidated. Mr. Broome was the managing director of GFM
from its incorporation until the appointment of a receiver. GFM was in the
business of manufacturing aluminum products. On January 9, 2004, Law Link (Legal
Expenses) Ltd., a corporation formed under the laws of England and Wales ("Law
Link"), went into receivership. Mr. Broome was a guarantor on a loan received by
Law Link from a local bank and, at the request of the bank, acted as a director
and secretary of the Law Link.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE FOR THE SLATE
OF DIRECTOR NOMINEES. THE VOTE OF A PLURALITY OF SHARES, PRESENT IN PERSON OR
REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE, IS REQUIRED TO
ELECT EACH OF THE DIRECTORS.
8
BOARD AND COMMITTEE MEETINGS
Our Board of Directors has responsibility for establishing the Company's
corporate policies and overseeing the Company's overall performance, although it
is not involved in day-to-day operating details. The Board of Directors meets
regularly throughout the year to review significant developments affecting the
Company and to act upon matters requiring approval of the Board of Directors. It
also holds special meetings as required from time to time when important matters
arise requiring action of the Board of Directors between scheduled meetings. Due
to the change in control of the Company in October 2004, the Board of Directors
only held one meeting during 2004. All of the members of the Board of Directors
at that time were present for the meeting.
The Board of Directors has an Audit Committee. The Board of Directors does
not have a Nominating Committee or a Compensation Committee. The entire Board of
Directors assumes the duties that would be delegated to a Nominating Committee
and Compensation Committee. The Company does not have a policy with regard to
Board of Directors members' attendance at annual meetings of stockholders. Since
October 28, 2004, when the Company consummated the Share Exchange Agreement and
new directors were appointed to the Board of Directors, the Company has not held
an annual meeting of stockholders. Accordingly, there is no information to
provide as to the number of members of the Board of Directors who attended the
prior year's annual meeting.
Nominating Committee
The Board of Directors does not have a standing Nominating Committee. The
Board of Directors has adopted resolutions with respect to the nomination
process.
The Board of Directors accepts director nominations made by members of the
Board of Directors and stockholders of the Company. Pursuant to the terms of the
Company's bylaws, stockholders proposing to nominate one or more candidates for
election as directors must give timely notice in writing of such nomination to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered or mailed to the principal office of the Company not less than 70 days
prior to the scheduled meeting date or, if notice of the scheduled meeting date
is not given at least 80 days prior to such meeting, not more than ten (10) days
following the day on which notice of the date of the scheduled meeting is mailed
or the day on which disclosure of that date is made, whichever is earlier. A
stockholder's notice to the Secretary of the Company shall set forth (i) the
name, age, business address and residence address of the person nominated, (ii)
the principal occupation or employment of the person nominated, (iii) the number
and class of shares of stock of the Company beneficially owned by the nominated
person, and (iv) the information with respect to each such proposed nominee that
would be required to be provided in a proxy statement prepared in accordance
with Regulation 14A of the Securities Exchange Act of 1934, as amended. A
stockholder's notice to the Secretary of the Company also shall set forth (i)
the name and address, as they appear in the Company's records, of the
stockholder and any other stockholder(s) supporting or likely to support the
person being nominated, and (ii) the number and class of shares of stock of the
Company that are beneficially owned on the date of such notice by the nominating
stockholder(s). This information shall be accompanied by a written statement,
signed and acknowledged by each person nominated by the stockholder(s) that the
person nominated agrees to be nominated and serve as a director of the Company
if elected. The Board of Directors or a designated committee thereof may reject
any stockholder's nomination of one or more director candidates if (i) notice is
not timely given, or (ii) there is a material deficiency in the notice. The
Secretary of the Company shall notify the stockholder of the deficiency and the
stockholder shall have not more than five (5) days, to be determined by the
Board of Directors, from the date of the deficiency notice to cure. If the
deficiency is not materially cured within such period as determined by the Board
of Directors, then the Board of Directors may reject the stockholder's
nomination. If a stockholder proposes to nominate one or more candidates for
election as directors at a meeting and the Board of Directors has not made a
determination of whether the stockholder has complied with the procedures set
forth above, then the chairman of the meeting shall determine at the meeting
whether the nominating stockholder has complied. If the chairman determines that
the stockholder's notice has complied with the procedures set forth above, then
the chairman shall declare the notice effective and ballots shall be provided
for use at the meeting with respect to such nomination. If the chairman
determines that the stockholder's notice has not complied, then unless the
chairman, in his sole and absolute discretion, decides to waive such compliance,
the stockholder's nomination shall be disregarded.
