CHARTER
FOR THE AUDIT COMMITTEE OF TIX CORPORATION
1. Purpose.
The
purpose of the Audit Committee (the “Committee”)
of the Board of Directors (the “Board” and, each
member of the Board, a “Director”) of Tix Corporation
(the “Company”) is to assist the Board in discharging
its duties relating to (1) the quality and integrity of the
financial reports of the Company, (2) the independent auditor’s
qualifications and independence, and (3) the performance of
the Company’s internal audit function and independent
auditors. Consistent with these functions, the Committee shall
encourage continuous improvement of, and shall foster adherence
to, the Company’s policies, procedures and practices at
all levels. In carrying out its responsibilities, the Committee
believes its policies and procedures should remain flexible,
in order to best react to changing circumstances while ensuring
that the Company’s accounting and reporting practices
are in accordance with all requirements and are all of the highest
quality.
2. Statement of Policy.
The
Committee’s primary duties and responsibilities are to:
• Serve as an independent and objective party to monitor
the Company’s financial reporting process and internal
control system.
•
Review and appraise the audit efforts of the Company’s
independent accountants and internal audit function.
•
Provide an open avenue of communication among the independent
accountants, internal auditors, the Company’s operational
management (the “Management”) and the Board.
The
Committee shall provide assistance to the Board in fulfilling
the Board’s oversight responsibility to the shareholders,
potential shareholders, the investment community, and others
relating to the Company’s financial statements and the
financial reporting process, the systems of internal accounting
and financial controls, the internal audit function, the annual
independent audit of the Company’s financial statements
and the ethics programs as established by Management and the
Board. In discharging its oversight role, the Committee is empowered
to investigate any matter brought to its attention, with full
access to all books, records, facilities and personnel of the
Company.
The
Committee will fulfill these responsibilities by carrying out
the activities enumerated in Section 5 of this Charter. The
Committee may augment the activities defined by Section 5 at
its discretion in order to comply with the requirements of the
Sarbanes-Oxley Act, the requirements of Nasdaq and the Securities
and Exchange Commission (the “SEC”) and any other
applicable laws and regulations.
3. Composition.
The
Committee shall consist of at least three (3) but not more than
five (5) directors, each of whom will be an “independent
director” within the meaning of the applicable Nasdaq
rules and any rule or regulation prescribed by the SEC now or
in the future.
Each
member of the Committee must be financially literate and 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 in a reasonable
period of time after his or her appointment to the Committee),
and at least one member of the Committee must be an “Audit
Committee Financial Expert” as defined by the SEC.
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The
members of the Committee, including its Chair, will be appointed
annually by the Board, following receipt of the recommendation
of the Nomination and Governance Committee. Committee members
will serve at the discretion of the Board.
4. Meetings.
The
Committee shall meet four (4) times annually, or more frequently,
as circumstances dictate. A meeting may be called by the Chair
or at the direction of the Chair at the request of any member
of the Committee. The Committee may meet in person or by phone
and shall have the authority to act by written consent. A majority
of the total authorized number of members of the Committee will
constitute a quorum at all Committee meetings, and the affirmative
vote or written consent of a majority of the authorized number
of members shall be necessary and sufficient to take any Committee
action.
All
non-employee Directors may attend and observe meetings of the
Committee. In such case, however, any Director who is not a
member of the Committee shall neither participate in any discussion
or deliberation at such meeting unless the Committee so requests
and, in no event, shall any Director who is not a member of
the Committee be entitled to vote on any Committee matters.
The
Committee may request any officer or employee of the Company
or the Company’s outside counsel or independent auditor
to attend a meeting of the Committee or meet with any members
of, or consultants to, the Committee.
5. Committee Responsibilities
and Authority.
Pursuant
to the Committee’s purpose, the Committee shall:
• Report to the Board on the major items covered at each
Committee meeting.
•
Have the authority, to the extent it deems necessary or appropriate,
to retain accounting or other advisors. The Company shall provide
appropriate funding, as determined by the Committee, for payment
of compensation to the independent auditor for the purpose of
rendering or issuing an audit report and to any advisors employed
by the Committee.
