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(As of May 2008)
The Audit Committee (the “Committee”) shall represent and assist the Board of Directors of BayHill Capital Corporation (the “Company”) with the oversight of: (a) the integrity of the Company’s financial statements and internal controls, (b) the Company’s compliance with legal and regulatory requirements related to accounting and/or financial controls, (c) the independent registered public accounting firm’s qualifications and independence, (d) the performance of the Company’s internal audit function and the independent registered public accounting firm, and (e) the Company’s systems of disclosure controls and procedures, internal controls over financial reporting, and compliance with ethical standards related to accounting and/or financial controls adopted by the Company. Except as otherwise required by applicable laws, regulations or listing standards or this Charter, major decisions regarding the Company’s activities and operations are considered by the Board of Directors as a whole.
The Committee should encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures, and practices at all levels. The Committee should also provide for open communication among the Company’s independent auditor, financial and senior management, internal audit function, and Board of Directors.
The Committee has the authority to obtain advice and assistance from outside legal, accounting or other advisors as necessary to perform its duties and responsibilities. The Company will provide appropriate funding, as determined by the Committee, for compensation to the independent auditor, to any advisors that the Committee chooses to engage, and for payment of administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The Committee will report regularly to the Board of Directors regarding the execution of its duties and responsibilities.
MEMBERSHIP
The Committee members will be appointed by, and will serve at the discretion of, the Board of Directors. The Committee will consist of at least two members of the Board of Directors. Members of the Committee must meet the following criteria (as well as any additional criteria required by the U.S. Securities and Exchange Commission (“SEC”):
- Each member must be an “Independent Director,” as defined in (a) Rule 4200 and Rule 4350 of the National Association of Securities Dealers (the “NASD”) listing standards, and (b) Section 10A(m)(3) of the Securities Exchange Act of 1934 and Rule 10A-3 thereunder.
- Each member must be able to read and understand fundamental financial statements, in accordance with Rule 4350(d) of the NASD’s audit committee requirements for companies listed on the Nasdaq National Market.
- At least one member shall, in the judgment of the Board of Directors, be an audit committee financial expert in accordance with the rules and regulations of the SEC.
MEETINGS AND PROCEDURES
The Committee will meet at least quarterly, or more frequently as circumstances dictate. The Chairperson will approve the agenda for the meetings and any Committee member may suggest items for consideration. The Committee shall fix its own rules of procedure, which shall be consistent with the Certificate of Incorporation and Bylaws of the Company and this Charter.
The Committee will meet periodically with Company management, the director of the Company’s internal audit function, and the independent auditor in separate executive sessions. The Committee may take action by unanimous written consent when deemed necessary or desirable by the Committee or its Chairperson.
The Chairperson of the Committee shall arrange with the Corporate Secretary’s office and corporate counsel for the completion of an official set of minutes of each Committee meeting. The official minutes shall be approved by the Committee members, signed by the Chairperson, and shall be filed with the corporate records.
RESPONSIBILITIES
To fulfill its responsibilities and duties, the Committee will:
Documents / Reports / Accounting Information Review
- Review this Charter at least annually and recommend to the Board of Directors any necessary Amendments.
- Meet with management and the independent auditor to review and discuss the Company’s annual and quarterly financial statements (prior to the Company’s Form 10-Q filings or release of earnings), as well as all internal control reports or summaries thereof. Review other relevant reports or financial information submitted by the Company to any governmental body or the public, including management certifications as required by the Sarbanes Oxley Act of 2002 and relevant reports rendered by the independent auditor.
- Review and discuss with management and the independent auditors the annual audited and quarterly unaudited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” prior to filing the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, respectively, with the SEC.
- Direct the Company’s independent auditors to review before filing with the SEC the Company’s interim financial statements included in Quarterly Reports on Form 10-Q, using professional standards and procedures for conducting such reviews. The Committee may request from the Company’s independent auditors confirmation of the independent auditors’ review of such financial statements.