9
The Board of Directors may consider those factors it deems appropriate in
evaluating director nominees, including judgment, skill, diversity, strength of
character, experience with businesses and organizations comparable in size or
scope to the Company, experience and skill relative to other members of the
Board of Directors, and specialized knowledge or experience. Depending upon the
current needs of the Board of Directors, certain factors may be weighed more or
less heavily. In considering candidates for the Board of Directors, they
evaluate the entirety of each candidate's credentials and do not have any
specific minimum qualifications that must be met by a nominee. They will
consider candidates from any reasonable source, including current members of the
Board of Directors, stockholders, professional search firms or other persons.
The Board of Directors will not evaluate candidates differently based on who has
made the recommendation.
Audit Committee
The following disclosure about the Company's audit committee does not
constitute soliciting material and shall not be deemed filed or incorporated by
reference into any of the Company's other filings under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates the report by reference therein.
The Audit Committee operates under a formal charter in accordance with all
applicable laws. The charter was approved and adopted by the Board of Directors
on February 23, 2005 and will be reviewed and reassessed annually by the Audit
Committee. The charter sets forth the responsibilities, authority and specific
duties of the Audit Committee. The charter specifies, among other things, the
structure and membership requirements of the Audit Committee, as well as the
relationship of the Audit Committee to the Company's independent auditors and
management. The Audit Committee charter is attached as Appendix 1 to this proxy
statement.
The Board of Directors has established an audit committee in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of
the Audit Committee are Messrs. Brian Alleman and John Sanderson, each of whom
are independent as defined in the Nasdaq Marketplace listing standards currently
in effect. None of the Audit Committee members is a current officer or employee
of the Company or any of its affiliates.
The Board of Directors has determined that Brian Alleman, Chairman of the
Audit Committee, qualifies as an "audit committee financial expert" under the
Securities and Exchange Commission's definition.
10
Audit Committee Report
The responsibilities of the Audit Committee are set forth in the Audit
Committee Charter. The Audit Committee assists the full Board of Directors in
fulfilling its oversight responsibilities with respect to the integrity of
financial statements and other financial information. Management prepares the
financial statements and establishes the system of internal control.
As part of its oversight responsibility, the Audit Committee reviewed and
discussed the financial statements with Management and the Company's Independent
Auditor, Moore Stephens, P.C., including a discussion about the quality and
appropriateness, not just acceptability, of accounting principles applied in the
company's financial statements. The Independent Auditor has the responsibility
for expressing an opinion on the conformity of the annual financial statements
with US GAAP and disclosure requirements. The Audit Committee reviewed with the
Independent Auditor their judgments as to the acceptability and conformity of
the Company's financial statements with US GAAP and SEC disclosure requirements;
and also other matters as are required to be discussed under US generally
accepted auditing standards. The Audit Committee met with the Independent
Auditor, without management present, to discuss the results of their audit,
quality of financial reporting and audit experience with the Company.
The Audit Committee discussed with Moore Stephens, P.C. its independence
from management and the Company. The Audit Committee received a letter and
written disclosure, as required by Independence Standard Board Standard No.1,
from Moore Stephens, P.C. confirming its independence from management and the
Company.
An engagement letter was submitted to and approved by the Audit Committee
outlining the scope and plan of the annual audit.
Relying on the reviews and discussions noted above, the Audit Committee
recommends to the full Board of Directors that the financial statements be
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2004 for filing with the US SEC. The Audit Committee also
recommends Moore Stephens, P.C. as the Company's Independent Auditor for 2004.
THE AUDIT COMMITTEE
Brian Alleman, Chairman
John Sanderson
April 6, 2005
Compensation Committee
In February 2004, the Board of Directors formed a Compensation Committee,
which is currently comprised of independent directors, Messrs. Brian Alleman and
John Sanderson. The Compensation Committee will make recommendations to the
Board of Directors concerning salaries for our officers, including our Chief
Executive Officer, and employees.
