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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
_____________________
FORM 8-K
_____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 5, 2026 (April 1,
2026)
|
Mag
Magna Corp. |
| (Exact name of registrant as specified in its charter) |
| 333-268561 |
|
98-1626237 |
| (Commission File Number) |
|
(IRS Employer Identification Number) |
|
4005 West Reno Avenue, Suite F
Las Vegas, Nevada 89118 |
|
Wyoming |
| (Address of Principal Executive Offices) |
|
(State or other jurisdiction of incorporation or organization) |
702-595-2247
(Registrant’s telephone number, including area
code)
N/A
(Former name or former address, if changed since last
report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
| None |
|
N/A |
|
N/A |
Indicate by check mark whether the registrant is an
emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange
Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.
Item 1.01. Entry into
a Material Definitive Agreement.
Securities Purchase
Agreements
Effective
April 1, 2026, Mag Magna Corp., a Wyoming corporation (the “Company”), entered into a Securities Purchase
Agreement (the “CFI Capital SPA”) with CFI Capital, LLC (“CFI Capital”), pursuant
to which the Company issued to CFI Capital a 6% convertible redeemable note in the principal amount of $170,000.00 (the “CFI
Capital Note”) for cash proceeds of $153,000.00 (reflecting $17,000.00 original issue discount).
Material terms of
the CFI Capital Note include:
Maturity and Interest
The
CFI Capital Note matures 12 months from its issue date and bears interest at 6% per annum.
Conversion Rights
Convertible at the holder’s option at any time
after the six month anniversary of the CFI Capital Note into shares of the Company’s common stock at a conversion price equal to
60% of the lowest traded price of the Company’s common stock on any trading day during the 20 trading days prior to the conversion
date (subject to adjustments for stock dividends, splits, combinations, reclassifications, etc.). Conversion is subject to a 4.99% beneficial
ownership limitation (calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, including attribution and group
rules).
Prepayment
Optional prepayment prior to default on three
days’ prior written notice, as follows:
| |
Prepay Date |
Prepay Amount |
| |
≤ 30 days |
105% of principal plus accrued interest |
| |
30- 59 days |
110% of principal plus accrued interest |
| |
60-89 days |
115% of principal plus accrued interest |
| |
90-119 days |
120% of principal plus accrued interest |
| |
120-149 days |
130% of principal plus accrued interest |
| |
150-180 days |
140% of principal plus accrued interest |
Failure to pay the prepayment amount forfeits
the Company’s future prepayment rights.
Events of Default and Remedies
Includes customary events (non-payment, conversion
failures, covenant breaches, bankruptcy, cross-defaults, reporting failures, delisting, Rule 144 unavailability, etc.). Upon default,
the conversion price under the CFI Capital Note drops to 45% of the lowest traded price of the Company’s common stock on any trading
day during the 20 trading days prior to the conversion date. The holder may convert the Default Amount post-maturity.
Reserved Shares
With respect to each
Note, the Company must reserve the greater of 2,083,333 shares or four times the number of shares issuable on full conversion at the
then-current price. Failure to maintain the reserved amount is an Event of Default.
Other Material
Provisions
On the occurrence of a Sale Event, CFI Capital may request the redemption of the CFI
Capital Note in cash for the applicable prepayment price, or at the election of the CFI Capital, it may convert the unpaid principal
amount of the CFI Capital Note (together with the amount of accrued but unpaid interest) into shares of Company common stock immediately
prior to such Sale Event at the then applicable conversion price; Arbitration in Florida under Florida law.
The Company applied the net proceeds
from the issuance of the CFI Capital Note for general working capital.
The issuance of the CFI Capital
Note was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and
Rule 506(b) thereunder.
The foregoing descriptions
do not purport to be complete and are qualified in their entirety by reference to the full text of the CFI Capital SPA and the CFI Capital
Note, copies of which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and incorporated herein by reference.