- Recommend to the Board of Directors whether the Company’s financial statements should be included in the Company’s Annual Report on Form 10-K.
- Review earnings press releases, as well as Company’s policies with respect to earnings press releases, financial information and earnings guidance provided to analysts and rating agencies.
- At least annually, receive and review (a) a report by the independent auditors describing the independent auditor’s internal quality-control procedures and any material issues raised by the most recent internal quality-control review, peer review or Public Company Accounting Oversight Board review, of the independent auditing firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, and (b) other required reports from the independent public auditors.
Independent Auditor
- Appoint (and recommend that the Board of Directors submit for shareholder ratification), compensate, retain, and oversee the work performed by the independent auditor for the purpose of preparing or issuing an audit report or related work. Review the performance and independence of the independent auditor and remove the independent auditor if circumstances warrant. The independent auditor will report directly to the Committee and the Committee will oversee the resolution of disagreements between management and the independent auditor if they arise.
- Consider whether the independent auditor’s provision of permissible nonaudit services is compatible with the independent auditor’s independence. Discuss with the independent auditor the matters required to be discussed under Statement on Auditing Standards (SAS) No. 61, as amended by SAS No. 84 and SAS No. 90, and as may be further modified or supplemented.
- Review the independent auditor’s attestation and report on management’s assessment of internal control over financial reporting.
- Hold timely discussion with the independent auditor regarding the following: (a) all crucial accounting policies and practices; (b) all alternative treatments of financial information within generally accepted accounting principles related to material items that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and (c) other material written communications between the independent auditor and management, including, but not limited to, the management letter and schedule of unadjusted differences.
- Actively engage in dialogue with the independent auditor with respect to any disclosed relationships or services that may affect the independence and objectivity of the independent auditor and take appropriate actions to oversee the independence of the independent auditor.
- Review and preapprove, or disapprove, both audit and non-audit services to be provided by the independent auditor. The authority to grant preapproval may be delegated to one or more designated members of the Committee, whose decisions will be presented to the full Committee at its next regularly scheduled meeting.
Financial Reporting Processes, Accounting Policies, and Internal Control Structure
- In consultation with the independent auditor and the internal audit function, review the integrity of the Company’s financial reporting processes (both internal and external), and the internal control structure (including disclosure controls and procedures and internal control over financial reporting).
- Receive and review any disclosure from the Company’s CEO or CFO made in connection with the certification of the Company’s quarterly and annual reports filed with the SEC of (a) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controls.
- Review and approve all related-party transactions, defined as those transactions required to be disclosed under Item 404 of Regulation S-K.
- Establish and oversee procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, including procedures for confidential, anonymous submissions by Company employees regarding questionable accounting or auditing matters.
Legal Compliance and Risk Management
- Oversee, review and periodically update the Company’s Code of Business Conduct and Ethics and the Company’s system to monitor compliance with and enforce this Code.
- Review, with the Company’s counsel, (a) the status of compliance with laws, regulations, and internal procedures, and (b) the scope and status of systems designed to promote compliance with laws, regulations and internal procedures, through review of reports from management, legal counsel and third parties as determined by the Committee.
- Discuss Company policies with respect to risk assessment and risk management, including appropriate guidelines and policies to govern the process, as well as the Company’s major financial risk exposures and the steps management has undertaken to control them.
- Oversee compliance with the requirements of the SEC for disclosure of auditor’s services and audit committee members, member qualifications and activities.
Other Responsibilities
- Review, with the independent auditor, the internal audit function, and management, the extent to which changes or improvements in financial or accounting practices have been implemented.
- Prepare the report that the SEC requires be included in the Company’s annual proxy statement.
- Perform any other actives consistent with this charter, the Company’s bylaws, and governing law that the Board of Directors or Committee determines are necessary or appropriate.
- Authorize or engage any internal investigation related to financial statements or financial controls as specified and upon prior direction from the full Board of Directors.
