Tuckamore Capital

Audit Committee

The Audit committee has oversight responsibilities for reviewing financial information, the systems of internal controls and the financial reporting process.

Audit Committee Charter:

Purpose

The primary function of the Audit Committee is to assist the Board of Director (“Board”) in fulfilling its oversight responsibilities by reviewing the financial information that will be provided to shareholders and others, the systems of internal controls that management and the Board have established, and the Company’s and its subsidiaries’ audit and financial reporting process.

The external auditor’s ultimate responsibility is to the Board and the Audit Committee, as representatives of the Company and its shareholders.

The Audit Committee will primarily fulfill its responsibilities by carrying out the activities outlined in this Charter. The Committee is given full access to the Company’s management and records and its external auditors as necessary to carry out these responsibilities.

The Audit Committee has the authority to engage independent counsel and other advisors as may be necessary, and to set and pay their compensation.

Composition and Qualification

The Audit Committee will be comprised initially of all directors, three of whom will be an independent director, as contemplated by the Guidelines published by the Ontario Securities Commission.

The Board may fill vacancies in the Audit Committee by appointment, and if and whenever a vacancy shall exist in the Audit Committee, the remaining members may exercise all of its powers so long as a quorum remains in office.

All members of the Committee shall be financially literate and thus be able to read and understand a set of financial statements that have a level of complexity of accounting that is comparable to that of the Company’s financial statements. At least one member of the Committee will have accounting or related financial expertise. This could include 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 of an entity with financial oversight responsibilities.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Audit Committee shall:

  1. meet at least four times per year and review and recommend to the Board for approval:
    • the audited financial statements of the Company and the management discussion and analysis contained therein;
    • all financial information in any annual reports, prospectuses and other offering memoranda of the Company;
    • interim and year-end financial statements of the Company required by regulatory authorities;
    • press releases relating to interim and year-end financial results of the Company;
    • recommendations of the auditors for strengthening internal controls to ensure that processes are in place to mitigate or eliminate risks associated with financial reporting and cash management for the Company as well as the response of management to these recommendations; and
    • ensure adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements, other than the disclosure referred to above, and periodically assess the adequacy of these procedures.
  2. review with management all significant variances between comparative reporting periods in any financial statements of the Company, including variances in forecasted financial information from actual results which may have been included in any public documents of the Company;
  3. meet periodically with the external auditors and at least once a year meet in confidence with the external auditors and report to the Board on such meetings including the nature of the external auditor’s recommendations and assume direct responsibility for overseeing the work of the external auditors;
  4. make recommendations to the Board as to the reappointment or appointment of the auditors and the nomination and remuneration of the auditors on an annual basis. If a change in auditors is proposed, the Audit Committee will inquire as to the reasons for the change, including the response of the incumbent auditors and inquire as to the qualifications of the newly proposed auditors before making its recommendation to the Board;
  5. review the audit plans of the auditors and report to the Board any significant reservations the Audit Committee may have or the auditors have expressed with respect to such arrangements or scope. Review with the auditors the degree of coordination of those plans and inquire as to the extent the planned audit scope can be relied upon to detect weaknesses in internal controls;
  6. review management programs and policies regarding the adequacy of internal controls over the accounting and financial reporting systems within the Company. Meet with appropriate officers of the Company to discuss the effectiveness of the internal control and information security procedures established for the Company. Receive reports relating to the control environment in connection with the trading activities of the Company;
  7. receive reports relating to compliance by the Company with the legal and regulatory obligations applicable to it;
  8. review management plans regarding any changes in accounting practices or policies and the financial impact thereof and review any major areas of management judgement and estimates that have significant effect upon the financial statements of the Company;
  9. review with management, the auditors and, if necessary, with legal counsel, any litigation, claim or other contingency, including tax assessments, that could have a materially adverse effect upon the financial position or operating result of the Company, and the manner in which these matters have been disclosed in the financial statements of the Company;
  10. review and pre-approve any non-audit related services provided by the external auditors of the Company and the fees related thereto. Review and confirm the independence of the external auditors by obtaining statements from such auditors on relationships between the auditors and the Company, including non-audit services, and discussing the relationships with the auditors;
  11. review the basis and amount of the external auditor’s fees in light of the number and nature of reports issued by the auditors, the quality of the internal controls, the size, complexity and financial condition of the Company and the extent of support provided to the auditors and to review all other non-audit fees of the auditors and other accounting firms;
  12. report annually to the shareholders, describing the Audit Committee’s composition, responsibilities and how they were discharged, and any other information required;
  13. perform other activities related to this charter as requested by the Board;
  14. establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters, including a violation of the Code of Ethics;
  15. review and assess the adequacy of the Audit Committee Charter annually, requesting Board approval for proposed changes;
  16. review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors;
  17. confirm to the Board annually that all responsibilities outlined in this Charter have been carried out; and
  18. evaluate the Audit Committee’s and individual members’ performance on a regular basis.

Meetings

The Audit Committee will meet on a quarterly basis and will hold special meetings if circumstances require. The time of the meetings shall be determined by the Committee. The Committee may engage external advisors as it determines necessary and will set the compensation for such advisors. A quorum for the transaction of business of the Audit Committee shall consist of two members of the Committee.

The time and place for meetings of the Audit Committee and procedures at such meetings shall be determined from time to time by the Audit Committee. The Secretary of the Company shall, upon request of the Audit Committee Chairman, any member of the Audit Committee, the external auditors, the Chief Executive Officer or Chief Financial Officer of the Company, call a meeting of the Audit Committee by letter, telephone, fax, telegram or other communication equipment, by giving at least 48 hours notice, provided that no notice of a meeting shall be necessary if all of the members are present either in person or by means of conference telephone or if those absent have waived notice or otherwise signified their consent to the holding of such meeting.

Any member of the Audit Committee may participate in the meeting of the Committee by means of conference telephone or other communication equipment and the member participating in a meeting pursuant to this paragraph shall be deemed, for purposes hereof, to be present in person at the meeting.

The Audit Committee shall keep minutes of its meetings, which shall be submitted to the Board.

One of the members of the Audit Committee shall be elected as its Chairman by the Audit Committee or the Board and the Committee may, from time to time, appoint any person who need not be a member, to act as a secretary at any meeting.

The Audit Committee may invite such officers and employees of the Company and the external auditors of the Company as it may see fit, from time to time, to attend meetings of the Audit Committee.

The Board may at any time amend or rescind any of the provisions hereof or cancel them entirely with or without substitution.