Process for Sending Communications to the Board of Directors
Stockholders may contact senior management or directors to discuss any
questions they may have by sending correspondence to the Company's corporate
offices located at Billhurst Studio, P.O. Box 177, Lingfield Common Road,
Lingfield, Surrey, United Kingdom, Attention: Steve Goodacre, Chief Financial
Officer, or by e-mail to the Company's Chief Financial Officer at:
stockholders@adalgroup.com. The telephone number at the corporate office is
011-44-342-833855.
11
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or accrued for the
fiscal year ended December 31, 2004 for the Company's Chief Executive Officer.
There are no other executive officers whose salary and bonus were in excess of
$100,000.
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ANNUAL COMPENSATION
----------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY COMPENSATION
---------------------------- -------------- --------------- ----------------
Nicholas A. Shrager 2003 USD$26,640(1) -0-
Chief Executive Officer 2002 N/A N/A
and President 2001 N/A N/A
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(1) On October 28, 2004, Mr. Shrager was appointed as CEO and President of the
Company. The salary disclosed here represents the compensation paid to Mr.
Shrager from October 28, 2004 through December 31, 2004.
OPTION GRANTS IN LAST FISCAL YEAR.
None.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
None.
EQUITY COMPENSATION PLAN INFORMATION
The Company has not adopted an equity incentive plan.
DIRECTORS' COMPENSATION
The Company pays its non-employee Directors USD$20,000 per year in
connection with their activities on behalf of the Company, plus travel expenses
in connection with the Board of Directors meetings. The directors fee will be
paid quarterly in arrears on April 1, July 1, October 1 and January 1 in a
combination of shares of Company common stock and cash. Each non-employee
director shall receive shares equal to USD$3,000 per quarter based on the
closing price of the Company's common stock on the date of grant as quoted on
the Over-the-Counter Bulletin Board (or applicable quotation medium or exchange
as of such date) and USD$2,000 per quarter in cash.
12
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with Nicholas A. Shrager,
effective on October 28, 2004, pursuant to which Mr. Shrager will serve as
Chairman of the Company, reporting to the Board of Directors. Mr. Shrager's
initial salary is (pound)75,000, which will be subject to an increase to
(pound)100,000 provided that the Company's financial performance objectives are
achieved for each of the first three (3) fiscal years, as determined by the
Board of Directors each year. He is also eligible to participate in the annual
discretionary bonus program for executive management, which is potentially five
(5) percent of his current annual base salary. The bonus payments shall be made
in accordance with the following performance targets: (i) 70% of the bonus
potential shall be earned if the Company meets its annual operating EBITDA
target established by the Board of Directors each year; (ii) 20% of the bonus
potential shall be earned if the Company meets its annual revenue target
established by the Board of Directors each year; and (iii) 10% of the bonus
potential shall be earned based on Mr. Shrager's performance and contribution to
the business as determined by the Board of Directors each year. In the event Mr.
Shrager is terminated involuntarily without cause or he terminates voluntarily
for good reason as defined in the employment agreement, the Company will pay him
a termination benefit equal to (i) 100% of his base salary plus his prior year
bonus over a 12-month period if termination occurs after January 1, 2005 but
before January 1, 2006, or (ii) 100% of his base salary plus the average of his
bonus for the prior two fiscal years over a 12-month period if termination
occurs after January 1, 2006. In the event Mr. Shrager voluntarily terminates
the employment agreement without cause or is terminated involuntarily with good
reason, he shall receive no termination benefit.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 7, 2005, the Company entered into a Share Sale & Purchase
Agreement (the "Agreement") relating to Guilform Holdings Limited ("Guilform"),
with Keith Malcolm Broome, the sole shareholder of Guilform. Pursuant to the
terms of the Agreement, the Company purchased 100% of the shares of Guilform
from Mr. Broome in consideration of (i) (pound)300,000 in cash; (ii) a
promissory note in the amount of (pound)200,000 bearing interest at a rate of 6%
per annum, and (iii) 300,000 restricted shares (the "Shares") of the Company.
Under the Agreement, the Company has undertaken to ensure that Guilform
meets its payment obligations under certain commercial loan facilities provided
to Guilform by State Securities plc in the sum of (pound)1,007,000, of which
(pound)497,000 was new borrowing in connection with the consummation of the
transactions contemplated by the Agreement. (pound)320,891.32 of the new
borrowing was loaned by Guilform to the Company in respect of the payment due to
Mr. Broome on completion of the Agreement and completion expenses incurred. Mr.
