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AMPEX CORPORATION
AUDIT COMMITTEE CHARTER
Revised March 18, 2008
I. PURPOSE
The Audit Committee (the "Committee") shall assist the Board of Directors (the "Board") of Ampex Corporation (the "Company") by overseeing the Company's accounting and financial reporting processes and the audits of the Company's financial statements. The Committee shall review: the Company's financial reports and other financial information; the Company's systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Company's auditing, accounting and financial reporting processes generally. Consistent with this function, the Committee should provide an open avenue of communication among the Company's independent accountants, management and the Board. The Committee shall have the authority to engage independent counsel and other advisers, at the expense of the Company, as it determines necessary to carry out its duties.
II. COMPOSITION
The Committee shall be comprised of three or more directors, as determined by the Board, each of whom shall be an Independent (as defined below) director, and at least one of whom shall be a Financial Expert (as defined below). Each Committee member must have a working familiarity with basic finance and accounting practices, and must, at the time of appointment to the Committee or within a reasonable period of time thereafter, be able to read and understand fundamental financial statements, including balance sheets, income statements and cash flow statements. In addition, Committee members may not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the three years preceding service on the Committee.
As used herein, an "Independent" director shall mean a director who is not an executive officer or employee of the Company or a subsidiary of the Company, who is not otherwise affiliated (within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with the Company or any Company subsidiary (except for service on the board of directors of a Company affiliate), and who does not have a relationship which, in the opinion of the Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director. Subject to the exemptions set forth in Rule 10A-3 under the Exchange Act, the following persons shall not be deemed to be Independent:
A. a director who is, or at any time during the past three years was, employed by the Company or by any parent or subsidiary of the Company;
B. a director who:
(i) accepted or who has a Family Member (as defined below) who accepted any compensation from the Company or any parent or subsidiary of the Company in excess of $100,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than the following: (a) compensation for Board or Board committee service; (b) compensation paid to a Family Member who is an employee (other than an executive officer) of the Company or a parent or subsidiary of the Company; (c) benefits under a tax-qualified retirement plan or non-discretionary compensation; or
(ii) accepts, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary of the Company other than in his or her capacity as a member of the Committee, the Board or any other Board committee, provided that, unless the rules of The NASDAQ Stock Market ("Nasdaq") provide otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company (provided that such compensation is not contingent in any way on continued service);
C. a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company or by any parent or subsidiary of the Company as an executive officer;
D. a director who is, or has a Family Member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than payments arising solely from investments in the Company's securities or payments under non-discretionary charitable contribution matching programs;
E. a director of the Company who is, or has a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the Company's executive officers serve on the compensation committee of such entity;
F. a director who is, or has a Family Member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
As used herein, "Family Member" means a person's spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person's home.
Notwithstanding the foregoing, the Committee may include one director who is not Independent, under exceptional and limited circumstances as determined by the Board in accordance with applicable Nasdaq rules (or the applicable rules of any other exchange), as then in effect.
As used herein, A "Financial Expert" shall mean a person who has the following attributes:
1. an understanding of generally accepted accounting principles and financial
statements;
2. the ability to assess the general application of such principles in connection
with the accounting for estimates, accruals and reserves;
3. experience preparing, auditing, analyzing or evaluating financial statements
that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the Company's financial
statements, or experience actively supervising one or more persons
engaged in such activities;
4. an understanding of internal control over financial reporting; and
5. an understanding of audit committee functions;
6. and who acquired such attributes through:
(a) education and experience as a principal financial officer, principal
accounting officer, controller, public accountant or auditor or
experience in one or more positions that involve the performance of
similar functions;
(b) experience actively supervising a principal financial officer,
principal accounting officer, controller, public accountant, auditor
or person performing similar functions;
(c) experience overseeing the performance of companies or public
accountants with respect to the preparation, auditing or evaluation
of financial statements; or
(d) other relevant experience described to the Company's Board of
Directors.
The members of the Committee shall be elected by the Board at the annual organizational meeting of the Board, and shall serve for one year until the next annual organizational meeting of the Board or until their successors shall be duly elected and qualified. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Committee may ask members of management, the independent accountants or others to attend meetings and provide pertinent information, as necessary. As part of its job to foster open communication, the Committee should meet at least annually with management and the Company's independent accountants in separate executive sessions to discuss any matters that the Committee or either of these groups believes should be discussed privately. A meeting also shall be convened promptly upon request of management or the independent accountants when either deems such a meeting to be appropriate.
IV. RESPONSIBILITIES AND DUTIES
The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged (including resolution of disagreements between 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 for the Company, and each such registered public accounting firm shall report directly to the Committee. To fulfill its responsibilities and duties the Committee shall:
1. Review and reassess the adequacy of this Charter at least
annually, and update as circumstances dictate.