Effective
April 29, 2026, the Company entered into a Securities Purchase Agreement (the “Silvercrest SPA”) with Silvercrest
Hybrid Capital LLC (“Silvercrest”), pursuant to which the Company issued to Silvercrest a 6% convertible redeemable
note in the principal amount of $170,000.00 (the “Silvercrest Note”) for cash proceeds of $153,000.00 (reflecting
$17,000.00 original issue discount).
Material
terms of the Silvercrest Note include:
Maturity and Interest
The Silvercrest Note matures 12 months from its issue date and bears interest at 12% per annum.
Conversion Rights
Convertible at the holder’s option at any time after the six month anniversary of the Silvercrest Note into shares of the Company’s common stock at a conversion price equal to 60% of the lowest traded price of the Company’s common stock on any trading day during the 20 trading days prior to the conversion date (subject to adjustments for stock dividends, splits, combinations, reclassifications, etc.). Conversion is subject to a 4.99% beneficial ownership limitation (calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, including attribution and group rules).
Prepayment
Optional prepayment prior to default on three days’ prior written notice, as follows:
| |
Prepay Date |
Prepay Amount |
| |
≤ 30 days |
105% of principal plus accrued interest |
| |
30- 59 days |
110% of principal plus accrued interest |
| |
60-89 days |
115% of principal plus accrued interest |
| |
90-119 days |
120% of principal plus accrued interest |
| |
120-149 days |
130% of principal plus accrued interest |
| |
150-180 days |
140% of principal plus accrued interest |
Failure to pay the prepayment amount forfeits the Company’s future prepayment rights.
Events of Default and Remedies
Includes customary events (non-payment, conversion failures, covenant breaches, bankruptcy, cross-defaults, reporting failures, delisting, Rule 144 unavailability, etc.). Upon default, the conversion price under the Silvercrest Note drops to 45% of the lowest traded price of the Company’s common stock on any trading day during the 20 trading days prior to the conversion date. The holder may convert the Default Amount post-maturity.
Reserved Shares
With respect to each Note, the Company must reserve the greater of 2,023,810 shares or four times the number of shares issuable on full conversion at the then-current price. Failure to maintain the reserved amount is an Event of Default.
Other Material Provisions
On the occurrence of a Sale Event, Silvercrest may request the redemption of the Silvercrest Note in cash for 150% of the principal amount plus accrued interests or, at the election of the Silvercrest, it may convert the unpaid principal amount of the Silvercrest Note (together with the amount of accrued but unpaid interest) into shares of Company common stock immediately prior to such Sale Event at the then applicable conversion price; Nevada law governs, with all actions required to be brought in Washoe County or Clark County, Nevada.
The
Company applied the net proceeds from the issuance of the Silvercrest Note for general working capital.
Effective
May 6, 2026, the Company entered into a Securities Purchase Agreement (the “GW Capital SPA”) with GW Capital
Investments, LLC (“GW Capital”), pursuant to which the Company issued to GW Capital a 12% convertible redeemable
note in the principal amount of $123,333.33 (the “GW Capital Note”) for cash proceeds of $111,000.00 (reflecting
$12,333.33 original issue discount).
Material
terms of the GW Capital Note include:
Maturity and Interest
The GW Capital Note matures 12 months from its issue date and bears interest at 12% per annum.
Conversion Rights
Convertible at the holder’s option at any time after the six month anniversary of the GW Capital Note into shares of the Company’s common stock at a conversion price equal to 60% of the lowest traded price of the Company’s common stock on any trading day during the 20 trading days prior to the conversion date (subject to adjustments for stock dividends, splits, combinations, reclassifications, etc.). Conversion is subject to a 4.99% beneficial ownership limitation (calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, including attribution and group rules).
Prepayment
Optional prepayment prior to default on three days’ prior written notice, as follows:
| |
Prepay Date |
Prepay Amount |
| |
≤ 30 days |
105% of principal plus accrued interest |
| |
30- 59 days |
110% of principal plus accrued interest |
| |
60-89 days |
115% of principal plus accrued interest |
| |
90-119 days |
120% of principal plus accrued interest |
| |
120-149 days |
130% of principal plus accrued interest |
| |
150-180 days |
140% of principal plus accrued interest |
Failure to pay the prepayment amount forfeits the Company’s future prepayment rights.
