ex10_7.htm


    
      

    

    Exhibit
10.7

     

    
      CORPORATE
GOVERNANCE PRINCIPLES

      OF
THE BOARD OF DIRECTORS

      OF
MARSHALL HOLDINGS INTERNATIONAL, INC.

      


      The Board
of Directors, as representatives of the stockholders, is committed to the
achievement of business success and the enhancement of long-term stockholder
value with the highest standards of integrity and ethics.  In that
regard, the Board has adopted these principles to provide an effective corporate
governance framework for Marshall Holdings International, Inc., intending to
reflect a set of core values that provide the foundation for the Company’s
governance and management systems and its interactions with others.

      


      1.        
     Ethics and
Values.  The Board and management are jointly responsible for
managing and operating the Company’s business with the highest standards of
responsibility, ethics and integrity.  In that regard, the Board
expects each director, as well as each member of senior management, to lead by
example in a culture that emphasizes trust, integrity, honesty, judgment,
respect, managerial courage and responsibility.  Furthermore, the
Board also expects each director and each member of senior management to act
ethically at all times and to adhere to the policies, as well as the spirit,
expressed in the Company’s Code of Ethics for Senior Executive Officers and
Senior Financial Officers.  The Board will not permit any waiver of
any ethics policy for any director or executive officer.

      


      2.        
     Roles of Board and
Management.  It is the responsibility of the Board to direct,
guide and oversee the conduct of the Company’s business and to ensure that the
interests of the stockholders are being served.  In carrying out that
responsibility, the Board considers its primary functions to include the
following:

      


      (a)      
     Management Planning and
Oversight.  Selecting, evaluating and compensating the Chief
Executive Officer (“CEO”) and planning for CEO succession; providing counsel and
oversight in the selection, evaluation and compensation of, and succession
planning for, other members of senior management; and approving the appointment
and compensation of executive officers.

      


      (b)       
    Strategic and Operational
Planning.  Reviewing, understanding and approving long-term
strategic plans and annual operating plans, and monitoring the implementation
and execution of those plans.

      


      (c)      
     Major Corporate
Actions.  Reviewing, understanding and approving significant
financial and business transactions and other major corporate
actions.

      


      (d)      
     Financial
Reporting.  Reviewing, understanding and approving financial
statements and reports, and overseeing the establishment and maintenance of
controls, processes and procedures to ensure accuracy, integrity and clarity in
financial and other disclosures.

      


      (e)       
    Governance, Compliance and
Risk Management.  Establishing and maintaining governance and
compliance processes and procedures to ensure that the Company is managed with
the highest standards of responsibility, ethics and integrity.

      


      (f)          
  General
Advice to Management.  Providing general advice and counsel to
the CEO and senior management in connection with issues arising during the
course of managing the Company’s business.

      


      3.         
   Role
of Management.  It is the responsibility of management, under
the direction of the CEO, to conduct the Company’s business and affairs in an
effective, responsible and ethical manner, consistent with the principles and
direction established by the Board.  In carrying out that
responsibility, management is charged with the following:

      


      (a)        
   Organizing
Management.  Selecting qualified management and implementing an
organizational structure that is efficient and appropriate for the Company’s
operations and culture.


      
        
           


        

        
          1

          
            

          

        

        
           


        

      


      (b)         
  Strategic
and Operational Planning and Implementation.  Developing
long-term strategic plans and annual operating plans, presenting those plans to
the Board, implementing and executing approved plans and recommending and
executing changes to those plans as necessary.

      


      (c)        
   Managing
Risk.  Identifying and managing the risks that the Company
undertakes in the course of carrying out its business and managing the Company’s
overall risk profile.

      


      (d)       
    Financial
Reporting.  Ensuring the integrity of the financial statements
and reports by implementing, and supervising the operation of, systems,
controls, processes and procedures that allow the Company to record, process,
summarize and report information timely and accurately and produce financial
statements and other disclosures that fairly present the Company’s financial
condition and results of operations and permit stockholders to understand the
Company’s business, financial soundness and risks.

      


      4.            
 Board
Composition and Structure.

      


      (a)       
    General
Qualifications.  Each director should possess the highest
standards of personal and professional ethics and integrity, practical wisdom
and mature judgment, and should be committed to staunchly representing the
interests of the stockholders.  A director should have an inquisitive
and objective perspective and a proactive, focused state of mind.  The
Board should be comprised of a diverse group of individuals with significant
leadership accomplishments in international business, government, education or
not-for-profit activities, who have been associated with institutions noted for
excellence, and who have broad experience and the ability to exercise sound
business judgment.

