1038-00005 · Calderwood & Harkness LLP · Transaction Documents/Committee Charters

audit-committee-charter-revised.docx DOCUMENT M&A / Corporate

7 / 12 ← → ✕

Contract analysis Extract to table

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF CASCADE RETAIL HOLDINGS INC.

Adopted by the Board of Directors on March 11, 2024

Supersedes the prior Audit Committee Charter last revised in February 2020

Prepared by Calderwood & Harkness LLP

Right-click to update Table of Contents

I. Purpose

The Audit Committee (the "Committee") is a standing committee of the Board of Directors (the "Board") of Cascade Retail Holdings Inc., a Delaware corporation (the "Company," "CRH," Nasdaq: CRHI). The Committee is established to assist the Board in fulfilling its fiduciary and oversight responsibilities with respect to the following areas:

(a) the integrity of the Company's financial statements and financial reporting processes, including the application of accounting principles and the completeness and accuracy of financial disclosures;

(b) the Company's compliance with applicable legal and regulatory requirements, including but not limited to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market LLC ("Nasdaq");

(c) the qualifications, independence, and performance of the Company's independent registered public accounting firm (currently Mercer & Holloway LLP) engaged for the purpose of rendering an audit report on the Company's annual financial statements or performing other audit, review, or attest services;

(d) the performance of the Company's internal audit function, including the adequacy of its scope, resources, organizational reporting, and effectiveness;

(e) the Company's systems of internal controls over financial reporting and disclosure controls and procedures;

(f) the Company's risk management framework, including but not limited to financial risk, cybersecurity risk, compliance risk, and operational risk as it relates to the Committee's areas of oversight; and

(g) the Company's procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including procedures for the confidential, anonymous submission of concerns by employees regarding questionable accounting or auditing matters (whistleblower protections).

The Committee's oversight role is informed by, and shall be exercised consistent with, the heightened standards articulated in Delaware case law regarding the obligation of board-level committees to establish and monitor information and reporting systems. In particular, the Committee is mindful of the oversight duties discussed in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), and its progeny, including In re McDonald's Corp. Stockholder Derivative Litigation, C.A. No. 2021-0324-JTL (Del. Ch. 2023), and In re Harborview & Co. Derivative Litigation, C.A. No. 2019-0907-MTZ (Del. Ch. 2021). These decisions emphasize that board-level committees to which specific oversight responsibilities have been delegated bear an obligation to make good-faith efforts to implement and monitor information and reporting systems that are reasonably designed to provide the committee with timely and accurate information sufficient to allow the exercise of informed business judgment. The Committee shall discharge its responsibilities in a manner consistent with these fiduciary obligations.

Notwithstanding the foregoing, while the Committee has the authority and responsibilities 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 generally accepted accounting principles in the United States of America ("GAAP") and applicable rules and regulations. The preparation of the Company's financial statements is the responsibility of the Company's management. The audit of those financial statements is the responsibility of the Company's independent registered public accounting firm. The Committee's responsibility is one of oversight, and the Committee recognizes that Company management, the internal audit function, and the independent auditor have more extensive knowledge and detailed information about the Company than do Committee members.

II. Composition and Membership

A. Size. The Committee shall consist of no fewer than four (4) members of the Board. The Board may, from time to time, increase or decrease the size of the Committee, provided that the Committee shall at all times consist of at least three (3) members as required by Nasdaq Listing Rule 5605(c)(2)(A) and Rule 10A-3 under the Exchange Act. As of the adoption of this Charter, the current membership of the Committee consists of four (4) independent directors, as identified in Section II.F below.

B. Independence Requirements

Each member of the Committee shall satisfy the independence requirements established by the following authorities:

(i) Nasdaq Listing Rules. Each member shall satisfy the independence requirements set forth in Nasdaq Listing Rule 5605(a)(2) (general independence standard for board members) and Nasdaq Listing Rule 5605(c)(2)(A) (enhanced independence standard for audit committee members). In determining whether a director is eligible to serve on the Committee, the Board shall consider whether the director has any relationship with the Company that may interfere with the exercise of the director's independence from management and the Company.

(ii) SEC Rule 10A-3. Each member shall satisfy the independence requirements set forth in Rule 10A-3(b)(1) under the Exchange Act, which, among other things, prohibit the Committee from including any member who (a) accepts, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary thereof, other than in the member's capacity as a member of the Board or any committee of the Board, or (b) is an affiliated person of the Company or any subsidiary thereof.

In addition, no member of the Committee shall have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three (3) years. For purposes of this requirement, "preparation of financial statements" includes, but is not limited to, the maintenance of the books and records from which such statements are derived, and the exercise of supervisory authority over those who maintain such books and records.

C. Financial Literacy and Financial Expert

Each member of the Committee shall be financially literate, as determined by the Board in its business judgment, or shall become financially literate within a reasonable period of time after appointment to the Committee. For purposes of this Charter, "financial literacy" includes the ability to read and understand fundamental financial statements, including the Company's balance sheet, income statement, statement of cash flows, and accompanying notes.

At least one (1) member of the Committee shall qualify as an "audit committee financial expert" as defined by Item 407(d)(5) of Regulation S-K promulgated by the SEC. A person qualifies as an audit committee financial expert if such person has the following attributes: (i) an understanding of GAAP and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; (iii) 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; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.

The Board has determined that Sandra Chen-Watkins, Chair of the Committee, qualifies as an audit committee financial expert based on her extensive experience as a former audit partner at a major international accounting firm, where she served as lead engagement partner on numerous public company audit engagements across the retail and consumer products sectors. Ms. Chen-Watkins's designation as an audit committee financial expert does not impose any duties, obligations, or liabilities that are greater than the duties, obligations, or liabilities imposed on her as a member of the Committee and the Board in the absence of such designation, nor does such designation affect the duties, obligations, or liabilities of any other member of the Committee or the Board.

D. Appointment, Removal, and Term

Members of the Committee shall be appointed by the Board upon the recommendation of the Nominating & Corporate Governance Committee of the Board. In making its recommendations, the Nominating & Corporate Governance Committee shall consider the independence, financial literacy, and expertise requirements described in this Charter, as well as the overall composition and effectiveness of the Committee.

Members of the Committee shall serve for such term or terms as the Board may determine, or until their successors are duly appointed and qualified, or until their earlier resignation, removal from the Committee, or cessation of membership on the Board. The Board may remove any member of the Committee at any time with or without cause by a resolution adopted by a majority of the Board. A member of the Committee shall automatically cease to be a member of the Committee upon cessation of such person's membership on the Board.

E. Chair. The Board shall designate one member of the Committee as Chair of the Committee (the "Chair"). Sandra Chen-Watkins serves as the initial Chair of the Committee under this revised Charter. The Chair shall have the following responsibilities:

(i) preside at all meetings of the Committee;

(ii) establish meeting agendas in consultation with the Company's management, including the Chief Financial Officer and the General Counsel, and the independent auditor;

(iii) determine the length and frequency of Committee meetings, subject to the minimum meeting requirements set forth in Section III.A;

(iv) report regularly to the full Board on the activities, findings, and recommendations of the Committee;

(v) serve as the primary liaison between the Committee and the independent auditor, the head of internal audit, and senior management regarding matters within the Committee's purview; and

(vi) perform such other duties and responsibilities as may be assigned by the Board or the Committee from time to time.