Events of Default and Remedies
Includes customary events (non-payment, conversion failures, covenant breaches, bankruptcy, cross-defaults, reporting failures, delisting, Rule 144 unavailability, etc.). Upon default, the conversion price under the Silvercrest Note drops to 45% of the lowest traded price of the Company’s common stock on any trading day during the 20 trading days prior to the conversion date. The holder may convert the Default Amount post-maturity.
Reserved Shares
With respect to each Note, the Company must reserve the greater of 1,447,574 shares or four times the number of shares issuable on full conversion at the then-current price. Failure to maintain the reserved amount is an Event of Default.
Other Material Provisions
On the occurrence of a Sale Event, GW Capital may request the redemption of the GW Capital Note in cash for 150% of the principal amount plus accrued interests or, at the election of the GW Capital, it may convert the unpaid principal amount of the GW Capital Note (together with the amount of accrued but unpaid interest) into shares of Company common stock immediately prior to such Sale Event at the then applicable conversion price; Nevada law governs, with all actions required to be brought in Washoe County or Clark County, Nevada.
The Company applied the net proceeds from the
issuance of the GW Capital Note for general working capital.
The issuances of the CFI Capital
Note, the Silvercrest Note and the GW Capital Note were made in reliance on the exemption from registration provided by Section 4(a)(2)
of the Securities Act of 1933, as amended, and Rule 506(b) thereunder.
The foregoing descriptions
do not purport to be complete and are qualified in their entirety by reference to the full text of the CFI Capital SPA, the CFI Capital
Note, Silvercrest SPA, the Silvercrest Note, GW Capital SPA and the GW Capital Note, copies of which are filed as Exhibits 10.1, 10.2,
10.3, 10.4, 10.5 and 10.6 hereto, respectively, and incorporated herein by reference.
Item 2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information provided above in Item 1.01 herein is incorporated by reference into this Item 2.03.
Item 3.02.
Unregistered Sales of Equity Securities.
The
information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The
issuances of CFI Capital Note, the Silvercrest Note and the GW Capital Note were made in reliance on the exemption provided by Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), for the offer and sale of securities
not involving a public offering. The Company’s reliance upon Section 4(a)(2) of the Securities Act in issuing the CFI Capital Note,
the Silvercrest Note and the GW Capital Note was based upon the following factors: (a) the issuance was an isolated private transaction
by the Company which did not involve a public offering; (b) each of CFI Capital, Silvercrest and GW Capital is an accredited investor;
(c) the Company did not engage in general solicitation or advertising in connection with the issuance; and (d) each of CFI Capital, Silvercrest
and GW Capital represented that, among other things, it was acquiring the securities for investment purposes only and not with a view
to distribution, it has received information about the Company necessary to make an informed investment decision, and each of CFI Capital,
Silvercrest and GW Capital is capable of evaluating the merits and risks of its investment. Any shares of Company common stock issuable
upon conversion of the CFI Capital Note, the Silvercrest Note and the GW Capital Note will be issued in reliance on the exemption from
registration provided by Section 3(a)(9) or Section 4(a)(2) of the Securities Act.
Item 5.02. Departure of
Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Executive Committee; Audit
Committee
Executive Committee.
On February 16, 2026, the Company’s Board of Directors established an Executive Committee and, in conjunction therewith, adopted
an Executive Committee Charter. The Company’s Executive Committee is composed of Harpreet Sangha and Jamal Khurshid. Pursuant to
our Bylaws and the charter of the Executive Committee, between meetings of the full Board of Directors, the Executive Committee has the
full power and authority of the Board of Directors in the management of our business and affairs, except to the extent limited by Wyoming
law.
Audit
Committee. On April 3, 2026, the Company’s Board of Directors established an Audit Committee and, in conjunction therewith,
adopted an Audit Committee Charter.
The Company’s
Audit Committee is composed of Gonca Demir, Daniel Marcus and Nicholas Gregory, with Ms. Demir serving as Chair of the Audit Committee.
Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements of Rule 10A-3 under
the Securities Exchange Act of 1934 and has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. Daniel
Marcus qualifies as an audit committee financial expert under Item 407 of Regulation S-K. The Audit Committee Charter details the principal
functions of the Audit Committee, including:
| |
• |
assisting board oversight of (1) the integrity
of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications
and independence, and (4) the performance of our internal audit function and independent auditors; the appointment, compensation, retention,
replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged
by us;
|
| |
|
|
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• |
pre-approving all audit and non-audit services
to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval
policies and procedures;
|
| |
|
|
| |
• |
reviewing and discussing with the independent
auditors all relationships the auditors have with us in order to evaluate their continued independence;
|
| |
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|
| |
• |
setting clear policies for audit partner
rotation in compliance with applicable laws and regulations;
|
| |
|
|
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• |
obtaining and reviewing a report, at least
annually, from the independent auditors describing (1) the independent auditor’s internal quality-control procedures and (2) any
material issues raised by the most recent internal quality-control review, or peer review, of the audit 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 such issues;
|
| |
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• |
meeting to review and discuss our annual
audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific
disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior
to us entering into such transaction; and
|
| |
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• |
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
The foregoing
descriptions do not purport to be complete and are qualified in their entirety by reference to the full text of the Executive Committee
Charter and the Audit Committee Charter, copies of which are filed as Exhibits 99.1 and 99.2 hereto, respectively, and incorporated herein
by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit
Number |
|
Description |
|
10.1 |
|
Securities Purchase Agreement between the Company and CFI Capital, LLC dated April 1, 2026 |
| 10.2 |
|
6% Convertible Redeemable Note dated April 1, 2026, $170,000.00 principal amount, in favor of CFI Capital, LLC |
| 10.3 |
|
Securities Purchase Agreement between the Company and Silvercrest Hybrid Capital LLC dated April 29, 2026
|
| 10.4 |
|
6% Convertible Redeemable Note dated April 29, 2026, $170,000.00 principal amount, in favor of Silvercrest Hybrid Capital LLC |
| 10.5 |
|
Securities Purchase Agreement between the Company and GW Capital Investments, LLC dated May 6, 2026
|
| 10.6 |
|
12% Convertible Redeemable Note dated May 6, 2026, $123,333.33 principal amount, in favor of GW Capital Investments, LLC
|
| 99.1 |
|
Charter of the Executive Committee of the Board of Directors |
| 99.2 |
|
Charter of the Audit Committee of the Board of Directors |
| 104 |
|
Cover Page Interactive Data File (embedded within
the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
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MAG MAGNA CORP. |
| |
|
|
|
| Date: June 5,
2026 |
|
|
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By: |
|
/s/ Jamal Khurshid |
| |
|
|
|
|
|
Jamal Khurshid |
| |
|
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|
|
Chief Executive Officer |
Exhibit 99.1
MAG MAGNA
CORP.
CHARTER OF THE EXECUTIVE COMMITTEE
OF THE BOARD OF DIRECTORS
The Executive Committee (the “Committee”)
has the authority and responsibilities described in this Executive Committee Charter (the “Charter”), which
was duly adopted by the Board of Directors of Mag Magna Corp., a Wyoming corporation (the “Company”) on February
16, 2026, to be effective on such date.
1.Committee
Membership. The Committee shall consist of Harpreet Sangha, Chairman of the Board of the Company and Jamal Khurshid, a Director and
Chief Executive Officer of the Company.
The initial Chairman of the Committee shall be Harpreet
Sangha. Thereafter, the Chairman of the Committee shall be appointed by the members of the Committee. The members of the Committee shall
serve at the pleasure of the Board of Directors or until their successors shall be duly designated. Vacancies in the Committee shall be
filled by the Board of Directors.
2.Responsibilities.