2. Review and discuss with management and the independent accountants the Company's annual and quarterly financial statements, and its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q before filing with the Securities and Exchange Commission (the "SEC").
3. Based on the review and discussion referred to in Sections IV.A.2, IV.B.1 and IV.B.6 hereof, prepare a recommendation to the Board as to whether the audited financial statements should be included in the Company's Annual Report on Form 10-K for the most recent fiscal year for filing with the SEC.
1. Select the Company's independent accountants, considering independence and effectiveness, and approve the products and services to be provided by, and the fees and other compensation to be paid to, the independent accountants. On an annual basis, the Committee shall request and ensure receipt from the independent accountants of a formal written statement delineating all relationships between the independent accountants and the Company, consistent with Independence Standards Board Standard 1; review and discuss with the independent accountants and the Board all significant relationships and services that may impact the accountants' objectivity and independence; and take, or recommend that the Board take, appropriate action to oversee the accountants' independence.
2. Evaluate the performance of the independent accountants generally, including the scope of audit efforts to assure completeness of coverage, reduction of redundant efforts and effective use of audit efforts. Replace the independent accountants when circumstances warrant.
3. Periodically consult with the independent accountants out of the presence of management about internal controls (including computerized information system controls and security) and the fullness and accuracy of the Company's financial statements.
4. Advise the independent accountants that they are accountable to the Committee, as the stockholders' representatives, and that the Committee has the ultimate authority and responsibility to select, evaluate and, when appropriate, replace the independent accountants.
5. Review and discuss with the independent accountants any other matters required to be discussed by SAS 61, as in effect from time to time.
1. In consultation with the independent accountants and management, review the integrity of the Company's financial reporting processes, both internal and external, including the methods used to account for significant or unusual transactions.
2. Consider the independent accountants' judgments about the quality and appropriateness of the Company's accounting principles and financial disclosure practices in its financial reporting. Inquire as to the independent accountants' view as to whether management's choices of accounting principles are conservative, moderate or aggressive with respect to the recognition of income and assets and liabilities, off-balance sheet financing, accounting for equity investments and other areas in which significant accounting issues may exist and whether such principles are common or minority practices.
3. Consider and review with management and the independent auditors any new accounting pronouncements and their impact on the Company's accounting procedures. Request management and the independent accountants to provide timely analyses of significant current financial reporting issues and practices.
4. Consider and approve, if appropriate, major changes to the Company's auditing and accounting principles and practices, as suggested by the independent accountants or management.
1. Establish regular and separate systems of reporting to the Committee by management and the independent accountants regarding any significant judgments made in management's preparation of the financial statements and the view of each as to the appropriateness of such judgments.
2. Inquire of management and the independent accountants about significant risks or exposures, and assess the steps that management has taken to minimize such risk to the Company and its subsidiaries and affiliates.
3. Following completion of the annual audit, review separately with management and the independent accountants any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.
4. Review any significant disagreement among management and the independent accountants in connection with the preparation of the financial statements.
5. Review with the independent accountants and management the extent to which any changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented.
6. Report periodically to the Board on any significant results of the Committee's activities.
1. Ensure that the Company has a formal written code of conduct setting guidelines for acceptable business practices by its employees (the "Code of Conduct"), and that all of the Company's employees are informed of it.
2. Evaluate whether management is setting the appropriate tone for employees by communicating the importance of the Code of Conduct.
3. Discuss annually with the General Counsel and independent accountants the Company's system for, and the results of, monitoring compliance with the Code of Conduct.
4. Ensure that management has the proper review system in place to provide reasonable assurance that the Company's financial statements, reports and other financial information satisfy legal requirements.
5. Review with the Company's counsel any legal or regulatory matters that could have a significant impact on the Company's financial statements or compliance policies, and any reports received from regulators or other governmental authorities relating to such matters.
6. Establish procedures to receive, retain and treat complaints made to the Company regarding accounting, internal accounting controls, or auditing matters, review such complaints with officers, counsel, the independent auditors and/or independent advisors to the Committee as may be deemed appropriate, and take appropriate action as required for remediation.
7. Provide for communication of confidential, anonymous submissions by employees of the Company of concerns regarding questionable accounting or auditing matters, review such submissions with officers, counsel, the independent auditors and/or independent advisors to the Committee as may be deemed appropriate without jeopardizing the anonymity of such employees, and take appropriate action as required for remediation.
8. Prepare an annual written report of the Committee to the Board and the Company's stockholders with respect to actions taken by the Committee pursuant to this Charter.
9. Perform any other activities consistent with this Charter, the Company's By-laws and applicable law, as the Committee or the Board deems necessary or appropriate.
The Company shall provide appropriate funding, as determined by the Committee, in its capacity as a Board committee, for payment of:
A. Compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;
B. Compensation to any advisers engaged by the Committee under Section I of this Charter; and
C. Ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
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