Charter for the Compensation Committee of the Board of Directors of BayHill Capitel Corporation
(as of May 2008)
PURPOSE
The Compensation Committee (the “Committee”) shall represent and assist the Board of Directors of BayHill Capital Corporation (the “Company”) with the oversight: (a) to discharge the responsibilities of the Board of Directors relating to compensation, and (b) to ensure that compensation plans, programs and values transferred through cash pay, stock and stock-based awards, whether immediate, deferred, or contingent are fair and appropriate to attract, retain and motivate management and are reasonable in view of company economics and of the relevant practices of other, similar companies. Except as otherwise required by applicable laws, regulations or listing standards, or this Charter, all major decisions are considered by the Board of Directors as a whole.
The Committee has the authority to obtain advice and assistance from outside legal, compensation consultants, or other advisors as necessary to perform its duties and responsibilities. The Company will provide appropriate funding, as determined by the Committee, for compensation to any advisors that the Committee chooses to engage, and for payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The Committee will report regularly to the Board of Directors regarding the execution of its duties and responsibilities.
MEMBERSHIP
The Committee will consist of at least two members of the Board of Directors each of whom is independent of management of the Company. The Chairperson will be appointed by and serve at the discretion of the Board and all members will serve at the pleasure of the Board of Directors, continuing as a member of the Committee until resignation or replacement.
MEETINGS AND PROCEDURES
The Committee will hold at least two regular meetings per year and additional meetings as the Chairperson or Committee deems appropriate. The Chairperson will approve the agenda for the meetings and any member may suggest items for consideration. The Committee shall fix its own rules of procedure, which shall be consistent with the Certificate of Incorporation and Bylaws of the Company and this Charter. The Committee may take action by unanimous written consent when deemed necessary or desirable by the Committee or the Chairperson.
The Chief Executive Officer and/or Corporate counsel of the Company may attend any meeting of the Committee, except for portions of the meetings where his, her, or their presence would be inappropriate, as determined by the Chairperson. The Committee shall regularly have executive sessions without members of management present. The Chairperson shall arrange with the Corporate Secretary’s office and corporate counsel for the completion of an official set of minutes of each Committee meeting. The official minutes shall be approved by the Committee members, signed by the Chairperson, and filed with the corporate records.
RESPONSIBILITIES
To fulfill its responsibilities and duties, the Committee will:
- Review this Charter at least annually and recommend to the Board of Directors any necessary amendments.
- Oversee the Company’s overall compensation structure, policies and programs, and assess whether the Company’s compensation structure establishes appropriate incentives for management and employees.
- Administer and make recommendations to the Board of Directors with respect to the Company’s incentive-compensation and equity-based compensation plans.
- Review and approve corporate goals and objectives relevant to the compensation of the CEO, evaluate the CEO’s performance in light of those goals and objectives, and set the CEO’s compensation level based on this evaluation.
- Set the compensation of other executive officers based upon the recommendation of the CEO.
- Approve stock option and other stock incentive awards.
- Review and approve the design of other benefit plans.
- Review and recommend employment agreements and severance arrangements for executive officers, including change-in-control provisions, plans or agreements.
- Approve, amend or modify the terms of any compensation or benefit plan, subject to shareholder approval, to the extent required.
- Monitor compliance by executive officers and directors with the Company’s stock ownership guidelines, if any.
- Review the compensation of directors for service on the Board of Directors and its committees and recommend changes in compensation to the Board of Directors.
- Review and discuss with the Company’s management, the Compensation Discussion and Analysis (“CD&A”) to be included in the Company’s annual proxy statement and determine whether to recommend to the Board of Directors that the CD&A be included in the proxy statement.
- Provide the Committee Report for inclusion in the Company’s proxy statement that complies with the rules and regulations of the Securities and Exchange Commission.
- Perform such other duties and responsibilities as are consistent with the purpose of the Committee and as the Board of Directors or the committee deems appropriate.
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