During the intervals between the meetings of the Board of Directors, the Executive Committee shall have and may exercise all of the authority
of the Board of Directors in the management of the business affairs of the Company; provided, however, that the Committee is not
authorized to declare dividends, and other distributions, to propose to shareholders actions that require such shareholders’ approval,
fill vacancies on the board or adopt, amend or repeal bylaws. This authorization is further subject to the limitations imposed by law,
the Bylaws of the Company or the Board of Directors.
3.Meetings
and Actions Without a Meeting. The Committee will meet at such times and with such frequency as the Committee shall determinate as
appropriate to meet its responsibilities. The Chairman of the Committee, in consultation with the other member(s) of the Committee will
set the dates, times and places of such meetings. The Committee will report to the full Board of Directors from time to time with respect
to the activities of the Committee. A quorum of the Committee for the transaction of business will be a majority of its members. Meetings
may be held via telephone or video conference. The Committee may also act by unanimous written consent in lieu of a meeting in accordance
with the Company’s Bylaws. The Chairman of the Committee will designate a secretary for each meeting, who need not be a member of
the Committee.
CHARTER OF THE EXECUTIVE COMMITTEE | PAGE SOLO
Exhibit 99.2
MAG MAGNA
CORP.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee (the “Committee”)
has the authority and responsibilities described in this Audit Committee Charter (the “Charter”), which was
duly adopted by the Board of Directors of Mag Magna Corp., a Wyoming corporation (the “Company”), on April 3,
2026, to be effective on such date.
This Charter was adopted by the Board of Directors
(the “Board”) of the Company on April 3, 2025.
A.Purpose
The purpose of the Committee shall be to serve as an
independent and objective party to monitor the Company’s financial reporting process and internal control system and to provide
an open avenue of communication among the independent auditors, financial and senior management and the Board. The Committee’s primary
duties and responsibilities are to monitor and oversee:
| • | the integrity of the financial statements of the Company and its financial reporting process and systems
of internal controls regarding finance and accounting; |
| | | |
| • | the qualifications, independence and performance of the Company’s independent auditor; |
| | | |
| • | the performance of the Company’s internal audit function; and |
| | | |
| • | compliance by the Company with applicable legal and regulatory requirements. |
The Committee shall prepare the audit committee report
that Securities and Exchange Commission rules require to be included in the Company’s annual proxy statement. To effectively perform
his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership.
B.Structure and Membership
1.Number.
The Committee shall consist of at least three directors of the Company (each, a “member”).
2.Independence.
Each member of the Committee shall be “independent” according to the standards of the NASDAQ Stock Market and the Company
(to the extent the Company maintains requirements that are more stringent).
3.Financial
Literacy. Each member of the Committee must be able to read and understand fundamental financial statements, including the Company’s
balance sheet, income statement, and cash flow statement, at the time of his or her appointment to the Committee. In addition, at least
two members shall have 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, internal accounting
controls and experience with the preparation or auditing of financial statements of generally comparable companies and the application
of such principles in connection with the accounting for estimates, accruals, and reserves.
4.Chair.
The Board shall designate the Chair of the Committee, upon the recommendation of the Governance Committee of the Company (the “Governance
Committee”); provided, however, that, until such time as the Board shall have established the Governance Committee,
the Board shall designate the Chair of the Committee.
5.Selection
and Removal. The Governance Committee of the Company shall recommend nominees for appointment to the Committee annually and as vacancies
or newly-created positions occur or are about to occur. Committee members shall be appointed by the Board annually and may be removed
by the Board at any time, with or without cause.
C.Authority and Responsibilities
General
The Committee shall discharge its responsibilities,
and shall assess the information provided by the Company’s management and the Company’s registered public accounting firm
(the “independent auditor”) in accordance with the same standards of duty and care as do the Directors of the
Board.