      


      (b)          
 Independence.  The
Board believes that its primary function is to manage the Company’s business in
the best interests of the stockholders and that those interests are best served
by having a substantial number of objective, independent representatives on the
Board.  Consequently, at all times, a majority of the directors will
be “independent.”  For this purpose, a director shall be considered to
be “independent” only if the Board affirmatively determines that the director
does not have any direct or indirect material relationship with the Company that
may impair, or appear to impair, the director’s ability to make independent
judgments.

      


      With
respect to each director, the Board’s assessment and determination of such
director’s independence shall be made by the remaining independent members of
the Board.  In each case, the Board shall broadly consider all
relevant facts and circumstances and shall apply the following
standards:

      


      (i)        
    A director will not be considered to be “independent” if
any of the following conditions exist at the time of determination or existed at
any time during the immediately preceding five-year period:

      


      
        ·             
 The director is employed by the Company;

      

      


      
        ·        
      An immediate family member of the
director is employed as an officer of the Company;

      

      


      
        ·        
      The director is employed by or
affiliated with the Company’s independent auditor;

      

      


      ·         
     An immediate family member of the director
is employed as a partner, principal or manager by the Company’s independent
auditor; or

      


      ·          
    An executive officer of the Company serves on the
board of directors of a company that employs the director or employs an
immediate family member of the director as an officer.

      


      For
purposes of the above, “immediate family member” includes spouse, parents,
children, siblings, mothers-in-law, fathers-in-law, sons-in-law,
daughters-in-law, brothers-in-law, sisters-in-law and other persons living in
the director’s home (not including employees of the director).


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      (ii)         
  The following relationships will not be considered to be material
relationships that would impair, or appear to impair, a director’s ability to
make independent judgments and, therefore, will not alone prevent the director
from being considered to be “independent”:

      


      ·          
    The director is an executive officer of a company
that does business with the Company and the other company’s annual sales to, or
purchases from, the Company are less than one percent of the Company’s annual
revenues and less than one percent of the annual revenues of the other
company;

      


      ·          
    The director is an executive officer of a company
that is indebted to the Company or is an executive officer of a company to which
the Company is indebted and, in either case, the aggregate amount of such debt
is less than one percent of the Company’s total consolidated assets and less
than one percent of the total consolidated assets of the other company;
and

      


      ·           
   The director serves as an executive officer, director
or trustee of a charitable organization to which the Company or any of its
executive officers contributes and the combined annual contributions to such
organization by the Company and its executive officers are less than one percent
of that organization’s total annual charitable receipts.

      


      The Board
will review annually all commercial and charitable relationships between each
director and the Company and will make a determination of such director’s
independence, and the Company will disclose the Board’s determinations in the
proxy statement relating to the annual meeting of stockholders.  If
the Board determines that a director who has a relationship with the Company
that is not described in this Paragraph 4(b) is nevertheless “independent,” such
disclosures shall also include the basis for such determination.

      


      The Board
recognizes that members of the Audit Committee or the Compensation Committee may
be subject to more stringent standards of “independence” pursuant to applicable
rules and regulations, including the listing requirements of the various stock
exchanges, accounting and auditing rules and federal securities or tax
laws.  Any such more stringent standards will be reflected in the
charter of the respective committee.

      


      5.      
       Size of Board and Selection
Process.  The number of directors constituting the full Board
shall be determined from time to time by the Board, within the limits prescribed
by the Company’s Articles of Incorporation and Bylaws, taking into account the
size and breadth of the Company’s business and the need for Board
diversity.

      


      (a) 
          The Governance and
Nominating Committee shall be responsible for selecting and recommending
nominees for director positions to the full Board, which shall in turn submit
its recommendations to the stockholders for election.  Stockholders
may propose nominees for consideration through the procedures communicated to
the stockholders in the annual proxy statement, and the Governance and
Nominating Committee shall duly consider all such nominees.

      


      (b)   
        Whenever a vacancy occurs in the
Board, either because of a newly-created director position or the removal or
retirement of an existing director, the Board, acting on the recommendation of
the Governance and Nominating Committee, shall select a person to fill the
vacancy and that person shall serve as a director until the next annual meeting
of stockholders, at which time such person (or another Board nominee) shall be
submitted to the stockholders for election to the Board.