Broome and Ms. Janice Conley, the previous Secretary of Guilform, had guaranteed
payment of the amounts owing by Guilform under the loan facilities. Under the
Agreement, the Company has undertaken to provide for the release of Mr. Broome
and Ms. Conley as guarantors on the loan facility by August 7, 2007. Further, in
connection with another loan facility provided to Guilform by Venture Finance
plc, to which Mr. Broome and Ms. Conley are also guarantors, the Company has
undertaken to provide for the release of Mr. Broome and Ms. Conley as guarantors
on that loan facility upon its expiration on May 31, 2005. The Company intends
for Guilform to re-finance the Venture Finance plc loan facility on or prior to
expiration.
As a condition to the consummation of the Agreement, the Board of
Directors of the Company appointed Mr. Broome to serve as a non-executive
director on the Company's Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments to these forms
furnished to the Company, all parties subject to the reporting requirements of
Section 16(a) of the Exchange Act filed all such required reports during and
with respect to the fiscal year ended December 31, 2004.
CODE OF BUSINESS CONDUCT AND ETHICS
On February 23, 2005, the Board of Directors adopted a Code of Business
Conduct and Ethics to promote its commitment to the legal and ethical conduct of
the Company's business. The Chief Executive Officer, Chief Financial Officer,
and other senior officers are required to abide by the Code of Business Conduct
and Ethics, which provides the foundation for compliance with all corporate
policies and procedures, and best business practices. The policies and
procedures address a wide array of professional conduct, including the
establishment of sound employment policies, methods for avoiding and resolving
conflicts of interest, safeguarding intellectual property, protecting
confidential information, and a strict adherence to all laws and regulations
applicable to the conduct of the Company's business. The Company intends to
satisfy its obligations, imposed under the Sarbanes-Oxley Act, to disclose
promptly on the Company's website amendments to, or waivers from, the Code of
Business Conduct and Ethics, if any.
14
PROPOSAL NO. 2.
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Moore Stephens, P.C. as independent
auditors to audit the financial statements of the Company for the current fiscal
year, subject to the approval of such appointment by the Company's stockholders.
Moore Stephens, P.C. has served as the Company's Independent Auditors since
October 2004.
Representatives of the firm of Moore Stephens, P.C. may be present at the
Annual Meeting by telephone conference call to respond to appropriate questions
and will have an opportunity to make a statement, if they so desire.
On October 28, 2004, we ended the engagement of Hein & Associates, LLP as
our independent certified public accountants, and engaged Moore Stephens, P.C.
as our new independent certified public accountants. The decision was approved
by the Board of Directors of the Company. The report of Hein & Associates LLP on
the Company's financial statements for the fiscal years ended September 30, 2003
and 2002 did not contain an adverse opinion or disclaimer of opinion. However,
the report was modified due to an uncertainty about the Company's ability to
continue as a going concern. During the Company's fiscal years ended September
30, 2003 and 2002 and the subsequent interim period preceding the termination,
there were no disagreements with Hein & Associates LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Hein & Associates LLP, would have caused Hein & Associates LLP to make reference
to the subject matter of the disagreements in connection with its report on the
financial statements for such years or subsequent interim periods.
During the two most recent fiscal years and the interim period preceding
the engagement of Moore Stephens, the Company did not consult with Moore
Stephens regarding either: (i) the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements; or (ii)
any matter that was either the subject of a disagreement or event identified in
paragraph (a)(1)(iv) of Item 304 of Regulation S-B.
Audit Fees
The aggregate fees billed by Moore Stephens, P.C. for professional
services rendered for the audit of the Company's annual financial statements for
the fiscal year ended December 31, 2004, and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB for fiscal
year 2004 was $25,000 and $6,500, respectively.
Audit Related Fees
There were no fees billed for services rendered for assurance and related
services in connection with the audit and quarterly reviews.
Tax Fees
There were no tax fees billed.
All Other Fees
There were no other fees billed.
15
Pre-Approval of Services
The Audit Committee pre-approves all services, including both audit and
non-audit services, provided by the Company's independent accountants. For audit
services, each year the independent auditor provides the Audit Committee with an
engagement letter outlining the scope of the audit services proposed to be
performed during the year, which must be formally accepted by the Committee
before the audit commences. The independent auditor also submits an audit
services fee proposal, which also must be approved by the Committee before the
audit commences.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL
OF THIS PROPOSAL. THE AFFIRMATIVE VOTE OF THE MAJORITY OF THE VOTES CAST AT THE
ANNUAL MEETING IS REQUIRED FOR THE APPROVAL OF THE APPOINTMENT OF THE
INDEPENDENT AUDITORS.