The Committee’s primary task is one of oversight
as set forth in this Charter. In performing their duties and responsibilities, Committee members are entitled to rely in good faith on
information, opinions, reports or statements prepared by:
| • | One or more officers or employees of the Company whom the Committee member reasonably believes to be
reliable and competent in the matters presented; |
| | | |
| | • | Counsel, independent internal
and external auditors or other persons retained by the Company or the Committee as to matters which the Committee member reasonably believes
to be within the professional or expert competence of such person; or |
| | | |
| • | Another committee of the Board as to matters within its designated authority which the Committee member
reasonably believes to merit confidence. |
In addition to any other responsibilities which may
be assigned from time to time by the Board, the Committee is authorized to undertake, and has responsibility for, the following matters:
Oversight of Independent Auditors
| 1. | Retention and Termination. The Committee has the sole authority to retain and terminate the independent auditors of the Company
(subject, if applicable, to stockholder ratification), including sole authority to approve all audit engagement fees and terms and all
non-audit services to be provided by the independent auditors. The Committee must pre-approve each such non-audit service to be provided
by the Company’s independent auditors. The Committee may consult with management in the decision making process, but may not delegate
this authority to management. The Committee may, from time to time, delegate its authority to approve non-audit services on a preliminary
basis to one or more Committee members, provided that such designees present any such approvals to the full Committee at the next Committee
meeting. |
| 2. | Oversight. The Committee shall review and approve the timetable, scope and staffing of the independent auditors’ annual
audit plan(s). |
| 3. | Independence. The Committee shall evaluate the independent auditors’ qualifications, performance and independence, and
shall present its conclusions and recommendations with respect to the independent auditors to the Board on at least an annual basis. As
part of such evaluation, at least annually, the Committee shall: |
| (a) | obtain and review a report from the Company’s independent auditors: |
| (1) | describing the independent auditor’s internal quality-control procedures; |
| | | |
| (2) | describing any material issues raised by (a) the most recent internal quality-control review or peer review of the independent auditor,
or (b) any inquiry or investigation by governmental or professional authorities, within the preceding five years, regarding one or more
independent audits carried out by the auditing firm; and any steps taken to deal with any such issues; |
| | | |
| (3) | describing all relationships between the independent auditor and the Company; and |
| | | |
| (4) | assuring that Section 10A of the Securities Exchange Act of 1934 has not been implicated; and |
| | | |
| (5) | assuring that the independent auditors responsible for auditing the Company did not provide any consulting services that would impair
its independence under the relevant rules and regulations; |
| (b) | evaluate the adequacy of the auditors’ quality-control procedures and their compliance with such controls; |
| | | |
| (c) | review and evaluate the senior members of the independent auditor team, particularly the lead audit partner; |
| | | |
| (d) | consider whether the lead audit partner or the audit firm should be rotated in addition to the rotation of the lead audit or reviewing
partner as required by law, so as to assure continuing auditor independence; and |
| | | |
| (e) | obtain the opinion of management and the internal auditors of the independent auditor’s performance. |
| 4. | Hiring Policies. The Committee shall establish clear policies
for the Company’s hiring of employees or former employees of the independent auditors. |
Oversight of Internal Audit Function
| 1. | Internal Audit Program Review. At least annually, the Committee shall evaluate the performance, responsibilities, budget and
staffing of the Company’s internal audit function and review the annual internal audit plan and the result of the internal audits
for each audited department. Such evaluation shall include a review of the responsibilities, budget and staffing of the Company’s
internal audit function with the independent auditors as well as an evaluation of the thoroughness and effectives in identifying actual
and potential weaknesses in internal controls, and make any recommendations to improve the internal audit function as may be appropriate.
The Committee shall review the results of completed internal audits and evaluate whether the Company’s internal controls over financial
reporting are sufficient to detect, and deter fraudulent financial reporting. The Committee shall receive periodic presentations from
the internal audit department on the identification and remediation of material weaknesses in the Company’s internal control environment,
including any significant deficiencies in the design or operation of internal controls that could adversely affect the Company’s
ability to record, process, summarize, and report financial data. |
| | | |
| 2. | Role of Chief Audit Executive. The Committee shall meet periodically with the Chief Audit Executive to review and evaluate
the internal audit function. One of the primary functions of the Chief Audit Executive shall be to assist the Audit Committee in fulfilling
its oversight responsibilities by reviewing, in detail and on an on-going basis: |
| (a) | the financial reports and other financial information provided by the Company to any governmental body or the public; |
| (b) | the Company’s systems of internal controls with respect to finance, accounting, legal, compliance, regulatory, compliance and
ethics that management has established; and |
| (c) | the Company’s auditing, accounting and financial reporting processes generally. |
| 3. |
Evaluation of Chief Audit Executive.