In the absence of the Chair at any meeting, or in the event of the Chair's temporary inability to serve, the Committee may designate a temporary presiding member from among its members to fulfill the Chair's responsibilities for such meeting.

F. Current Membership

As of the adoption of this Charter, the members of the Committee are as follows:

The Board has determined that each of the foregoing members satisfies the independence, financial literacy, and other qualification requirements set forth in this Charter and under applicable Nasdaq listing standards and SEC rules. The Board's determination with respect to each member's independence and qualifications is set forth in the Company's most recent annual proxy statement and in the records of the Nominating & Corporate Governance Committee.

III. Meetings and Procedures

A. Frequency. The Committee shall meet at least four (4) times per year, generally on a quarterly basis to coincide with the Company's quarterly financial reporting cycle, and more frequently as circumstances require. Additional meetings may be called by the Chair, by any two members of the Committee, or at the request of the independent auditor or the head of internal audit.

In addition to regular meetings, the Committee shall meet periodically in separate executive sessions with each of the following parties, without the presence of other parties:

(i) the independent auditor;

(ii) the head of internal audit; and

(iii) management, including the Chief Financial Officer and such other members of senior management as the Committee deems appropriate.

The Committee shall also meet periodically in executive session without any members of management or the independent auditor present to discuss matters that the Committee deems appropriate for private deliberation. The purpose of these executive sessions is to facilitate candid discussion, to allow the Committee to receive information and perspectives that may not be shared in the presence of management, and to enable the Committee to fulfill its oversight responsibilities effectively.

B. Quorum and Voting

A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. Actions of the Committee shall be taken by a majority vote of the members present at a meeting at which a quorum is present. Any action that may be taken at a meeting of the Committee may be taken without a meeting if all members of the Committee consent thereto in writing (including by electronic transmission), and such written consents are filed with the minutes of the proceedings of the Committee. Members of the Committee may participate in meetings by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.

C. Attendance. The Committee may invite members of management, the independent auditor, internal auditors, legal counsel (including outside counsel), and other advisors and guests to attend meetings as the Committee deems appropriate. The following officers and personnel of the Company shall be expected to attend Committee meetings as requested by the Chair:

(i) the Company's Chief Financial Officer;

(ii) the Company's General Counsel & Corporate Secretary (currently Priya Sundaram);

(iii) the Company's Controller;

(iv) the head of internal audit; and

(v) such other Company officers, employees, or advisors as the Chair or the Committee may from time to time request.

The foregoing individuals shall attend meetings in a non-voting, advisory capacity and shall recuse themselves from executive sessions unless specifically invited by the Committee to remain.

D. Agenda and Minutes

The Chair shall establish the agenda for each meeting of the Committee in consultation with the General Counsel, the Chief Financial Officer, and the independent auditor. Any member of the Committee may suggest items for inclusion on the agenda, and any member of the Committee may raise subjects at a meeting that are not on the agenda. Meeting materials, including the agenda and supporting documentation, shall be distributed to Committee members in advance of each meeting to the extent practicable.

Minutes of each meeting of the Committee shall be prepared by the Corporate Secretary or her designee, and such minutes shall be reviewed by the Chair and retained as part of the permanent corporate records of the Company. Minutes shall be made available to each member of the Board upon request, unless the Committee determines that access to particular minutes or portions thereof should be limited due to the sensitive or confidential nature of the subject matter.

E. Delegation to Subcommittees

The Committee may form and delegate authority to subcommittees consisting of one or more of its members when it deems appropriate, including the delegation of authority to grant pre-approvals of audit and permissible non-audit services, provided that:

(i) the subcommittee's composition and authority are consistent with applicable Nasdaq listing standards, SEC rules, and this Charter;

(ii) decisions of any subcommittee shall be reported to the full Committee at its next regularly scheduled meeting; and

(iii) the Committee shall not delegate any authority or responsibility required by applicable law, regulation, or listing standard to be performed by the full Committee.

IV. Authority and Resources

A. Authority to Retain Advisors

The Committee shall have the sole authority to appoint, retain, compensate, evaluate, oversee, and, when appropriate, terminate the Company's independent registered public accounting firm (subject to any stockholder ratification as may be required or deemed appropriate). The independent auditor shall report directly to the Committee. The Committee's authority over the independent auditor engagement encompasses all matters relating to the scope, planning, and execution of the annual audit of the Company's consolidated financial statements and the effectiveness of the Company's internal controls over financial reporting, as well as the review of quarterly financial information.

In addition to its authority over the independent auditor, the Committee shall have the authority to retain and obtain the advice and assistance of independent legal counsel, accounting advisors, and other experts or consultants as it determines necessary or appropriate to carry out its duties and responsibilities under this Charter. The Committee may retain such advisors at the Company's expense, without requiring prior approval of the Board or management. The selection, retention, and terms of engagement of any such advisors shall be at the Committee's sole discretion.

The Company shall provide appropriate funding, as determined by the Committee in its sole discretion, for:

(i) the payment of compensation to the independent registered public accounting firm engaged for the purpose of rendering or issuing an audit report or performing other audit, review, or attest services for the Company;

(ii) the payment of compensation to any advisors employed by the Committee, including independent legal counsel, accounting advisors, and other experts or consultants; and

(iii) the payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

B. Access to Information

The Committee shall have full, free, and unrestricted access to the Company's books, records, facilities, and personnel as it deems necessary or appropriate to carry out its responsibilities under this Charter. All employees and officers of the Company are directed to cooperate as requested by the Committee or any of its members.

The Committee shall have direct communication channels with the independent auditor and with the head of internal audit. Such communication may occur at any time, and neither the independent auditor nor the head of internal audit shall be required to obtain the approval or consent of management before communicating with the Committee or its Chair on any matter.

C. Investigations. The Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities. In conducting any such investigation, the Committee shall have the authority to require the cooperation of any officer or employee of the Company, to obtain any information or documentation it deems relevant, and to engage outside counsel, forensic accountants, or other experts as it determines necessary. The Committee shall report to the Board regarding the initiation and results of any material investigation.

V. Duties and Responsibilities

The following duties and responsibilities are set forth as a guide to the Committee with the understanding that the Committee may supplement or modify them as appropriate in light of changing business, legislative, regulatory, legal, or other conditions. In fulfilling its responsibilities, the Committee is entitled to rely in good faith on information, opinions, reports, or statements prepared or presented by Company officers and employees, the Company's independent auditor, internal audit personnel, and outside advisors.

A. Independent Auditor Oversight

1. Appointment, Compensation, and Oversight. The Committee shall be directly responsible for the appointment, compensation, retention, and oversight of the work of the independent 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. The Company's independent auditor is currently Mercer & Holloway LLP, led by engagement partner Philip Tanaka. The independent auditor shall report directly to the Committee. The Committee shall be responsible for the resolution of any disagreements between management and the independent auditor regarding financial reporting matters, and shall have the authority to consult with independent legal counsel or other advisors in connection with any such disagreement.

2. Independence Assessment. At least annually, the Committee shall:

(a) obtain and review a formal written statement from the independent auditor delineating all relationships between the auditor and the Company, consistent with the applicable requirements of the Public Company Accounting Oversight Board ("PCAOB"), including PCAOB Rule 3526, Communication with Audit Committees Concerning Independence;

(b) actively engage in a dialogue with the independent auditor with respect to any disclosed relationships or services that may affect the objectivity and independence of the auditor, and take appropriate action in response to the auditor's statement to satisfy itself of the auditor's independence;

(c) consider whether the provision of permissible non-audit services by the independent auditor is compatible with maintaining the auditor's independence;

(d) confirm that the independent auditor has complied with the auditor independence requirements set forth in Rule 2-01 of Regulation S-X, including the prohibition on certain non-audit services and the restrictions on the employment of former audit firm personnel by the Company; and

(e) present its conclusions regarding the independence of the independent auditor to the Board.