      


      6.          
   Retirement or Withdrawal of
Directors; Conflicting Commitments.  The Board believes that
directors should serve only so long as they add value to the Board.  A
director’s contributions to the Board and ability to continue to contribute
productively will be considered by the Governance and Nominating Committee each
time a director is considered for renomination.  In that regard, the
results of the annual Board self-evaluation described below will be an important
factor in determining whether a director should be renominated.  No
director will be asked to retire or withdraw from the Board without the approval
of a majority of the remaining independent directors.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      Recognizing
that the most important factor in renomination considerations is a director’s
contributions to Board deliberations and processes rather than length of
service, the Board has not established any term limits on Board
service.  However, directors will not be nominated for election to the
Board after their _____ birthday.

      


      Each
director must be willing and able to devote sufficient time and attention to
carrying out his or her duties and responsibilities
effectively.  While the Board acknowledges the value in having
directors with significant experience in other businesses and activities, it
also understands that effective service requires substantial
commitment.  Consequently, although the Board has not established
specific guidelines regarding a director’s non-Company activities, it will take
the nature and extent of those activities into account in renomination
considerations.

      


      Each
director shall notify the Governance and Nominating Committee (a) prior to
accepting a directorship or other position of responsibility with another
company or (b) prior to or promptly following a significant change in personal
circumstances (including a change in employment or principal job
responsibilities).  The Governance and Nominating Committee will
review and evaluate the circumstances and will make a recommendation to the full
Board regarding the propriety of the director’s continued service on the
Board.  If the Board determines that the director’s continued service
on the Board would not be appropriate under the circumstances, the director
shall offer his or her resignation.

      


      7.           
  Presiding
Director.  The Chair of the Governance and Nominating Committee
(as such position is filled from time to time) shall serve as the Presiding
Director.  The principal responsibility of the Presiding Director
shall be to chair the executive sessions of the non-employee directors (as
described below) and to perform such other roles and responsibilities as are
assigned from time to time by the Governance and Nominating Committee or the
full Board.  In addition, in the event of an unforeseen vacancy in the
position of Chairman of the Board, the Presiding Director shall serve as interim
Chairman of the Board for the sole purpose of calling and holding a special
meeting of the Board to elect a new Chairman.  If, at any time, the
Chair of the Governance and Nominating Committee is unable or unwilling to serve
as the Presiding Director (or, in connection with any meeting, is absent or
otherwise unable to perform the duties of Presiding Director at such meeting),
then the most senior independent director (based on length of service on the
Board) shall fulfill the duties and responsibilities of the Presiding Director
until such time as the Chair of the Governance and Nominating Committee is again
able and willing to perform those duties and responsibilities.

      


      8.        
     Conduct of Board
Meetings.

      


      (a)     
      Number of Meetings and
Attendance.  The Board shall be responsible for determining the
appropriate number of regular meetings to hold each fiscal
year.  Currently, the Board holds ___ meetings each
year.  Each director is expected to attend all regular meetings of the
Board and of the committees of which he or she is a member, and is expected to
make every effort to attend any specially called Board or committee
meetings.  In addition, each director is expected to attend the annual
meeting of stockholders each year.  Except for the executive sessions
of non-employee directors (as discussed below) and unless otherwise requested by
the Board, the President, Chief Financial Officer and General Counsel shall
attend all Board meetings.  In addition, the Chairman may request
other members of management to attend all or portions of Board meetings for
discussion purposes or to make appropriate presentations.

      


      (b)      
     Meeting
Agenda.  The Board shall be responsible for its agenda, and
each director is encouraged to suggest agenda items to the Chairman or the
Presiding Director at any time.  Prior to each Board meeting, the
Presiding Director will review the specific agenda items for that meeting and,
if needed, discuss the agenda with the Chairman.

      


      (c)        
   Pre-Meeting
Materials.  Prior to each regularly scheduled Board meeting,
the Chairman shall distribute appropriate written materials relating to the
substantive agenda items to be discussed at that meeting (unless confidentiality
or sensitivity concerns suggest that materials be distributed only at the
meeting).  Each director is encouraged to offer suggestions to either
the Chairman or the Presiding Director regarding the nature or extent of
information or materials that are regularly distributed in advance of Board
meetings.

      


      (d)       
    Executive Sessions of
Non-Employee and Independent Directors.  From time to time, the
directors who are not also the Company employees shall hold “executive sessions”
in which they meet without the directors who are the Company’s
employees.  An executive session of the non-employee directors shall
be a standing agenda item at no less than two regular meetings of the Board each
year and, in addition, may be called at any time by the Presiding Director or at
the request of a majority of the non-employee directors.  The agenda
for each executive session of the non-employee directors shall be determined by
the Presiding Director, but shall focus principally on the question of whether
management is performing its responsibilities in a manner consistent with the
direction of the Board.