At least annually, the Committee, in consultation with management of the Company shall evaluate the performance of the Chief Audit Executive
for the Company, or if none shall be named, the senior internal auditing executive and shall have, following consultation with management
of the Company, the authority to retain and to terminate the Chief Audit Executive or if none shall be named, the senior internal auditing
executive.
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| 4. | Comprehensive Supervisory Plan. The Committee shall oversee,
review and approve management’s development of a comprehensive supervisory plan for
the Company, which shall include an internal audit plan. The Committee shall oversee that
management develops such a supervisory plan annually and updates it as appropriate for the
consolidated organization. |
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| | 5. | Internal Audit Reports. The
Committee shall review all significant reports prepared by the Internal Audit Department together with management’s response and
the follow-up to these reports. |
Financial Statements; Disclosure and Regulatory
Matters
| 1. | Review of Financial Statements and Reports. The Committee shall
review with management, the internal auditors and the independent auditor, in separate meetings
if the Committee deems it appropriate. |
| (a) | the annual audited financial statements, including the Company’s disclosures under “Management’s Discussion and
Analysis and Analysis of Financial Condition and Results of Operations”, prior to the filing of the Company’s Form 10-K; |
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| (b) | the quarterly financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis
and Analysis of Financial Condition and Results of Operations”, prior to the filing of the Company’s Form 10-Q; |
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| (c) | any analyses or reports prepared by management, the internal auditors and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the financial statements, including analyses of the effects of alternative GAAP
methods on the financial statements; |
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| (d) | the critical accounting policies and practices of the Company; |
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| (e) | the effect of regulatory and accounting initiatives (including any SEC investigations or proceedings) on the financial statements
of the Company; |
| (f) | the effect of off-balance sheet structures on the financial statements of the Company; and |
| (g) | any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s
selection or application of accounting principles. |
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2. |
Review of Earnings Information.
The Committee shall review, in conjunction with management, the Company’s policies with respect to the Company’s earnings
press releases and all financial information, such as earnings guidance, provided to analysts and rating agencies, including the types
of information to be disclosed and the types of presentation to be made and paying particular attention to the use of “pro forma”
or “adjusted” “non-GAAP” information. |
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3. |
Review of Legal and Regulatory Matters.
The Committee shall review periodically with the General Counsel of the Company, legal and regulatory matters that may have a material
impact on the Company’s financial statements. |
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4. |
Review of Internal Controls.
The Committee shall, in conjunction with the Chief Executive Officer and Chief Financial Officer of the Company, periodically review the
Company’s internal controls (including computerized information system controls and security) and disclosure controls and procedures,
including whether there are any significant deficiencies in the design or operation of such controls and procedures, material weaknesses
in such controls and procedures, any corrective actions taken with regard to such deficiencies and weaknesses and any fraud involving
management or other employees with a significant role in such controls and procedures. |
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5. |
Review of Audit Issues. The Committee shall review and discuss
with the independent auditor any audit problem or difficulties and management’s response thereto; including those matters required
by Statement on Auditing Standards No. 61, including the following: |
| (a) | any restrictions on the scope
of the independent auditor’s activities or access to requested information; |
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| (b) | any accounting adjustments that
were noted or proposed by the auditor but were “passed” (as immaterial or otherwise); |
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| (c) | any communications between
the audit team and the audit firm’s national office regarding auditing or accounting issues presented by the engagement; |
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| (d) | any management or internal control
letter issued, or proposed to be issued, by the auditor; and |
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| (e) | any significant disagreements between
the Company’s management and the independent auditor. |
| 6. | Procedures. The Committee shall establish and oversee procedures for: |
| (a) | the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing
matters, and |