3. Pre-Approval of Services. The Committee shall pre-approve all audit services and permissible non-audit services to be provided by the independent auditor to the Company and its subsidiaries, consistent with applicable SEC rules (including Rule 2-01 of Regulation S-X) and Nasdaq listing standards. The Committee may establish policies and procedures for the pre-approval of such services, provided that such policies and procedures are detailed as to the particular services to be provided, do not include delegation of the Committee's responsibilities to management, and provide that the Committee is informed of each service on a timely basis. The Committee may delegate pre-approval authority to the Chair of the Committee (or another designated member of the Committee) for specific engagements up to a dollar threshold of $75,000 per engagement, provided that any such pre-approvals shall be presented to and ratified by the full Committee at its next regularly scheduled meeting.

4. Audit Partner Rotation. The Committee shall oversee compliance with the mandatory rotation of the lead audit engagement partner and the concurring review partner in accordance with applicable SEC rules (Section 203 of the Sarbanes-Oxley Act of 2002 and Rule 2-01(c)(6) of Regulation S-X) and PCAOB standards. The Committee shall actively participate in the selection of any new lead engagement partner, including by reviewing the qualifications and experience of proposed candidates.

5. Performance Evaluation. The Committee shall annually evaluate the qualifications, performance, and independence of the independent auditor, taking into consideration the following factors, among others:

(a) the quality and depth of communications between the independent auditor and the Committee, including the timeliness and clarity of communications regarding audit findings, accounting issues, and internal control matters;

(b) the auditor's tenure as the Company's independent auditor (Mercer & Holloway LLP has served as the Company's independent registered public accounting firm since the fiscal year ended January 31, 2018);

(d) the auditor's independence, objectivity, and professional skepticism;

(e) the quality and timeliness of the auditor's work product and deliverables;

(f) the results of the most recent PCAOB inspection of the auditor;

(g) feedback from management regarding the auditor's performance; and

(h) other relevant factors as determined by the Committee.

The Committee shall present its conclusions and recommendations to the Board, including whether the continued engagement of the current independent auditor is in the best interests of the Company and its stockholders.

6. Audit Scope and Plan. The Committee shall review and discuss with the independent auditor the overall scope and plan of the annual audit engagement, including:

(a) the auditor's assessment of the Company's critical audit matters and significant audit risks;

(b) the proposed staffing and resource allocation for the engagement;

(d) the extent of the auditor's planned reliance on the work of the internal audit function;

(e) the coordination between the independent auditor and the internal audit function to avoid unnecessary duplication of effort; and

(f) the auditor's planned timeline for completion of audit fieldwork and the issuance of audit reports.

B. Financial Reporting and Disclosure Oversight

1. Annual Financial Statements. The Committee shall review and discuss with management and the independent auditor the annual audited consolidated financial statements of the Company, including the related notes, the independent auditor's report thereon, and the disclosures made in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"). Based on such review and discussion, the Committee shall recommend to the Board whether the audited financial statements should be included in the Company's Annual Report on Form 10-K for filing with the SEC. As part of this review, the Committee shall discuss with the independent auditor the matters required to be discussed by the applicable PCAOB auditing standards, including Auditing Standard No. 1301, Communications with Audit Committees.

2. Quarterly Financial Statements. The Committee shall review and discuss with management and the independent auditor the Company's quarterly unaudited financial statements, including the related notes and disclosures, and the results of the independent auditor's review of the quarterly financial statements, prior to the filing of the Company's Quarterly Reports on Form 10-Q with the SEC. The Committee shall discuss with the independent auditor any significant matters arising from the interim review, including any modifications to the scope of the review and any restrictions on the review.

3. Earnings Releases and Guidance. The Committee shall review and discuss the Company's earnings press releases, with particular attention to the use of any non-GAAP financial measures, including the presentation, reconciliation, and rationale for such measures. The Committee shall also review and discuss, as appropriate, financial information and earnings guidance provided to analysts, rating agencies, and the public, including the types of information to be disclosed and the types of presentations to be made, with attention to the use of "pro forma" or "adjusted" information not prepared in accordance with GAAP.

4. Critical Accounting Policies. The Committee shall review and discuss with management and the independent auditor the Company's critical accounting policies and practices, including: (a) significant accounting estimates and judgments underlying the Company's financial statements; (b) the selection and application of critical accounting policies; (c) the reasonableness of significant estimates and judgments; (d) alternative treatments of financial information within GAAP that have been discussed with management, including the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditor; and (e) any significant changes to the Company's accounting policies or practices proposed by management or the independent auditor.

5. SEC Correspondence. The Committee shall review and discuss with management and the independent auditor any correspondence with the SEC, the PCAOB, or other regulatory bodies regarding the Company's financial reporting, accounting policies, or audit matters, including any SEC comment letters and the Company's responses thereto, and shall assess the impact of such correspondence on the Company's financial statements and disclosures.

C. Internal Controls and Internal Audit

1. Internal Controls over Financial Reporting. The Committee shall review and discuss with management, the independent auditor, and the head of internal audit the adequacy and effectiveness of the Company's internal controls over financial reporting, including:

(a) any significant deficiencies or material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting;

(c) management's assessment of the effectiveness of internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 and the independent auditor's attestation report thereon; and

(d) management's remediation plans for any identified deficiencies and the status of such remediation efforts.

2. Disclosure Controls and Procedures. The Committee shall review and discuss with management and the General Counsel the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), including the process by which the Chief Executive Officer and the Chief Financial Officer make the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 in connection with the Company's periodic reports filed with the SEC.

3. Internal Audit Function. The Committee shall review the scope, responsibilities, budget, staffing, and organizational structure of the Company's internal audit function. The head of internal audit shall report functionally to the Committee and administratively to management (currently the Chief Financial Officer). The Committee shall:

(a) review and concur in the appointment, replacement, reassignment, or dismissal of the head of internal audit;

(b) review the qualifications, independence, and objectivity of the internal audit function;

(d) evaluate the effectiveness of the internal audit function on an annual basis.

4. Internal Audit Plan. The Committee shall review and approve the annual internal audit plan and any significant changes thereto. The Committee shall receive periodic reports on the results of internal audit activities, including summaries of significant findings, recommendations, and the status of management's implementation of corrective actions. The Committee shall ensure that the internal audit function maintains appropriate independence from management and that the head of internal audit has unrestricted access to the Committee and its Chair.

D. Risk Oversight (Expanded Mandate)

1. General Risk Oversight. The Committee shall review and discuss with management the Company's major financial risk exposures and the steps management has taken to monitor, control, and mitigate such exposures. The Committee's review shall include discussion of the Company's risk assessment and risk management policies, including the Company's guidelines and policies governing the process by which risk assessment and management are undertaken, the adequacy of the Company's risk management infrastructure, and the Company's overall risk appetite and risk tolerance levels as they pertain to financial risk.

