Audit Committee Charter
of
Global Technovations, Inc.
As approved by the Board of Directors
of Global Technovations, Inc.
on June 7, 2000.
1. Organization
(a) There shall be a committee of the board of directors of Global
Technovations, Inc. (the "Company") to be known as the audit committee. The
audit committee shall have at least three members, comprised solely of
Independent Directors (as defined in Section 1 (b) below), each of whom is able
to read and understand fundamental financial statements, including the Company's
balance sheet, income statement, and cash flow statement or will become able to
do so within a reasonable period of time after his or her appointment to the
audit committee. At least one member of the audit committee shall have had past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
(b) Independent Directors shall not be officers of the Company and
shall be, in the view of the Company's board of directors, free of any
relationship that would interfere with the exercise of independent judgment. The
following persons shall not be considered independent:
(i) a director who is employed by the Company or any of its affiliates
for the current year or any of the past three years; (ii) a director who
accepts any compensation from the Company or any of its affiliates in
excess of $60,000 during the previous fiscal year, other than compensation
for board service, benefits under a tax-qualified retirement plan, or
non-discretionary compensation;
(iii) a director who is a member of the immediate family of an
individual who is, or has been in any of the past three years, employed by
the Company or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home;
(iv) a director who is a partner in, or a controlling shareholder or
an executive officer of, any for-profit business organization to which the
Company made, or from which the Company received, payments (other than
those arising solely from investments in the corporation's securities) that
exceed 5% of the Company's or business organization's consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the past
three years;
(v) a director who is employed as an executive of another entity where
any of the Company's executives serve on that entity's compensation
committee.
(c) Notwithstanding Section 1(b) above, one director who is not
independent, and is not a current employee or an immediate family member of the
Company, may be appointed to the audit committee, if the board of directors,
under exceptional and limited circumstances, determines that membership on the
audit committee by the individual is required by the best interests of the
Company and its shareholders, and the board of directors discloses, in the next
annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination.
2. Statement of Policy
The audit committee shall provide assistance to the Company's board of
directors in fulfilling its oversight responsibility to the stockholders,
potential stockholders, and investment community relating to internal financial
reporting practices of the Company, and the quality and integrity of the
financial statements of the Company. In addition, the audit committee shall
provide such assistance with regard to the systems of internal accounting and
financial controls, the annual independent audit of the company's financial
statements, and the legal compliance and ethics programs as established by
management and the board. In so doing, it is the responsibility of the audit
committee to maintain free and open means of communication between the
directors, the independent auditors, and the financial management of the
Company. The board of directors and audit committee, as representatives of the
stockholders, are charged with the ultimate authority and responsibility to
select, evaluate, and where appropriate, replace the Company's independent
auditors (or nominate the independent auditors to be proposed for stockholder
approval in any proxy statement).
3. Responsibilities
In carrying out its responsibilities hereunder, the audit committee's
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and stockholders that the
corporate accounting and reporting practices of the Company are in accordance
with all current requirements and are of the highest quality. The audit
committee shall review and reassess the adequacy of this charter in meeting
these objectives on an annual basis.
In carrying out these responsibilities, the audit committee shall:
o Review and recommend to the board of directors the independent
auditors to be selected to audit the financial statements of
the Company and any divisions and subsidiaries;
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors;
o Review with the independent auditors, and the Company's financial and
accounting management, the adequacy and effectiveness of the accounting
and financial controls of the Company, and elicit any recommendations
for the improvement of such internal control procedures or particular
areas where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of such internal
controls to expose any payments, transactions, or procedures that might
be deemed illegal or otherwise improper;
o Review the financial statements to be included in the Annual Report on
Form 10-K with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements. Any changes in accounting
procedures should be explained in the Annual Report;
o The committee shall review the interim financial statements with management
and the independent auditors prior to the filing of the company's Quarterly
Report on Form 10-Q. Also, the committee shall discuss the results of the
quarterly review and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards. The chair of the committee may represent the entire committee
for the purposes of this review.
o Provide sufficient opportunity for the independent auditors to meet
with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditor's evaluation of the Company's financial and
accounting personnel, and the cooperation that the independent auditors
received during the course of the audit;
o Ensure receipt from the independent auditors of a formal written
statement delineating all relationships between the auditor and the
Company, consistent with Independent Standards Board Standard 1, and
actively engage in a dialogue with the auditors with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the auditors and, take, or recommend that the full
board take, appropriate action to oversee the independence of the
outside auditors;
o Inquire about the independent auditors' past and continuing compliance
with auditor independence rules and about their program for enhancing
safeguards to ensure that conflicts to not arise in the future;
o Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors; and
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
4. Effective Date
This Audit Committee Charter shall become effective
immediately upon its approval and adoption by the board of directors of
the Company, with the exception that Section 1(b) of this Audit
Committee Charter defining an Independent Director shall not become
effective until June 1, 2001. This Audit Committee Charter will be
reviewed on an annual basis to assess its adequacy.
