1. Page 1 John F. Levy Board Advisory (O): (908) 518-0781 (O): (201) 650-6269 John@BoardAdvisory.net www.BoardAdvisory.net

2.  Back in the Day ◦ Was Ceremonial  Sarbanes Oxley ◦ Then Compliance  New World Order ◦ Now Competitive Advantage John F. Levy Board Advisory www.BoardAdvisory.net 2

3.  Dutch East India Trading Company  Need for Capital  Limited Investors  Direct contact between managers and investors  More shareholders John F. Levy Board Advisory www.BoardAdvisory.net 3

4.  Comes from the Latin fides, meaning faith, and, and fiducia, meaning trust.  Act at all times for the sole benefit and interests of another,.  Highest standard of care at either equity or law.  Highlighted by good faith, loyalty and trust. John F. Levy Board Advisory www.BoardAdvisory.net 4

5.  Director duties are governed by the corporate law of the state of incorporation.  Under Delaware law the business is managed by or under the direction of the Board of Directors.  In this capacity, members of the Board serve as fiduciaries of the Company and its shareholders. John F. Levy Board Advisory www.BoardAdvisory.net 5

6.  The Duty of Care  The Duty of Loyalty  The Duty of Disclosure John F. Levy Board Advisory www.BoardAdvisory.net 6

7. Directors do not act in good faith when there is:  fiduciary conduct motivated by an actual intent to do harm;  “gross negligence”; or  intentional dereliction of duty. John F. Levy Board Advisory www.BoardAdvisory.net 7

8. The courts will not second guess directors’ decisions if the directors can demonstrate that they complied with the duties of care, loyalty and disclosure in good faith. John F. Levy Board Advisory www.BoardAdvisory.net 8

9.  A full, complete and considered process  Consider utilizing legal, financial and other expert advice  Complete agendas  Materials in advance of meetings  Sufficient time for discussion  Complete minutes John F. Levy Board Advisory www.BoardAdvisory.net 9

10.  Set Strategy  Understand Risk  Monitor Execution  Select, Assess, Evaluate and Compensate the CEO  Comply with Laws and Regulations John F. Levy Board Advisory www.BoardAdvisory.net 10

11.  Tough times require additional Board involvement attention  Government, shareholders and activists are watching  Board are focused on Risk  Cash forecasting and management are Board issues John F. Levy Board Advisory www.BoardAdvisory.net 11

12.  Board Chairperson or Lead Director  Governance Committee  Compensation Committee  Audit Committee  Other Committees John F. Levy Board Advisory www.BoardAdvisory.net 12

13. Shareholders Board of Directors Chairman/ Lead Director Governance and Nominating Committee Compensatio n Committee Audit Committee Internal Audit CEO Management and Employees John F. Levy Board Advisory www.BoardAdvisory.net13

14.  Each Committee is responsible to a Charter.  The Charter lists the responsibilities and expectations of each committee.  Charters may be detailed or broad.  Charters are typically available on company websites or in public filings. John F. Levy Board Advisory www.BoardAdvisory.net 14

15. Public companies must disclose:  Audit committee financial expert by name,  Independence,  If no expert the public company must disclose this fact and explain why. John F. Levy Board Advisory www.BoardAdvisory.net 15

16. An understanding of:  GAAP and the ability to assess the general application GAAP;  Internal controls and procedures for financial reporting; and  Audit committee functions. John F. Levy Board Advisory www.BoardAdvisory.net 16

17.  Must have obtained by :  principal financial officer, principal accounting officer, controller, public accountant or auditor or similar or actively supervision;  oversee or assess the performance of companies or public accountants;  or other relevant experience. John F. Levy Board Advisory www.BoardAdvisory.net17

18.  NONE  Higher Standard John F. Levy Board Advisory www.BoardAdvisory.net 18

19.  Annual Board evaluation ◦ Entire Board ◦ Each Director  Skills Assessment ◦ Skills Required ◦ Skills of Existing Board  Board Dynamics ◦ Big Name - Small Company ◦ Team Players ◦ Building Consensus John F. Levy Board Advisory www.BoardAdvisory.net 19

20.  On Boarding ◦ The Company ◦ The Industry ◦ The Role of Board Members ◦ Committee Responsibilities and Committee Charters  Ongoing Training ◦ Keeping Current ◦ New Committee Assignments ◦ Ongoing Education John F. Levy Board Advisory www.BoardAdvisory.net 20

21.  Tone at the Top  Continuing role with the Company  See the “big picture”  Independent  Adults in the room John F. Levy Board Advisory www.BoardAdvisory.net 21

22.  Failure to see ethical issue  Not trained to look for ethical issues  Don’t want to “rock the boat”  Close relationships with CEOs  Short-term focus John F. Levy Board Advisory www.BoardAdvisory.net 22

23.  Healthy relationships, personal, professional and business, are built on trust.  Unethical behavior violates our trust. John F. Levy Board Advisory www.BoardAdvisory.net 23

24.  Must become a competitive advantage  Under Delaware law, fiduciaries for the shareholders  Protected by the business judgment rule  Primary role must be to set strategy  Improve selection process and training  Potential to create great wealth, job creation and innovation.  Work hard, faithfully and diligently and make ethical decisions to stop repeating past mistakes. John F. Levy Board Advisory www.BoardAdvisory.net 24