16
MISCELLANEOUS
ANNUAL REPORT
Our annual report to stockholders concerning our operations during the
fiscal year ended December 31, 2004, including audited financial statements, has
been distributed to all record holders as of the record date. The annual report
is not incorporated in the proxy statement and is not to be considered a part of
the soliciting material.
UPON WRITTEN REQUEST, WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF OUR
ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004, TO
EACH STOCKHOLDER OF RECORD OR TO EACH STOCKHOLDER WHO OWNED OUR COMMON STOCK
LISTED IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE CLOSE OF BUSINESS ON
MARCH 31, 2005. ANY REQUEST BY A STOCKHOLDER FOR OUR ANNUAL REPORT ON FORM 10KSB
SHOULD BE SENT TO OUR CHIEF FINANCIAL OFFICER, STEVE GOODACRE AT ADAL GROUP,
INC., P.O. BOX 177, BILLHURST STUDIO, LINGFIELD COMMON ROAD, LINGFIELD, SURREY
RHT 6B7.
OTHER BUSINESS
Our management is not aware of any other matters which are to be presented
at the meeting, nor have we been advised that other persons will present any
such matters. However, if other matters properly come before the meeting, the
individual named in the accompanying proxy shall vote on such matters in
accordance with his best judgment.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders' proposals intended to be presented at the 2006 Annual
Meeting of Stockholders must be submitted in writing to the Secretary of the
Company at P.O. Box 177, Billhurst Studio, Lingfield Common Road, Lingfield,
Surrey RH7 6B7, no later than December 9, 2005 for inclusion in the Company's
proxy statement and form of proxy for that meeting. Pursuant to the terms of the
Company's bylaws, stockholders submitting proposals must give timely notice in
writing of such proposal to the Secretary of the Company. A stockholder's notice
of proposal to the Secretary of the Company shall set forth (i) a brief
description of the item of business or proposal and the reasons for bringing it
before the meeting, (ii) the name and address, as they appear in the Company's
records, of the stockholder and any other stockholder(s) supporting or likely to
support the item of business or proposal, (iii) the number and class of shares
of stock of the Company that are beneficially owned on the date of such notice
by the stockholder or any such other stockholder(s) supporting the item of
business or proposal, and (iv) any financial interest of the stockholder or any
such other stockholder(s) in such item of business or proposal. The Board of
Directors or a designated committee thereof may reject any stockholder's item of
business or proposal if (i) notice is not timely given, or (ii) there is a
material deficiency in the notice. The Secretary of the Company shall notify the
stockholder of the deficiency and the stockholder shall have not more than five
(5) days, to be determined by the Board of Directors, from the date of the
deficiency notice to cure. If the deficiency is not materially cured within such
period as determined by the Board of Directors, then the Board of Directors may
reject the stockholder's notice. If a stockholder desires to raise an item of
business or proposal at a meeting and the Board of Directors has not made a
determination of whether the stockholder has complied with the procedures set
forth above, then the chairman of the meeting shall determine at the meeting
whether the stockholder has complied. If the chairman determines that the
stockholder's notice has complied with the procedures set forth above, then the
chairman shall declare the notice effective and ballots shall be provided for
use at the meeting with respect to such item of business or proposal. If the
chairman determines that the stockholder's notice has not complied, then unless
the chairman in his sole and absolute discretion decides to waive such
compliance, the stockholder's item of business or proposal shall not be brought
before the meeting. Although proposals that are not timely submitted will not be
included in the proxy statement for the 2006 Annual Meeting of Stockholders, the
SEC rules allow proxies to grant discretionary authority to vote on matters that
were not timely submitted to the Company for inclusion in the proxy statement,
provided that the Company had notice of such matters no later than February 22,
2006.
17
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Stockholders may read and copy any reports, statements
or other information that we file at the SEC's public reference rooms in
Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information about the public reference rooms. Our
public filings are also available from commercial document retrieval services
and at the Internet Web site maintained by the SEC at http://www.sec.gov.
STOCKHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE ANNUAL MEETING.
NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM
WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED APRIL
6, 2005. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.
The above notice and proxy statement are sent by order of the Board of
Directors.
/s/ Nicholas A. Shrager
--------------------------------
Nicholas A. Shrager,
Chairman of the Board
April 6, 2005
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
ADAL GROUP, INC.
TO BE HELD ON MAY 19, 2005
The undersigned hereby appoints Nicholas A. Shrager as the lawful agent
and Proxy of the undersigned (with all powers the undersigned would possess if
personally present, including full power of substitution), and hereby authorizes
him to represent and to vote, as designated below, all the shares of common
stock of AdAl Group, Inc. held of record by the undersigned as of the close of
business on March 31, 2005, at the Annual Meeting of Stockholders to be held on
May 19, 2005, or any adjournment or postponement.
The Board of Directors recommends a vote for Proposals 1 and 2.
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)
-----------------------------
Mr. Nicholas A. Shrager, Mr. Charles K. Howe, Mr. Brian Alleman, Mr. John
Sanderson and Mr. Keith Broome.
INSTRUCTION: To withhold authority to vote for any nominees, write the
nominees' names on the space provided below.)
2. APPROVAL OF INDEPENDENT PUBLIC AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
3. In his discretion, the Proxy is authorized to vote upon any matters which
may properly come before the Meeting, or any adjournment or postponement
thereof,
It is understood that when properly executed, this proxy will be voted in the
manner directed herein by the undersigned stockholder. WHERE NO CHOICE IS
SPECIFIED BY THE STOCKHOLDER, THE PROXY WILL BE VOTED FOR ALL DIRECTOR NOMINEES
IN PROPOSAL 1 AND FOR THE APPROVAL OF INDEPENDENT PUBLIC AUDITORS IN PROPOSAL 2.
Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. 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.
Date: __________, 2005 ____________________________________
Signature
____________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
19
APPENDIX 1
AUDIT COMMITTEE CHARTER
OF
ADAL GROUP, INC.
MISSION STATEMENT
The Audit Committee of AdAl Group, Inc. (the "Company") has been
established by the board of directors of the Company (the "Board") to assist the
Board in fulfilling its responsibilities to oversee the Company's financial and
accounting operations. The Audit Committee will review and be responsible for,
among other things, the Company's system of internal controls, its financial
reporting process, the audit process, and the Company's processes for monitoring
compliance with laws and regulations. In performing its duties, the Audit
Committee will maintain effective working relationships with the Board,
management, the Company's internal auditors, and the independent auditors. The
Audit Committee will confirm with the independent auditor its understanding that
it has access to the Audit Committee at any time.
ORGANIZATION AND MEETINGS
Audit Committee Composition
The Audit Committee shall consist of such number of members as the Board
shall determine, but in no event less than three members. The Board shall
designate one member of the Audit Committee to be the Chairperson. Each member
of the Audit Committee must be independent, as defined under applicable
Securities and Exchange Commission ("SEC") and stock exchange rules and
regulations as they currently exist and as they may be amended from time to
time.
Each member must be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement, and cash flow
statement or, if and so long as permitted under applicable stock exchange rules,
become able to do so within a reasonable period of time after his or her
appointment to the Audit Committee. Audit Committee members shall have such
other qualifications as the Board may from time to time deem appropriate in
light of the mission of the Audit Committee.
At least one member of the Audit Committee shall qualify as a "audit
committee financial expert" in compliance with the requirements established
under applicable SEC and stock exchange laws and regulations as they currently
exist and as they may be amended from time to time.
Notwithstanding anything to the contrary in this charter, if permitted by
applicable SEC and stock exchange laws and regulations in effect from time to
time, one director who (i) is not independent as defined under applicable stock
exchange rules, and (ii) is not a current employee or an immediate family member
(as defined under applicable stock exchange rules) of such employee, may be
appointed to the Audit Committee if the Board, under exceptional and limited
circumstances, determines that membership on the Audit Committee by the
individual is required in the best interests of the Company and its
stockholders. In such event, the Board will disclose in the Company's next
annual proxy statement the nature of that director's relationship with the
Company and the reasons for that determination.
20
If the Company fails to comply with the Audit Committee composition
requirements under applicable SEC and stock exchange rules and regulations, the
Company shall have an opportunity to cure such defect as provided under such
rules.