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      In
addition, the “independent” directors (as determined pursuant to these
Principles) shall meet alone in executive session at no less than two regular
meetings of the Board each year.  Additional executive sessions of the
independent directors may be called at any time by the Presiding Director or at
the request of a majority of the independent directors.  The General
Counsel shall attend executive sessions of the non-employee and independent
directors as requested by the Presiding Director.

      


      9.          
   Committees of the
Board.  The Board shall maintain the following committees to
assist it in discharging its oversight responsibilities:

      


      (a)    
       Audit
Committee.  The Audit Committee assists the Board in fulfilling
its responsibilities to provide oversight with respect to financial statements
and reports and other disclosures provided to stockholders, the system of
internal controls and the audit process.

      


      (b)       
    Compensation
Committee.  The Compensation Committee reviews and approves, on
behalf of the Board, the amounts and types of compensation to be paid to the
Company’s executive officers and the non-employee directors; reviews and
approves, on behalf of the Board, all bonus and equity compensation to be paid
to other employees of the Company; and administers the Company’s benefit and
equity compensation plans.

      


      (c)       
    Governance and Nominating
Committee.  The Governance and Nominating Committee oversees
all matters of corporate governance for the Company, including formulating and
recommending to the full Board governance policies and processes and monitoring
and safeguarding the independence of the Board.  In addition, the
Governance and Nominating Committee selects, evaluates and recommends to the
full Board qualified candidates for election or appointment as
directors.

      


      (d)       
    Finance
Committee.  The Finance Committee oversees all areas of
corporate finance, including capital structure, equity and debt financings,
capital expenditures, cash management, banking activities and relationships,
investments, foreign exchange activities and share repurchase
activities.

      


      (e)       
    Executive
Committee.  The Executive Committee may exercise all of the
authority of the Board of Directors in the management of the business affairs of
the Company to the extent authorized by the resolution providing for the
Executive Committee or by subsequent resolution adopted by a majority of the
whole Board of Directors.

      


      The Board
shall convene other standing or special committees as it deems
appropriate.  Each committee is governed by a written charter approved
by the full Board.  Once approved, each committee charter shall be
considered to be an integral part of these Principles.  Each committee
shall review its charter at least annually and shall report the results of such
review (including any recommended changes) to the full
Board.  Whenever a committee, pursuant to its charter, makes a
decision or takes an action on behalf of the Board, the committee, through its
chair, shall promptly make a report to, or otherwise notify, the full Board of
such decision or action.

      


      10.         
  Membership.   The
membership of each committee (including the number and identity of directors
comprising the committee and the director designated to serve as committee
chair) shall be determined by the full Board, acting with the recommendation of
the Governance and Nominating Committee.  The membership of the
committees shall be rotated on a periodic basis.  The Audit Committee,
the Compensation Committee and the Governance and Nominating Committee shall be
comprised entirely of directors who (a) are considered to be “independent”
pursuant to the standards described above under “Board Composition and Structure
- Independence” and (b) satisfy any additional or supplemental independence
standards applicable to the particular committee that have been established
under any applicable law, rule or regulation.


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      11.        
   Conduct of Committee
Meetings.  Within the confines of its purpose (as stated in its
charter), each committee shall be responsible for determining the frequency and
length of committee meetings and the agenda of items to be
discussed.  The committee chair, in consultation with appropriate
members of management, shall develop the agenda for each meeting and shall
prepare and distribute appropriate written materials prior to the
meeting.  The committee chair, generally with the assistance of a
designated member of management, shall be responsible for ensuring minutes of
each committee meeting are properly recorded, and the Secretary shall
incorporate these minutes into the official Board minute book.  The
committee chair shall be responsible for appraising the full Board on a regular
basis of all committee proceedings, determinations and
recommendations.

      


      Any
director shall be entitled to attend the meeting of any committee, regardless of
whether he or she is a member of that committee.  Unless otherwise
requested by the committee chair, appropriate members of management shall also
attend committee meetings for discussion purposes or to make appropriate
presentations.

      


      12.      
     Other Board Operations and
Practices.

      


      (a)      
     Access to Senior
Management.  Each director shall have complete and open access
to management.  Directors are encouraged to coordinate such access or
contact with management through the Chairman or the Board Liaison
Office.

      


      (b)          
 Director
Orientation and Education.  The Board Liaison Office, under the
guidance of the CEO, the Chief Financial Officer and the General Counsel, shall
be responsible for providing orientation materials and arranging orientation
meetings for new directors, as well as periodically providing materials or
briefing sessions for all directors on subjects that would assist them in
discharging their Board duties.  Each new director shall, within six
months of election to the Board, spend a day at the Company’s headquarters or
other facilities for personal briefing by senior management on the Company’s
business, its strategic plans, its financial statements and its key policies and
practices.