2. Enterprise Risk Management. The Committee shall receive periodic reports from management on the Company's enterprise risk management ("ERM") framework and processes. The Committee shall coordinate with other Board committees that have risk oversight responsibilities, including the Technology & Cybersecurity Committee regarding cybersecurity and technology-related risks, to ensure comprehensive Board-level risk oversight. The Committee shall periodically assess whether the allocation of risk oversight responsibilities among the Board and its committees is appropriate and effective, and shall recommend any changes to the Board for consideration.

3. Cybersecurity Risk Oversight. In light of the evolving cybersecurity threat landscape and the SEC's cybersecurity disclosure rules adopted in July 2023, the Committee shall have the following responsibilities with respect to cybersecurity risk:

(a) Management of Cybersecurity Risks. Oversee management's assessment and management of material cybersecurity risks, including the adequacy of the Company's cybersecurity programs, incident response plans, disaster recovery plans, and data protection measures. The Committee shall assess whether the Company's cybersecurity risk management program is appropriately integrated into the Company's overall enterprise risk management framework.

(b) SEC Cybersecurity Disclosure. Review the Company's disclosures relating to cybersecurity risks, strategy, governance, and incidents as required by the SEC's cybersecurity disclosure rules, including Item 106 of Regulation S-K (requiring annual disclosure of cybersecurity risk management, strategy, and governance) and Form 8-K Item 1.05 (requiring disclosure of material cybersecurity incidents within four business days of determining materiality). The Committee shall ensure that the Company has established appropriate processes and controls for determining the materiality of cybersecurity incidents and for preparing and filing timely disclosures.

(c) Coordination with the Technology & Cybersecurity Committee. Coordinate with the Technology & Cybersecurity Committee regarding the allocation of cybersecurity oversight responsibilities. The Audit Committee shall retain primary oversight of cybersecurity risk as it relates to financial reporting, internal controls over financial reporting, and regulatory disclosure obligations. The Technology & Cybersecurity Committee shall retain primary oversight of cybersecurity strategy, technology infrastructure, and operational security matters. The chairs of both committees shall communicate regularly to ensure alignment and avoid gaps or unnecessary duplication in oversight.

(d) Cybersecurity Briefings. Receive periodic briefings from the Company's Chief Information Security Officer (or equivalent), the Chief Information Officer, and other appropriate members of management regarding cybersecurity threats, vulnerabilities, incidents, and the effectiveness of the Company's cybersecurity controls. Such briefings shall be provided no less frequently than quarterly, or more frequently as circumstances warrant.

4. Insurance Coverage. The Committee shall periodically review the adequacy of the Company's insurance coverage, including the directors' and officers' liability insurance ("D&O insurance") program. As of the date of this Charter, the Company's D&O insurance program is maintained with Broadview Insurance Group as the primary carrier, with current policy limits of $50 million per occurrence and $50 million in the aggregate, for the policy period June 1, 2023, through June 1, 2024. The Committee shall review, or cause to be reviewed, the adequacy of such coverage in light of the Company's risk profile, the availability of coverage in the marketplace, and any changes in the legal or regulatory environment that may affect the Company's exposure to liability. The Committee shall also review the adequacy of the Company's other insurance programs to the extent they relate to financial risk or risk arising from matters within the Committee's areas of oversight.

5. Caremark Compliance Oversight. Consistent with the Board's oversight obligations under In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), and its progeny, including In re McDonald's Corp. Stockholder Derivative Litigation, C.A. No. 2021-0324-JTL (Del. Ch. 2023), and In re Harborview & Co. Derivative Litigation, C.A. No. 2019-0907-MTZ (Del. Ch. 2021), the Committee shall:

(a) ensure that the Company has implemented adequate information and reporting systems reasonably designed to provide the Committee and the Board with timely, accurate information sufficient to allow the Board to reach informed business judgments regarding the Company's compliance with applicable legal and regulatory requirements and the Company's material risks;

(b) receive and review regular reports from management on material legal, regulatory, and compliance risks facing the Company, and any material violations or suspected violations of applicable law, regulations, or the Company's compliance policies;

(c) oversee the Company's compliance programs, including the Company's Code of Business Conduct and Ethics, anti-corruption compliance (including compliance with the Foreign Corrupt Practices Act of 1977, as amended ("FCPA"), and the United Kingdom Bribery Act 2010), trade compliance, anti-money laundering compliance, sanctions compliance, and other material regulatory compliance matters;

(d) monitor the adequacy of the Company's compliance infrastructure, including the designation of a chief compliance officer or equivalent, the allocation of compliance resources, the effectiveness of compliance training programs, and the Company's compliance culture; and

(e) receive and review reports on the results of any material compliance audits, investigations, or examinations conducted by internal personnel or external advisors.

E. Legal and Regulatory Compliance

1. The Committee shall review with the General Counsel (currently Priya Sundaram) legal matters that may have a material impact on the Company's financial statements, the Company's compliance policies, or the Company's business and operations. Such review shall include discussion of material contingent liabilities, potential claims and assessments, and the adequacy of related reserves and disclosures.

2. The Committee shall receive periodic reports from the General Counsel on material pending or threatened litigation, government investigations, regulatory proceedings, enforcement actions, and related matters. The Committee shall assess the potential financial and reputational impact of such matters and the adequacy of the Company's legal defense and indemnification arrangements.

3. The Committee shall review and approve the Company's policies and procedures regarding related party transactions in accordance with Nasdaq Listing Rule 5630 and the Company's Related Party Transactions Policy. The Committee shall review all related party transactions (or any material amendments thereto) for potential conflicts of interest and shall approve or ratify only those transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.

F. Whistleblower and Complaint Procedures (Enhanced)

1. Establishment and Oversight. The Committee shall establish and maintain procedures for:

(a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, in compliance with Section 301 of the Sarbanes-Oxley Act of 2002 and Rule 10A-3 under the Exchange Act; and

(b) the confidential, anonymous submission by employees of the Company and its subsidiaries of concerns regarding questionable accounting or auditing matters (whistleblower procedures).

The Committee shall periodically review these procedures to ensure their continued effectiveness and compliance with applicable laws and regulations, including the whistleblower protections set forth in Section 806 of the Sarbanes-Oxley Act of 2002 and Rule 21F under the Exchange Act.

2. Reporting and Review. The Committee shall receive periodic reports from the General Counsel, the head of internal audit, or such other officer or employee as the Committee may designate, on the nature, volume, and disposition of complaints and concerns received through the Company's reporting channels. The Committee shall receive reports on the status and resolution of any significant matters, including the results of any investigations conducted in response to complaints.

3. Non-Retaliation. The Committee shall oversee the Company's non-retaliation policies designed to protect individuals who report concerns in good faith from retaliation, harassment, discrimination, or adverse employment actions. The Committee shall ensure that the Company's non-retaliation policies are clearly communicated to all employees, officers, and directors, and that any reports of retaliation are promptly investigated and addressed.

4. Hotline and Channels. The Committee shall ensure that the Company maintains appropriate reporting channels, including a confidential and, where practicable, anonymous hotline operated by a third-party provider. Information regarding these reporting channels shall be prominently communicated to all employees, officers, and directors of the Company and its subsidiaries through employee handbooks, intranet postings, training programs, and other appropriate means.

5. Escalation Protocols. The Committee shall establish and maintain clear escalation protocols for complaints and concerns that may involve senior management, executive officers, or members of the Board. Complaints or concerns involving members of senior management or the Board, or that allege material fraud or violations of law, shall be reported directly to the Chair of the Committee (or, if the Chair is the subject of the complaint, to another independent member of the Committee designated for such purpose). The Committee shall have the authority to engage outside counsel or other advisors to assist in the investigation and resolution of such matters.