Term; Meetings
The Committee shall meet at least quarterly, or more frequently as it
deems appropriate and as circumstances dictate. Any member of the Committee may
call a special meeting of the Committee. Meetings of the Committee may be held
telephonically.
The Committee shall periodically meet with each of management (including
the Chief Financial Officer) and the independent auditors (including the audit
engagement partner) in separate executive sessions to discuss any matters that
the Committee or each of these groups believe would be appropriate to discuss
privately. In addition, the Committee expects to meet with the independent
auditors and management quarterly to review the Company's financial statements.
The Committee may invite to its meetings any director, member of
management of the company and such other persons as it deems appropriate in
order to carry out its responsibilities. The Committee may also exclude from its
meetings any persons it deems appropriate in order to carry out its
responsibilities.
ROLE AND RESPONSIBILITIES
The Committee's primary responsibility is one of oversight and it
recognizes that the Company's management is responsible for preparing the
Company's financial statements and that the independent auditors are responsible
for auditing those financial statements. The Committee also recognizes that
financial management, as well as the independent auditors, have more time,
knowledge and more detailed information on the Company than do Committee
members; consequently, in carrying out its oversight responsibilities, the
Committee is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the independent
auditor's work. The Committee shall also perform any other activities consistent
with this Charter as the Audit Committee or the Board deems necessary or
appropriate or as may be required under applicable SEC and stock exchange rules
and regulations in effect from time to time.
The Committee may form and delegate authority to subcommittees consisting
of one or more members when appropriate, including the authority to grant
pre-approvals of audit and permitted non-audit services provided that the
decisions of such subcommittee to grant pre-approvals shall be presented to the
full Committee at its next scheduled meeting.
Corporate Governance
1. Report on its meetings, proceedings and other activities at each
regularly scheduled meeting of the Board, to the extent appropriate.
2. Review and reassess the adequacy of this Charter at least annually.
Submit changes to this Charter to the Board for approval.
3. Review and approve all transactions with affiliates, related
parties, directors and executive officers.
4. Review the procedures for the receipt and retention of, and the
response to, complaints received regarding accounting, internal
control or auditing matters.
21
5. Review the procedures for the confidential and anonymous submission
by employees of concerns regarding questionable accounting or
auditing matters.
6. Review with management and the independent auditors, at least once
annually, all correspondence with regulatory authorities and all
employees complaints or published reports that raise material issues
regarding the financial statements or accounting policies.
Independent Auditors
1. Appoint, compensate, retain and oversee the work of any independent
auditor engaged (including resolution of disagreements between
management and the auditor regarding financial reporting) for the
purpose of conducting the annual audit of the Company's books and
records, preparing or issuing an audit report or performing other
audit review or attest services for the Company.
2. Obtain and review, at least once annually, a report by the
independent auditors describing (i) their internal quality control
procedures, (ii) any material issues raised by the most recent
internal quality control review or peer review or by any inquiry or
investigation by any governmental or professional authority within
the preceding five years, in each case with respect to one or more
independent audits carried out by them, (iii) all material steps
taken to deal with any such issues and (iv) all relationships
between them and the Company.
3. Review annually the independence of the independent auditors by (i)
receiving from the independent auditors a formal written statement
delineating all relationships between the independent auditors and
the Company in accordance with Independence Standards Board Standard
No. 1, (ii) discuss with the independent auditors all disclosed
relationships between the independent accounts and the Company and
all other disclosed relationships that may impact the objectivity
and independence of the independent auditors and (iii) discussing
with management its evaluation of the independence of the
independent auditors.
4. Obtain from the independent auditors assurance that the lead audit
partner and the audit partner responsible for reviewing the audit
have been and will be rotated at least once every five years and
each other audit partner has been and will be rotated at least once
every seven years, in each case, in accordance with Section l0A of
the Securities Exchange Act of 1934, as amended (the "Act") and the
rules promulgated thereunder.
5. Review and pre-approve, all audit, review or attest services
(including comfort letters in connection with securities
underwritings and tax services) and all non-audit services to be
provided by the independent auditors as permitted by Section 10A of
the Exchange Act and the rules promulgated thereunder, and, in
connection therewith, the terms of engagement. The Audit Committee
may designate one member to approve such non-audit services, but
that member must inform the Audit Committee of the approval at the
next meeting of the Audit Committee. All such approvals and
procedures must be disclosed in periodic reports filed with the SEC.