| (b) | the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. |
| 7. | Preparation of Audit Committee Report. The Committee shall prepare
the audit committee report that Securities and Exchange Commission rules require to be included
in the Company’s annual proxy statement. |
D.Procedures and Administration
| 1. | Meetings. The Committee shall meet as often as it determines is appropriate to carry out its responsibilities under this Charter,
but not less frequently than five times annually, including meeting prior to the commencement and following the completion of the annual
audit by the Company’s independent auditor. At least one meeting per year shall contain an executive session with no members of
management present. Special meetings may be held from time to time pursuant to the call of the Chair of the Committee. The Chair of the
Committee, in consultation with the other Committee members, shall determine the frequency and length of the Committee meetings, shall
set meeting agendas consistent with this Charter and shall, when present, preside at the meetings of the Committee. Meetings may be conducted
by teleconference. In lieu of a meeting, the Committee may also act by unanimous written consent resolution. The Committee shall designate
a person (who need not be a member of the Committee) to keep minutes of its meetings. The minutes shall be retained by the Corporate Secretary
of the Company. At least quarterly, the Committee shall meet separately with management, with internal auditors or other personnel responsible
for the internal audit function and with the independent auditor. |
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| 2. | Quorum. A majority of the Committee members in office shall constitute a quorum at any meeting but a lesser number may adjourn
any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. If a quorum is present, the Committee
may take action through the vote of a majority of the directors who are in attendance. |
| 3. | Subcommittees. The Committee may, to the full extent permitted by applicable law or regulation, form and delegate its authority
to subcommittees of the Committee when it deems appropriate and in the best interests of the Company. |
| 4. | Reports to the Board. The Committee shall report to the Board at least quarterly. This report shall include a review of any
issues that arise with respect to the quality or integrity of the Company’s financial statements, the performance and independence
of the Company’s independent auditors, the performance of the internal audit function and any other matters that the Committee deems
appropriate or is requested to be included by the Board. |
| 5. | Charter. The Committee shall periodically, and not less than annually, review and reassess the adequacy of this Charter and
recommend any proposed changes to the Board for approval. |
| 6. | Independent Advisors. The Committee has the authority (without seeking Board or management approval) to retain and terminate
special legal, financial, accounting, audit or other professional advisors (“Advisors”) to assist the Committee
in performing its responsibilities under this Charter. Such retention shall be coordinated by the Committee Chair with the assistance
of the General Counsel of the Company. The Company shall be responsible for all costs and expenses incurred by the Advisors retained by
the Committee; provided, that the Committee reviews and approves all invoices of the Advisors prior to their submission to the Company
for payment. |
| 7. | Access to Company Employees and Advisors. In addition to the above, the Committee shall have full, free and unrestricted access
to the Company’s management, officers, employees, outside counsel, investment bankers, analysts who follow the Company and independent
auditors to assist the Committee in performing its duties under the Charter and the Committee may, upon reasonable notice, require the
Company’s management, officers, employees, outside counsel, investment bankers and independent auditors to meet with one or more
of the Committee’s Advisors. |
| 8. | Annual Self-Evaluation. At least annually, the Committee shall evaluate its own performance and report to the Board on such
evaluation. |
| 9. | Recommendations to the Board. The Committee shall make recommendations to the Board based on its conclusions, oversight and
review or, if power to do so is delegated by the Board, the Committee shall approve matters within such delegation of authority. |
E.Limitations Inherent in
the Audit Committee’s Role
It is not the duty of the Committee to plan or conduct
audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with GAAP. Management
is responsible for the preparation, presentation and integrity of the Company’s financial statements, for the appropriateness of
the accounting principles and reporting policies that are used by the Company, and for establishing and maintaining adequate internal
controls over financial reporting. The independent auditor is responsible for auditing the Company’s financial statements and the
Company’s internal control over financial reporting and for reviewing the Company’s unaudited interim financial statements.
It is also not the duty of the Committee to conduct
investigations, to resolve disagreements, if any, between management and the outside auditors, to guarantee the independent auditor’s
reports, or to assure compliance with laws and regulations and the Company’s policies generally.
* * * End
of Charter * * *