•
Have the authority, to the extent it deems necessary or appropriate,
to retain legal or other advisors. In the event that the Committee
chooses to engage any such advisors, the Company shall provide
appropriate funding, as determined by the Committee, for the
payment of such advisors.
•
Review this Charter at least annually, as conditions dictate,
and recommend any changes to the Board.
•
Perform the functions of the full Board of Directors with respect
to the negotiation, review and approval or ratification, as
appropriate, of each “related person transaction”
(within the meaning of Item 404(a) of the Securities and Exchange
Commission Regulation 404(a)) to the extent that such functions
can be properly delegated by the Board of Directors to a committee
of the Board of Directors under Delaware law, and to negotiate,
review, make recommendations and otherwise advise the Board
of Directors with respect to all other related person transactions.
•
Direct the officers of the Company with respect to the negotiation,
review, approval or ratification, as appropriate, and advise
Management with respect to all related person transactions.
•
Prepare an annual report to the Company’s shareholders
as required by the SEC. The report shall be included in the
Company’s annual proxy statement.
•
Have the sole authority to appoint or replace the independent
auditor (subject, if applicable, to shareholder ratification)
and be directly responsible for the compensation of the independent
auditor.
•
Pre-approve all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the
Company by its independent auditor, subject to the de minimis
exceptions for non-audit services described in Section 10A(i)(1)(B)
of the Securities Exchange Act which are approved by the Committee
prior to completion of the audit. The Committee may form and
delegate authority to subcommittees
consisting of one or more members when appropriate, including
the authority to grant pre-approvals of audit and permitted
non-audit services, provided that decisions of such subcommittee
to grant pre-approvals shall be presented to the full Committee
at its next scheduled meeting.
• Obtain and review a report from the independent auditor
at least annually regarding (a) the independent auditor’s
internal quality control procedures, (b) any material issues
raised by the most recent internal quality control review, or
peer review, of the 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, (c) any steps taken to deal with any such issues,
and (d) all relationships between the independent auditor and
the Company. Evaluate the qualifications, performance and independence
of the independent auditor, including considering whether the
auditor’s quality controls are adequate and the provision
of permitted non-audit services is compatible with maintaining
the auditor’s independence, taking into account the opinions
of Management. The Committee shall present its conclusions with
respect to the selection or change of independent auditor to
the Board.
•
Review and evaluate the lead partner of the independent auditor
team and ensure the rotation of the audit partners as required
by law.
•
Be directly responsible for the oversight of the work of the
independent auditor (who shall report directly to the Committee)
for the purpose of issuing an audit report or related work.
•
Meet with the independent auditor prior to the audit to discuss
the planning and staffing of the audit.
•
Review and discuss with Management and the independent auditor
the Company’s annual financial statements, including management’s
discussion and analysis. Review and discuss with Management
any reports or other financial information submitted to any
governmental body, or the public, including any certification,
report, opinion or review rendered by the independent auditor,
and recommend to the Board whether the audited financial statements
should be included in the Company’s Form 10-K.
•
Review and discuss with Management and the independent auditor
the Company’s quarterly financial statements prior to
the filing of its Form 10-Q, or prior to the release of earnings.
•
Discuss with Management the Company’s earnings press releases,
including the use of any “pro forma” non-GAAP information,
as well as financial information and earnings guidance provided
to analysts and rating agencies. Such discussion may be done
generally (consisting of the types of information to be disclosed
and the types of presentations to be made).
•
Review with the independent auditor the quality and appropriateness
of the Company’s accounting principles as applied in its
financial reporting and review and resolve any significant disagreements
between the independent auditor and Management in connection
with the preparation of the financial statements.
•
Discuss with Management and the independent auditor, together
and in separate executive sessions, financial reporting issues
and judgments made in connection with the preparation of the
Company’s financial statements, including any changes
in the Company’s selection or application of accounting
principles, any issues as to the adequacy of the Company’s
internal controls or financial reporting processes and any steps
adopted in light of significant and material deficiencies.