G. Tax and Other Matters

1. The Committee shall review the Company's tax planning strategies and any significant tax matters, including the status of material tax audits, assessments, or disputes, the Company's overall effective tax rate, and any significant changes to tax positions or reserves. The Committee shall receive periodic reports from management and, as appropriate, from outside tax advisors regarding the foregoing matters.

2. The Committee shall review and discuss any significant findings, recommendations, or reports issued by regulatory agencies, examiners, or auditors (including the PCAOB), and management's responses thereto. The Committee shall monitor the implementation of any recommended corrective actions and shall follow up on the status of unresolved matters.

VI. Interaction with Other Board Committees

The Committee recognizes that effective governance requires coordination among the various committees of the Board to ensure comprehensive oversight and to avoid gaps or unnecessary duplication of effort. Accordingly:

(a) Technology & Cybersecurity Committee. The Committee shall coordinate with the Technology & Cybersecurity Committee regarding cybersecurity risk oversight. As described in Section V.D.3 above, the Audit Committee retains primary responsibility for cybersecurity risk as it relates to financial reporting, internal controls over financial reporting, and SEC disclosure compliance, while the Technology & Cybersecurity Committee retains primary responsibility for cybersecurity strategy, technology infrastructure, and operational security. The chairs of the two committees shall communicate regularly and, when appropriate, may hold joint sessions to discuss matters of shared concern. Dr. Anwar Farouk, who serves on both committees, shall serve as a liaison to facilitate coordination.

(b) Compensation & Human Capital Committee. The Committee shall coordinate with the Compensation & Human Capital Committee regarding any financial reporting implications of the Company's compensation arrangements, including stock-based compensation expense, the Company's clawback policies adopted in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Nasdaq Listing Rule 5608, and pay-versus-performance disclosures required by Item 402(v) of Regulation S-K.

(c) Nominating & Corporate Governance Committee. The Committee shall coordinate with the Nominating & Corporate Governance Committee regarding oversight of the Company's Code of Business Conduct and Ethics, ESG-related compliance matters and disclosures, governance risk, and the annual board and committee self-evaluation process.

The Committee may request information from, or provide information to, any other committee of the Board, and may request joint meetings with other committees when the Committee determines that such meetings would be beneficial to the discharge of the Committee's or the other committee's responsibilities.

VII. Annual Performance Evaluation

The Committee shall conduct an annual self-evaluation of its own performance and the adequacy of this Charter. The evaluation process shall assess the following:

(a) whether the Committee has fulfilled its duties and responsibilities as set forth in this Charter;

(b) whether the Committee's composition, including the number of members, the independence and qualifications of its members, and the designation of an audit committee financial expert, remain appropriate;

(c) whether the Committee's meeting practices, including the frequency and duration of meetings, the quality of meeting materials and presentations, and the effectiveness of executive sessions, are adequate;

(d) whether the Committee's interactions with the independent auditor, the internal audit function, and management are productive and effective;

(e) whether any changes to this Charter or to the Committee's practices, procedures, or areas of focus are advisable in light of changes in the legal, regulatory, business, or risk environment; and

(f) any other matters that the Committee deems relevant to its effectiveness.

The results of the Committee's annual self-evaluation shall be reported to the Board, and any recommended amendments to this Charter shall be submitted to the Board for review and approval. The evaluation process shall be coordinated with the Nominating & Corporate Governance Committee's annual board and committee self-evaluation process established under the revised Nominating & Corporate Governance Committee Charter adopted by the Board on March 11, 2024.

VIII. Reporting to the Board

The Chair of the Committee shall report to the Board at each regularly scheduled meeting of the Board (or more frequently as warranted by the circumstances) regarding the activities of the Committee, significant issues discussed, actions taken, and recommendations. Such reports shall include, as appropriate, summaries of the Committee's discussions with the independent auditor, the head of internal audit, and management, as well as any matters requiring Board action.

In addition, the Committee shall prepare the report required by the rules of the SEC (Item 407(d) of Regulation S-K) to be included in the Company's annual proxy statement (the "Audit Committee Report"). The Audit Committee Report shall include, among other things, a statement regarding whether the Committee has reviewed and discussed the audited financial statements with management and the independent auditor, whether the Committee has discussed the matters required to be discussed by applicable PCAOB standards, whether the Committee has received the required disclosures from the independent auditor regarding independence, and the Committee's recommendation to the Board regarding the inclusion of the audited financial statements in the Company's Annual Report on Form 10-K.

IX. Limitations of the Committee's Role

While the Committee has the responsibilities and authority set forth in this Charter, the Committee's role is one of oversight. The members of the Committee are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management, the independent auditor, or the internal audit function.

Management is responsible for the preparation, presentation, and integrity of the Company's financial statements and for maintaining appropriate internal controls over financial reporting and disclosure controls and procedures. Management is also responsible for the Company's compliance with applicable laws, regulations, and Company policies. The independent auditor is responsible for planning and carrying out an audit in accordance with the standards of the PCAOB to provide reasonable assurance about whether the Company's financial statements are free of material misstatement and for reviewing the Company's unaudited interim financial statements. The independent auditor is also responsible for auditing the effectiveness of the Company's internal controls over financial reporting.

It is not the duty of the Committee to certify the Company's financial statements, to guarantee the independent auditor's report, or to ensure that the Company is in compliance with all applicable laws, regulations, and Company policies. The Committee's role does not provide any special assurance with regard to the Company's financial statements or any professional certification as to the independent auditor's work.

Nothing in this Charter is intended to expand the applicable standard of liability under federal or state law for the directors of the Company or the members of the Committee. Each member of the Committee shall be entitled to rely on the integrity of those persons and organizations within and outside of the Company from whom the member receives information and on the accuracy of the financial and other information provided to the Committee absent actual knowledge to the contrary.

X. Charter Review and Amendment

This Charter shall be reviewed at least annually by the Committee to determine whether any amendments or modifications are necessary or appropriate in light of developments in applicable law, regulation, or listing standards, or changes in the Company's business, risk profile, or governance practices.

Any amendments to this Charter shall be recommended by the Committee and submitted to the Board for review and approval. This Charter may not be amended except by action of the Board, upon the recommendation of the Committee.

This Charter supersedes the prior Audit Committee Charter of Cascade Retail Holdings Inc. last revised in February 2020, in its entirety. In the event of any conflict between this Charter and the Company's Restated Certificate of Incorporation, Amended and Restated Bylaws, or applicable law, the provisions of the applicable law, the Restated Certificate of Incorporation, and the Amended and Restated Bylaws shall control.

This Charter was adopted by the Board of Directors on March 11, 2024.

XI. Governing Law

This Charter and the Committee's authority and responsibilities hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. The Committee's authority and responsibilities shall also be subject to, and exercised consistently with, the Company's Restated Certificate of Incorporation (filed with the Secretary of State of the State of Delaware on October 3, 2016), the Amended and Restated Bylaws of the Company (adopted by the Board on March 11, 2024), and applicable federal securities laws and regulations (including the Exchange Act, the Sarbanes-Oxley Act of 2002, and the rules and regulations of the SEC) and Nasdaq listing standards.

XII. Adoption and Effective Date

This Charter was adopted by the Board of Directors of Cascade Retail Holdings Inc. at a duly called meeting held on March 11, 2024, upon the recommendation of the Nominating & Corporate Governance Committee, chaired by Margaret "Meg" Holliday, Lead Independent Director.