      


      (c)       
    On-Site
Days.  Each director is expected to spend at least one day each
year on-site at the Company to learn about and review in detail an area of the
Company’s business.  The day will be spent with management and
employees in that business area and the agenda will focus on the operations of
that business, the particular strategic and risk issues facing the business and
the opportunities presented.  These on-site days will be coordinated
through the Board Liaison Office.

      


      (d)      
     Self-Evaluation.  The
Board will conduct an annual self-evaluation to identify areas of concern or
potential issues relating to Board and committee processes, performance and
effectiveness and to assess and evaluate the overall effectiveness of individual
directors.  These evaluations will be administered by the Governance
and Nominating Committee and will be reviewed and discussed with the full
Board.

      


      (e)      
     Evaluation of
CEO.  On an annual basis, the Board shall evaluate the
performance and effectiveness of the CEO, as presented by the Compensation
Committee.

      
 

      (f)       
     Management Succession and
Development Planning.  The Board, with recommendations from the
Compensation Committee, shall approve and maintain a succession plan for the
CEO.  In addition, on an annual basis, the CEO shall present to the
Board a report on succession planning for senior management and a report on
management development.

      


      (g)        
   Compensation of
Board.  The Compensation Committee shall have the
responsibility for recommending to the Board compensation and benefits for
non-employee directors.  The Board believes that the amount of
director compensation should be fair and competitive in relation to director
compensation at other companies with businesses similar in size and scope to the
Company, the type of compensation should align directors’ interests with the
long-term interests of stockholders, and the structure of the compensation
program should be simple, transparent and easy for stockholders to
understand.  On an annual basis, the Compensation Committee shall
review non-employee director compensation and benefits (including insurance and
indemnity) with the full Board.


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      (h)      
     Reporting of Concerns to
Independent Directors or the Audit Committee.  Anyone who has a
concern about the Company’s conduct, accounting, financial reporting, internal
controls or auditing matters, may communicate that concern directly to the
independent directors (through the Presiding Director) or to the Audit Committee
(through the committee chair).  Such communications may be
confidential or anonymous, and may be e-mailed, submitted in writing or reported
by phone to the Company’s Business Ethics Office.  All such concerns
will be forwarded to the appropriate directors for their review and will be
simultaneously reviewed and addressed by the Business Ethics Office or the
Office of the Ombuds in the same way that other concerns are addressed by
management.  The status of all outstanding concerns addressed to the
independent directors or the Audit Committee will be reported to the full Board
on a quarterly basis.  The independent directors, the Presiding
Director or the Audit Committee may direct special treatment, including the
retention of outside advisors or counsel, for any concern addressed to
them.  The Company’s Code of Ethics for Senior Executive Officers and
Senior Financial Officers prohibits any employee from retaliating or taking any
adverse action against anyone for raising or helping to resolve an integrity
concern.

      


      (i)         
   Access to Independent
Advisors.  The Board and its committees, as well as the
non-employee directors acting in executive session as described under “Conduct
of Board Meetings - Executive Sessions of Non-Employee Directors,” shall have
the right at any time to retain independent outside financial, legal or other
advisors.

      


      (j)         
   Stockholder Ratification of
Independent Auditors.  Although the Board acknowledges that
current law, rules and regulations, as well as the Charter of the Board’s Audit
Committee, require the Company’s independent auditors to be engaged, retained
and supervised by the Audit Committee, the Board considers the selection of
independent auditors to be an important matter of stockholder concern and
considers a proposal for stockholders to ratify such selection to be an
important opportunity for stockholders to provide direct feedback to the Board
on an important issue of corporate governance.  Consequently, the
Board will present such a proposal to the stockholders in the proxy statement
related to each annual meeting of stockholders.

      


      (k)       
    Board Interaction with
Institutional Investors, the Press and Others.  The Board
believes that management should speak for the Company.  Individual
directors may, from time to time, meet or otherwise communicate with various
constituencies that are involved with the Company.  However, it is
expected that directors will do so only with the knowledge of the
Chairman.

      


      (l)             Review of Board
Operations.  The Governance and Nominating Committee shall
periodically review the Board’s operations under these Principles and shall
report to the full Board any material deviations.

      


      
        
          
            	 
      	
                    By
      Order of the Board of Directors,

                  
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                    By

                  	 
      
	 
      	 
      	
                    Elwood
      Sprenger, Chairman of the
Board

                  


          

        

      

       

       

      Dated
June ___, 2008.

       

       

      7