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Group, Inc. (the "Company")
Audit Committee of the Board assists the Board in fulfilling its responsibility for oversight of and integrity of the accounting,
auditing, and reporting practices of the Company, and such other duties as directed by the Board. The Committee's purpose
is to oversee the accounting and financial reporting processes of the Company, the audits of the Company's financial statements,
the qualifications of the public accounting firm engaged as the Company's independent auditor to prepare or issue an audit
report on the financial statements of the Company and internal control over financial reporting, and the performance of the Company's
internal audit function and independent auditor. The Committee reviews and assesses the qualitative aspects of financial reporting
to stockholders, the Company's processes to manage business and financial risk, and compliance with significant applicable
legal, ethical, and regulatory requirements. The Committee is directly responsible for the appointment (subject to stockholder
ratification) compensation, retention, and oversight of the independent auditor.
membership of the Committee will consist of at least three directors of the Company, all of which members shall satisfy the definition
of "independent" and the requirements of Audit Committee members set forth under the listing standard
of the NASDAQ Capital Market, or such other exchange(s) upon which the Company's securities are then listed from time to
time (the "Exchange"). If the Committee is comprised of at least three members who meet the criteria
above, one additional director who is not "independent" as defined under the rules of the Exchange and
is not currently an executive officer or employee or a family member of an executive officer, may be appointed to the Committee
if the Board, under exceptional and limited circumstances, determines that such individual's membership on the Committee
is required by the best interests of the Company and its stockholders and such member otherwise fits within the requirements of
the Exchange (with such member being defined as an "Excepted Member"). An Excepted Member may not serve
longer than two years. An Excepted Member may not serve longer than two years. An Excepted Member's service on the Committee
will be subject in all cases to the rules and requirements of the Exchange.
least one member of the Committee shall be a "financial expert" as defined in Regulation S-K, Item 407(d)(5)(ii)
and shall have an understanding of generally accepted accounting principles, and be able to read and understand financial statements,
including the Company's balance sheet, statements of operations and statements of cash flow. The Board shall review and
designate the Committee member(s) that meets the "financial expert" criteria. All Committee members
shall have an understanding of internal control over financial reporting and an understanding of audit committee functions.
Committee member shall have participated in the preparation of the financial statements of the Company at any time during the
three years preceding becoming a member of the Committee (unless such member qualifies as an Excepted Member). The Board appoints
the members of the Committee and the chairperson. The Board may remove any member from the Committee at any time with or without
cause. Each Committee member may be required to satisfy certain independence requirements of applicable securities laws, rules
or guidelines and any other applicable regulatory rules. Determinations as to whether a particular director satisfies the requirements
for membership on the Committee shall be made by the full Board.
no member of the Committee may serve on more than three audit committees of publicly traded companies (including the Audit Committee
of the Company) at the same time. For this purpose, service on the audit committees of a parent and its substantially owned subsidiaries,
if any, counts as service on a single audit committee.
Board shall designate one member of the Committee to act as its chairperson. The Committee will meet a minimum of four times a
year (once a quarter). Additional meetings may occur as the Committee or its chair deems advisable. The Committee will cause to
be kept adequate minutes of its proceedings, and will report on its actions and activities at the next quarterly meeting of the
Board. Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.
The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications
equipment) action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
The Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of the Company's
Certificate of Incorporation, (b) any provision of the Bylaws of the Company, or (c) the laws of the State of Delaware.
independent auditor reports directly to the Committee. The Committee is expected to maintain free and open communication with
the independent auditor, the internal auditors, and management. This communication will include periodic private executive sessions
with each of these parties.
Committee's role is one of an oversight function. The Committee is not intended to replace the Company's management,
internal auditors and outside auditors. It is the responsibility of the Company's management to prepare the Company's
financial statements and to develop and maintain adequate systems of internal accounting and financial controls, and it is the
internal and outside auditors' responsibility to review and, when appropriate, audit these financial statements and internal
Committee recognizes that the financial management and the internal and outside auditors have more knowledge and information about
the Company than do Committee members. Consequently, in carrying out its oversight responsibilities, the Committee cannot provide
any expert or special assurance as to the Company's financial statements or internal controls or any professional certification
as to the outside auditors' work. In carrying out its oversight responsibilities, the Committee shall undertake the activities
and have the authority as described in this Charter.
Committee will have the resources and authority necessary to discharge its duties and responsibilities. The Committee has sole
authority to retain and terminate outside counsel or other experts or consultants, as it deems appropriate, including sole authority
to approve the firms' fees and other retention terms. The Company will provide the Committee with appropriate funding, as
the Committee determines, for the payment of compensation to the Company's independent auditor, outside counsel, and other
advisors as it deems appropriate and administrative expenses of the Committee that are necessary or appropriate in carrying out
its duties. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention.
The Committee will have access to the Company's books, records, facilities, and personnel. Any communications between the
Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company,
and the Committee will take all necessary steps to preserve the privileged nature of those communications.
Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the
Committee shall review its own performance and reassess the adequacy of this Charter at least annually in such manner as it deems
appropriate, and submit such evaluation, including any recommendations for change, to the full Board for review, discussion and
Committee shall have sole authority and be directly responsible for the appointment, retention, compensation, oversight, evaluation
and termination (subject to stockholder ratification, if applicable) of the work of the Company's outside auditors engaged,
including resolution of disagreements between Company management and the auditor regarding financial reporting, for the purpose
of preparing or issuing an audit report or performing other audit, review or attest services. The Company's outside auditors
shall report directly to the Committee.
Committee shall review and pre-approve: (i) auditing services (including those performed for purposes of providing comfort letters
and statutory audits) and (ii) non-auditing services that exceed a de minimis standard established by the Committee, which are
rendered to the Company by its outside auditors (including fees).
| (i) | If required by any applicable law or rule of the Exchange (or such other exchange upon which the Company's securities are listed) request from the outside auditors, at least annually, a written report describing: (a) the outside auditors' internal quality-control procedures; and (b) any material issues raised by the most recent internal quality-control review or peer review of the outside auditors, or by any inquiry or investigation by government or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the outside auditors, and any steps taken to deal with any such issues; | |
| (ii) | If required by applicable law or rule of the Exchange (or such other exchange upon which the Company's securities are listed) review and discuss with the outside auditors any relationships or services that may impact the objectivity and independence of the outside auditors; and | |
| (iii) | Receive from the independent auditor annually a formal written statement delineating all relationships between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1, as may be modified or supplemented by such other standards as may be set by law or regulation or Exchange rules; and discuss with the independent auditor in an active dialogue any such disclosed relationships or services and their impact on the independent auditor's objectivity and independence and present to the Board its conclusion with respect to the independence of the independent auditor. |
reviewing the foregoing reports and the outside auditors' work throughout the year, the Committee shall evaluate the outside
auditor's qualifications, performance and independence. This evaluation shall include the review and evaluation of the lead
partner(s) of the outside auditors. In making its evaluation, the Committee may take into account the opinions of management and
the Company's internal auditors (or other personnel responsible for the internal audit function) and shall take appropriate
action in response to the outside auditors' report and the opinions of those the Committee consults to satisfy itself of
the outside auditors' independence and adequate performance.
Committee should further consider whether, in order to assure the continuing independence of the outside auditors, there should
be regular rotation of the lead audit partner (in addition to what may already be required by law or regulation).
Committee shall establish hiring policies with respect to employees and former employees of the outside auditors.
Committee shall review and discuss with management, the outside auditors and the internal auditors the performance and adequacy
of the Company's internal audit function, including the internal auditors' responsibilities, budget, and staffing.
Statements and Reporting:
| 1. | Reviewing the disclosures made by the Chief Executive Officer and the Chief Financial Officer in connection with their required certifications accompanying the Company's periodic reports to be filed with the Securities and Exchange Commission, including disclosures to the Committee of (a) significant deficiencies in the design or operation of internal controls, (b) significant changes in internal controls and (c) any fraud involving management or other employees who have a significant role in the Company's internal controls. | |
| 2. | Reviewing and discussing the Company's quarterly financial results and related press releases, if any, with management and the independent auditors prior to the release of such information to the public. |
| 1. | Reviewing with the management the proposed scope and plan for conducting internal audits of Company operations and obtaining reports of significant findings and recommendations, together with management's corrective action plans. | |
| 2. | Seeking to ensure the corporate audit function has sufficient authority, support and access to Company personnel, facilities and records to carry out its work without restrictions or limitations. | |
| 3. | Reviewing the corporate audit function of the Company, including its charter, plans, activities, staffing and organizational structure. | |
| 4. | Reviewing progress of the internal audit program, key findings and management's action plans to address findings. |
| 1. | Periodically reviewing the Company's policies with respect to legal compliance, conflicts of interest and ethical conduct. | |
| 2. | Seeking to ensure the adequacy of procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting control or auditing matters, including the confidential submission of complaints by employees regarding such matters. | |
| 3. | Recommending to the Board any changes in ethics or compliance policies that the Committee deems appropriate. |
addition to the above responsibilities and those other responsibilities included in this charter, the Committee will undertake
such other duties as the Board of Directors delegates to it, and will report periodically to the Board regarding the Committee's
examinations and recommendations.
Reporting Process and Financial Statements:
Committee shall meet regularly with management. The Committee shall meet, at least annually, with the Company's outside
auditors in a private session.
Committee shall review and discuss with management and the outside auditors on a quarterly basis prior to filing quarterly or
annual financial statements: (i) the audited financial statements to be included in the Company's Annual Report on Form
10-K (or the Annual Report to Stockholders if distributed prior to the filing of the Form 10-K) (ii) the quarterly financial statements