Thomas R. Kinsley presided as Chairman of the Board at the meeting at which this Charter was adopted.

This Charter was prepared by Calderwood & Harkness LLP (C&H Matter No. 1038-00005).

This Charter is effective as of March 11, 2024.

\ \ \*

APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS

CASCADE RETAIL HOLDINGS INC.

By: ________

Name: Thomas R. Kinsley

Title: Chairman of the Board

Date: March 11, 2024

ATTESTED:

By: ________

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF CASCADE RETAIL HOLDINGS INC.
Adopted by the Board of Directors on March 11, 2024
Supersedes the prior Audit Committee Charter last revised in February 2020
Prepared by Calderwood & Harkness LLP
Right-click to update Table of Contents
I. Purpose
The Audit Committee (the "Committee") is a standing committee of the Board of Directors (the "Board") of Cascade Retail Holdings Inc., a Delaware corporation (the "Company," "CRH," Nasdaq: CRHI). The Committee is established to assist the Board in fulfilling its fiduciary and oversight responsibilities with respect to the following areas:
(a) the integrity of the Company's financial statements and financial reporting processes, including the application of accounting principles and the completeness and accuracy of financial disclosures;
(b) the Company's compliance with applicable legal and regulatory requirements, including but not limited to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market LLC ("Nasdaq");
(c) the qualifications, independence, and performance of the Company's independent registered public accounting firm (currently Mercer & Holloway LLP) engaged for the purpose of rendering an audit report on the Company's annual financial statements or performing other audit, review, or attest services;
(d) the performance of the Company's internal audit function, including the adequacy of its scope, resources, organizational reporting, and effectiveness;
(e) the Company's systems of internal controls over financial reporting and disclosure controls and procedures;
(f) the Company's risk management framework, including but not limited to financial risk, cybersecurity risk, compliance risk, and operational risk as it relates to the Committee's areas of oversight; and
(g) the Company's procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including procedures for the confidential, anonymous submission of concerns by employees regarding questionable accounting or auditing matters (whistleblower protections).
The Committee's oversight role is informed by, and shall be exercised consistent with, the heightened standards articulated in Delaware case law regarding the obligation of board-level committees to establish and monitor information and reporting systems. In particular, the Committee is mindful of the oversight duties discussed in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), and its progeny, including In re McDonald's Corp. Stockholder Derivative Litigation, C.A. No. 2021-0324-JTL (Del. Ch. 2023), and In re Harborview & Co. Derivative Litigation, C.A. No. 2019-0907-MTZ (Del. Ch. 2021). These decisions emphasize that board-level committees to which specific oversight responsibilities have been delegated bear an obligation to make good-faith efforts to implement and monitor information and reporting systems that are reasonably designed to provide the committee with timely and accurate information sufficient to allow the exercise of informed business judgment. The Committee shall discharge its responsibilities in a manner consistent with these fiduciary obligations.
Notwithstanding the foregoing, while the Committee has the authority and responsibilities 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 generally accepted accounting principles in the United States of America ("GAAP") and applicable rules and regulations. The preparation of the Company's financial statements is the responsibility of the Company's management. The audit of those financial statements is the responsibility of the Company's independent registered public accounting firm. The Committee's responsibility is one of oversight, and the Committee recognizes that Company management, the internal audit function, and the independent auditor have more extensive knowledge and detailed information about the Company than do Committee members.
II. Composition and Membership
A. Size.  The Committee shall consist of no fewer than four (4) members of the Board. The Board may, from time to time, increase or decrease the size of the Committee, provided that the Committee shall at all times consist of at least three (3) members as required by Nasdaq Listing Rule 5605(c)(2)(A) and Rule 10A-3 under the Exchange Act. As of the adoption of this Charter, the current membership of the Committee consists of four (4) independent directors, as identified in Section II.F below.
B. Independence Requirements
Each member of the Committee shall satisfy the independence requirements established by the following authorities:
(i) Nasdaq Listing Rules. Each member shall satisfy the independence requirements set forth in Nasdaq Listing Rule 5605(a)(2) (general independence standard for board members) and Nasdaq Listing Rule 5605(c)(2)(A) (enhanced independence standard for audit committee members). In determining whether a director is eligible to serve on the Committee, the Board shall consider whether the director has any relationship with the Company that may interfere with the exercise of the director's independence from management and the Company.
(ii) SEC Rule 10A-3. Each member shall satisfy the independence requirements set forth in Rule 10A-3(b)(1) under the Exchange Act, which, among other things, prohibit the Committee from including any member who (a) accepts, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary thereof, other than in the member's capacity as a member of the Board or any committee of the Board, or (b) is an affiliated person of the Company or any subsidiary thereof.
In addition, no member of the Committee shall have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three (3) years. For purposes of this requirement, "preparation of financial statements" includes, but is not limited to, the maintenance of the books and records from which such statements are derived, and the exercise of supervisory authority over those who maintain such books and records.
C. Financial Literacy and Financial Expert
Each member of the Committee shall be financially literate, as determined by the Board in its business judgment, or shall become financially literate within a reasonable period of time after appointment to the Committee. For purposes of this Charter, "financial literacy" includes the ability to read and understand fundamental financial statements, including the Company's balance sheet, income statement, statement of cash flows, and accompanying notes.
At least one (1) member of the Committee shall qualify as an "audit committee financial expert" as defined by Item 407(d)(5) of Regulation S-K promulgated by the SEC. A person qualifies as an audit committee financial expert if such person has the following attributes: (i) an understanding of GAAP and financial statements; (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; (iii) 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; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
The Board has determined that Sandra Chen-Watkins, Chair of the Committee, qualifies as an audit committee financial expert based on her extensive experience as a former audit partner at a major international accounting firm, where she served as lead engagement partner on numerous public company audit engagements across the retail and consumer products sectors. Ms. Chen-Watkins's designation as an audit committee financial expert does not impose any duties, obligations, or liabilities that are greater than the duties, obligations, or liabilities imposed on her as a member of the Committee and the Board in the absence of such designation, nor does such designation affect the duties, obligations, or liabilities of any other member of the Committee or the Board.
D. Appointment, Removal, and Term
Members of the Committee shall be appointed by the Board upon the recommendation of the Nominating & Corporate Governance Committee of the Board. In making its recommendations, the Nominating & Corporate Governance Committee shall consider the independence, financial literacy, and expertise requirements described in this Charter, as well as the overall composition and effectiveness of the Committee.
Members of the Committee shall serve for such term or terms as the Board may determine, or until their successors are duly appointed and qualified, or until their earlier resignation, removal from the Committee, or cessation of membership on the Board. The Board may remove any member of the Committee at any time with or without cause by a resolution adopted by a majority of the Board. A member of the Committee shall automatically cease to be a member of the Committee upon cessation of such person's membership on the Board.
E. Chair.  The Board shall designate one member of the Committee as Chair of the Committee (the "Chair"). Sandra Chen-Watkins serves as the initial Chair of the Committee under this revised Charter. The Chair shall have the following responsibilities:
(i) preside at all meetings of the Committee;
(ii) establish meeting agendas in consultation with the Company's management, including the Chief Financial Officer and the General Counsel, and the independent auditor;
(iii) determine the length and frequency of Committee meetings, subject to the minimum meeting requirements set forth in Section III.A;
(iv) report regularly to the full Board on the activities, findings, and recommendations of the Committee;
(v) serve as the primary liaison between the Committee and the independent auditor, the head of internal audit, and senior management regarding matters within the Committee's purview; and
(vi) perform such other duties and responsibilities as may be assigned by the Board or the Committee from time to time.