•
Discuss separately with the independent auditor and Management
(as required by Statement on Auditing Standard No. 61) matters
relating to the conduct of the audit, including any difficulties
encountered in the course of the audit work, any restrictions
on the scope of the activities or access to requested information,
and any significant disagreements between the independent auditor
and Management.
•
Consider and approve, if appropriate, major changes to the Company’s
auditing and accounting principles and practices as suggested
by the independent auditor or Management.
•
Review and discuss reports from the independent auditors on:
• All critical accounting policies and practices to be
used.
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• All alternative treatments of financial information
within generally accepted accounting principles (“GAAP”)
that have been discussed with Management, ramifications of the
use of such alternative disclosures and treatments, and the
treatment preferred by the independent auditor.
•
Other material written communications between the independent
auditor and Management, such as any management letter or schedules
of the unadjusted differences.
• Discuss with Management and the independent auditor
the effect of regulatory and accounting initiatives as well
as off-balance sheet structures on the Company’s financial
statements.
•
Periodically review with the independent auditors and financial
and accounting personnel, the effectiveness of the accounting
and financial controls and reporting processes of the Company,
and elicit from financial and accounting personnel any recommendations
offered 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 by the Committee
to the adequacy of such internal controls to expose any payments,
transactions or procedures that might be deemed illegal or otherwise
improper. Further, the Committee periodically should review
Company policy statements to determine their adherence to the
Company’s Code of Ethics, as and when adopted by the Board.
•
Discuss with Management and the independent auditor the Company’s
financial risk exposures (including potential or pending litigation).
The Committee should discuss with Management the steps Management
has taken to monitor and control such exposures, including the
Company’s risk assessment and risk management policies,
and then discuss those steps with the independent auditor.
•
Discuss with or obtain reports from Management and corporate
counsel confirming that the Company is in conformity with applicable
legal requirements relating to financial and accounting matters
and the Company’s Code of Ethics, as and when adopted
by the Board. Review reports and disclosures on insider and
affiliated party transactions. Advise the Board with respect
to the Company’s policies and procedures regarding compliance
with applicable laws and regulations relating to financial and
accounting matters and with the Company’s Code of Ethics,
as and when adopted by the Board.
•
Investigate any matter brought to its attention within the scope
of its duties.
•
On an annual basis, evaluate the performance of the Committee
in light of its purpose.
•
Establish procedures for the confidential, anonymous submission
of employee concerns regarding questionable accounting or auditing
matters and for receiving, retaining and addressing complaints
concerning accounting, internal audit controls and other auditing
matters.
•
Discuss with the Company’s counsel legal matters that
may have a material impact on the financial statements or the
Company’s compliance policies.
•
Have full access to the Company’s executives, personnel
and advisors as necessary to carry out its responsibilities.
•
Submit the minutes of all meetings of the Committee to the Board
and discuss, through its Chairman, the matters discussed at
each Committee meeting with the Board.
•
Review the results of Management’s reviews of director,
officer and employee expense reports and reimbursements, and
Management perquisites.
•
Perform any other activities consistent with this Charter, the
Company’s Bylaws and governing law as the Committee or
the Board deems necessary or appropriate.
6. Minutes.
The
Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the
Board.
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7.
Compensation.
Members
of the Committee will be eligible to receive fees or other compensation
for their service as Committee members as determined by the
Board. Changes in such compensation will be determined by the
Board in its sole discretion.
8. Delegation of Duties.
Subject
to the Company’s Certificate of Incorporation and Bylaws
and applicable laws and rules of markets in which the Company’s
securities then trade, in fulfilling its responsibilities, the
Committee shall be entitled to delegate any or all of its responsibilities
to a subcommittee of the Committee.
9. Limitation of the audit committee’s
role.
While
the Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Committee to plan
or conduct audits or to determine that the Company’s financial
statements and disclosures are complete and accurate and are
in accordance with GAAP and applicable rules and regulations.
Management is responsible for the preparation, presentation
and integrity of the Company’s financial statements and
for the appropriateness of the accounting principles and reporting
policies that are used by the Company.
The
independent auditors are responsible for auditing the Company’s
financial statements and for reviewing the Company’s unaudited
interim financial statements.
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