6. Review and approve all compensation to the independent auditors for
all audit and non-audit services.
7. Review regularly with the independent auditors any audit problems or
difficulties and management's response, including restrictions on
the scope of activities of the independent auditors or access by the
independent auditors to requested information, and significant
disagreements between the independent auditors and management.
22
8. Present conclusions with respect to the independent auditors to the
Board.
Audits and Accounting
Before the commencement of the annual audit, the Audit Committee will meet with
financial management and the independent auditor to review and approve the plan,
scope, staffing, fees and timing of the annual audit. The Audit Committee shall:
1. After completion of the audit of the financial statements, review
with management and the independent auditors the results of the
audit, the audit report, the management letter relating to the audit
report, all significant questions (resolved or unresolved) that
arose and all significant difficulties that were encountered during
the audit, the disposition of all audit adjustments identified by
the independent auditors, all significant financial reporting issues
encountered and judgments made during the course of the audit
(including the effect of different assumptions and estimates on the
financial statements) and the cooperation afforded or limitations
(including restrictions on scope or access), if any, imposed by
management on the conduct of the audit.
2. Review, prior to filing, all annual reports on Form 10-K and all
quarterly reports on Form 10-Q, to be filed with the SEC. Discuss
with management and the independent auditors, where practicable,
prior to filing, the financial statements (including the notes
thereto) and the disclosures under "Management's Discussion and
Analysis o(pound) Financial Condition and Results of Operations".
3. Review with management and the independent auditors, at least
annually, (i) all significant accounting estimates, (ii) all
significant off balance sheet financing arrangements and their
effect on the financial statements, (iii) all significant valuation
allowances and liability, restructuring and other reserves, (iv) the
effect of regulatory and accounting initiatives, and (v) the
adequacy of financial reporting.
4. Review with management and the independent auditors all reports
delivered by the independent auditors in accordance with Section
10A(k) of the Securities Exchange Act of 1934 with respect to
critical accounting policies and practices used, alternative
treatments of financial information available under GAAP and other
written communications (including letters under SAS No. 50) between
the independent auditors and management, together with their
ramifications and the preferred treatment by the independent
auditors.
5. Discuss with the independent auditor and management the independent
auditor's judgment about the quality, not just the acceptability, of
the Company's accounting principles, as applied in the Company's
financial reporting in accordance with SAS No. 61.
6. Review and discuss with management and the independent auditors the
Company's earnings press releases (paying particular attention to
the use of any "pro forma" or "adjusted" non-GAAP information), as
well as financial information and earnings guidance provided to
analysts and rating agencies. This review may be generally of
disclosure and reporting policies. The Committee need not discuss in
advance each earnings press release or each instance in which the
Company may provide earnings guidance.
7. Prepare the report required by the SEC to be included in the
Company's annual proxy statement and any other reports of the Audit
Committee required by applicable securities laws or stock exchange
listing requirements or rules.
23
Monitoring of Internal Controls Systems
1. Meet separately in executive session, at least annually, with the
Company's principal accounting officer to discuss:
a) the scope of internal accounting and auditing procedures then
in effect;
b) the Company's means for monitoring compliance by Company
personnel with Company policies and procedures and applicable
law; and
c) the extent to which recommendations made by the principal
accounting officer or independent auditor have been
implemented.
2. Review, based upon the recommendation of the independent auditors
and financial management, the scope and plan of the work to be done
by the internal audit group and the responsibilities, budget and
staffing needs of the internal audit group.
3. Review on an annual basis the performance of the internal audit
group.
4. In consultation with the independent auditors and the internal audit
group, the accounting and financial controls, review the adequacy of
the Company's internal control structure and procedures designed to
insure compliance with laws and regulations, and any special audit
steps adopted in light of material deficiencies and controls.
5. Review (i) the internal control report prepared by management,
including management's assessment of the effectiveness of the design
and operation of the Company's internal control structure and
procedures for financial reporting, as well as the Company's
disclosure controls and procedures, with respect to each annual and
quarterly report that the Company is required to file under the
Securities Exchange Act of 1934 and (ii) the independent auditors'
attestation, and report, on the assessment made by management.
Other
1. Engage and determine funding for independent counsel and other
advisors as it determines necessary to carry out its duties.
2. Conduct any and all investigations it deems necessary or
appropriate.
Adopted: February 23, 2005
24