In the absence of the Chair at any meeting, or in the event of the Chair's temporary inability to serve, the Committee may designate a temporary presiding member from among its members to fulfill the Chair's responsibilities for such meeting.
F. Current Membership
As of the adoption of this Charter, the members of the Committee are as follows:
The Board has determined that each of the foregoing members satisfies the independence, financial literacy, and other qualification requirements set forth in this Charter and under applicable Nasdaq listing standards and SEC rules. The Board's determination with respect to each member's independence and qualifications is set forth in the Company's most recent annual proxy statement and in the records of the Nominating & Corporate Governance Committee.
III. Meetings and Procedures
A. Frequency.  The Committee shall meet at least four (4) times per year, generally on a quarterly basis to coincide with the Company's quarterly financial reporting cycle, and more frequently as circumstances require. Additional meetings may be called by the Chair, by any two members of the Committee, or at the request of the independent auditor or the head of internal audit.
In addition to regular meetings, the Committee shall meet periodically in separate executive sessions with each of the following parties, without the presence of other parties:
(i) the independent auditor;
(ii) the head of internal audit; and
(iii) management, including the Chief Financial Officer and such other members of senior management as the Committee deems appropriate.
The Committee shall also meet periodically in executive session without any members of management or the independent auditor present to discuss matters that the Committee deems appropriate for private deliberation. The purpose of these executive sessions is to facilitate candid discussion, to allow the Committee to receive information and perspectives that may not be shared in the presence of management, and to enable the Committee to fulfill its oversight responsibilities effectively.
B. Quorum and Voting
A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. Actions of the Committee shall be taken by a majority vote of the members present at a meeting at which a quorum is present. Any action that may be taken at a meeting of the Committee may be taken without a meeting if all members of the Committee consent thereto in writing (including by electronic transmission), and such written consents are filed with the minutes of the proceedings of the Committee. Members of the Committee may participate in meetings by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.
C. Attendance.  The Committee may invite members of management, the independent auditor, internal auditors, legal counsel (including outside counsel), and other advisors and guests to attend meetings as the Committee deems appropriate. The following officers and personnel of the Company shall be expected to attend Committee meetings as requested by the Chair:
(i) the Company's Chief Financial Officer;
(ii) the Company's General Counsel & Corporate Secretary (currently Priya Sundaram);
(iii) the Company's Controller;
(iv) the head of internal audit; and
(v) such other Company officers, employees, or advisors as the Chair or the Committee may from time to time request.
The foregoing individuals shall attend meetings in a non-voting, advisory capacity and shall recuse themselves from executive sessions unless specifically invited by the Committee to remain.
D. Agenda and Minutes
The Chair shall establish the agenda for each meeting of the Committee in consultation with the General Counsel, the Chief Financial Officer, and the independent auditor. Any member of the Committee may suggest items for inclusion on the agenda, and any member of the Committee may raise subjects at a meeting that are not on the agenda. Meeting materials, including the agenda and supporting documentation, shall be distributed to Committee members in advance of each meeting to the extent practicable.
Minutes of each meeting of the Committee shall be prepared by the Corporate Secretary or her designee, and such minutes shall be reviewed by the Chair and retained as part of the permanent corporate records of the Company. Minutes shall be made available to each member of the Board upon request, unless the Committee determines that access to particular minutes or portions thereof should be limited due to the sensitive or confidential nature of the subject matter.
E. Delegation to Subcommittees
The Committee may form and delegate authority to subcommittees consisting of one or more of its members when it deems appropriate, including the delegation of authority to grant pre-approvals of audit and permissible non-audit services, provided that:
(i) the subcommittee's composition and authority are consistent with applicable Nasdaq listing standards, SEC rules, and this Charter;
(ii) decisions of any subcommittee shall be reported to the full Committee at its next regularly scheduled meeting; and
(iii) the Committee shall not delegate any authority or responsibility required by applicable law, regulation, or listing standard to be performed by the full Committee.
IV. Authority and Resources
A. Authority to Retain Advisors
The Committee shall have the sole authority to appoint, retain, compensate, evaluate, oversee, and, when appropriate, terminate the Company's independent registered public accounting firm (subject to any stockholder ratification as may be required or deemed appropriate). The independent auditor shall report directly to the Committee. The Committee's authority over the independent auditor engagement encompasses all matters relating to the scope, planning, and execution of the annual audit of the Company's consolidated financial statements and the effectiveness of the Company's internal controls over financial reporting, as well as the review of quarterly financial information.
In addition to its authority over the independent auditor, the Committee shall have the authority to retain and obtain the advice and assistance of independent legal counsel, accounting advisors, and other experts or consultants as it determines necessary or appropriate to carry out its duties and responsibilities under this Charter. The Committee may retain such advisors at the Company's expense, without requiring prior approval of the Board or management. The selection, retention, and terms of engagement of any such advisors shall be at the Committee's sole discretion.
The Company shall provide appropriate funding, as determined by the Committee in its sole discretion, for:
(i) the payment of compensation to the independent registered public accounting firm engaged for the purpose of rendering or issuing an audit report or performing other audit, review, or attest services for the Company;
(ii) the payment of compensation to any advisors employed by the Committee, including independent legal counsel, accounting advisors, and other experts or consultants; and
(iii) the payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
B. Access to Information
The Committee shall have full, free, and unrestricted access to the Company's books, records, facilities, and personnel as it deems necessary or appropriate to carry out its responsibilities under this Charter. All employees and officers of the Company are directed to cooperate as requested by the Committee or any of its members.
The Committee shall have direct communication channels with the independent auditor and with the head of internal audit. Such communication may occur at any time, and neither the independent auditor nor the head of internal audit shall be required to obtain the approval or consent of management before communicating with the Committee or its Chair on any matter.
C. Investigations.  The Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities. In conducting any such investigation, the Committee shall have the authority to require the cooperation of any officer or employee of the Company, to obtain any information or documentation it deems relevant, and to engage outside counsel, forensic accountants, or other experts as it determines necessary. The Committee shall report to the Board regarding the initiation and results of any material investigation.
V. Duties and Responsibilities
The following duties and responsibilities are set forth as a guide to the Committee with the understanding that the Committee may supplement or modify them as appropriate in light of changing business, legislative, regulatory, legal, or other conditions. In fulfilling its responsibilities, the Committee is entitled to rely in good faith on information, opinions, reports, or statements prepared or presented by Company officers and employees, the Company's independent auditor, internal audit personnel, and outside advisors.
A. Independent Auditor Oversight
1. Appointment, Compensation, and Oversight. The Committee shall be directly responsible for the appointment, compensation, retention, and oversight of the work of the independent 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. The Company's independent auditor is currently Mercer & Holloway LLP, led by engagement partner Philip Tanaka. The independent auditor shall report directly to the Committee. The Committee shall be responsible for the resolution of any disagreements between management and the independent auditor regarding financial reporting matters, and shall have the authority to consult with independent legal counsel or other advisors in connection with any such disagreement.
2. Independence Assessment. At least annually, the Committee shall:
(a) obtain and review a formal written statement from the independent auditor delineating all relationships between the auditor and the Company, consistent with the applicable requirements of the Public Company Accounting Oversight Board ("PCAOB"), including PCAOB Rule 3526, Communication with Audit Committees Concerning Independence;
(b) actively engage in a dialogue with the independent auditor with respect to any disclosed relationships or services that may affect the objectivity and independence of the auditor, and take appropriate action in response to the auditor's statement to satisfy itself of the auditor's independence;
(c) consider whether the provision of permissible non-audit services by the independent auditor is compatible with maintaining the auditor's independence;
(d) confirm that the independent auditor has complied with the auditor independence requirements set forth in Rule 2-01 of Regulation S-X, including the prohibition on certain non-audit services and the restrictions on the employment of former audit firm personnel by the Company; and
(e) present its conclusions regarding the independence of the independent auditor to the Board.
3. Pre-Approval of Services. The Committee shall pre-approve all audit services and permissible non-audit services to be provided by the independent auditor to the Company and its subsidiaries, consistent with applicable SEC rules (including Rule 2-01 of Regulation S-X) and Nasdaq listing standards. The Committee may establish policies and procedures for the pre-approval of such services, provided that such policies and procedures are detailed as to the particular services to be provided, do not include delegation of the Committee's responsibilities to management, and provide that the Committee is informed of each service on a timely basis. The Committee may delegate pre-approval authority to the Chair of the Committee (or another designated member of the Committee) for specific engagements up to a dollar threshold of $75,000 per engagement, provided that any such pre-approvals shall be presented to and ratified by the full Committee at its next regularly scheduled meeting.
4. Audit Partner Rotation. The Committee shall oversee compliance with the mandatory rotation of the lead audit engagement partner and the concurring review partner in accordance with applicable SEC rules (Section 203 of the Sarbanes-Oxley Act of 2002 and Rule 2-01(c)(6) of Regulation S-X) and PCAOB standards. The Committee shall actively participate in the selection of any new lead engagement partner, including by reviewing the qualifications and experience of proposed candidates.
5. Performance Evaluation. The Committee shall annually evaluate the qualifications, performance, and independence of the independent auditor, taking into consideration the following factors, among others:
(a) the quality and depth of communications between the independent auditor and the Committee, including the timeliness and clarity of communications regarding audit findings, accounting issues, and internal control matters;
(b) the auditor's tenure as the Company's independent auditor (Mercer & Holloway LLP has served as the Company's independent registered public accounting firm since the fiscal year ended January 31, 2018);
(c) the qualifications and experience of the lead engagement partner and the audit team;
(d) the auditor's independence, objectivity, and professional skepticism;
(e) the quality and timeliness of the auditor's work product and deliverables;
(f) the results of the most recent PCAOB inspection of the auditor;
(g) feedback from management regarding the auditor's performance; and
(h) other relevant factors as determined by the Committee.
The Committee shall present its conclusions and recommendations to the Board, including whether the continued engagement of the current independent auditor is in the best interests of the Company and its stockholders.
6. Audit Scope and Plan. The Committee shall review and discuss with the independent auditor the overall scope and plan of the annual audit engagement, including:
(a) the auditor's assessment of the Company's critical audit matters and significant audit risks;
(b) the proposed staffing and resource allocation for the engagement;
(c) the auditor's approach to determining materiality levels;
(d) the extent of the auditor's planned reliance on the work of the internal audit function;
(e) the coordination between the independent auditor and the internal audit function to avoid unnecessary duplication of effort; and
(f) the auditor's planned timeline for completion of audit fieldwork and the issuance of audit reports.
B. Financial Reporting and Disclosure Oversight
1. Annual Financial Statements. The Committee shall review and discuss with management and the independent auditor the annual audited consolidated financial statements of the Company, including the related notes, the independent auditor's report thereon, and the disclosures made in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"). Based on such review and discussion, the Committee shall recommend to the Board whether the audited financial statements should be included in the Company's Annual Report on Form 10-K for filing with the SEC. As part of this review, the Committee shall discuss with the independent auditor the matters required to be discussed by the applicable PCAOB auditing standards, including Auditing Standard No. 1301, Communications with Audit Committees.
2. Quarterly Financial Statements. The Committee shall review and discuss with management and the independent auditor the Company's quarterly unaudited financial statements, including the related notes and disclosures, and the results of the independent auditor's review of the quarterly financial statements, prior to the filing of the Company's Quarterly Reports on Form 10-Q with the SEC. The Committee shall discuss with the independent auditor any significant matters arising from the interim review, including any modifications to the scope of the review and any restrictions on the review.
3. Earnings Releases and Guidance. The Committee shall review and discuss the Company's earnings press releases, with particular attention to the use of any non-GAAP financial measures, including the presentation, reconciliation, and rationale for such measures. The Committee shall also review and discuss, as appropriate, financial information and earnings guidance provided to analysts, rating agencies, and the public, including the types of information to be disclosed and the types of presentations to be made, with attention to the use of "pro forma" or "adjusted" information not prepared in accordance with GAAP.
4. Critical Accounting Policies. The Committee shall review and discuss with management and the independent auditor the Company's critical accounting policies and practices, including: (a) significant accounting estimates and judgments underlying the Company's financial statements; (b) the selection and application of critical accounting policies; (c) the reasonableness of significant estimates and judgments; (d) alternative treatments of financial information within GAAP that have been discussed with management, including the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditor; and (e) any significant changes to the Company's accounting policies or practices proposed by management or the independent auditor.
5. SEC Correspondence. The Committee shall review and discuss with management and the independent auditor any correspondence with the SEC, the PCAOB, or other regulatory bodies regarding the Company's financial reporting, accounting policies, or audit matters, including any SEC comment letters and the Company's responses thereto, and shall assess the impact of such correspondence on the Company's financial statements and disclosures.
C. Internal Controls and Internal Audit
1. Internal Controls over Financial Reporting. The Committee shall review and discuss with management, the independent auditor, and the head of internal audit the adequacy and effectiveness of the Company's internal controls over financial reporting, including:
(a) any significant deficiencies or material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information;
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting;
(c) management's assessment of the effectiveness of internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 and the independent auditor's attestation report thereon; and
(d) management's remediation plans for any identified deficiencies and the status of such remediation efforts.
2. Disclosure Controls and Procedures. The Committee shall review and discuss with management and the General Counsel the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), including the process by which the Chief Executive Officer and the Chief Financial Officer make the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 in connection with the Company's periodic reports filed with the SEC.
3. Internal Audit Function. The Committee shall review the scope, responsibilities, budget, staffing, and organizational structure of the Company's internal audit function. The head of internal audit shall report functionally to the Committee and administratively to management (currently the Chief Financial Officer). The Committee shall:
(a) review and concur in the appointment, replacement, reassignment, or dismissal of the head of internal audit;
(b) review the qualifications, independence, and objectivity of the internal audit function;
(c) ensure that the internal audit function has adequate resources and authority to fulfill its responsibilities; and
(d) evaluate the effectiveness of the internal audit function on an annual basis.
4. Internal Audit Plan. The Committee shall review and approve the annual internal audit plan and any significant changes thereto. The Committee shall receive periodic reports on the results of internal audit activities, including summaries of significant findings, recommendations, and the status of management's implementation of corrective actions. The Committee shall ensure that the internal audit function maintains appropriate independence from management and that the head of internal audit has unrestricted access to the Committee and its Chair.
D. Risk Oversight (Expanded Mandate)
1. General Risk Oversight. The Committee shall review and discuss with management the Company's major financial risk exposures and the steps management has taken to monitor, control, and mitigate such exposures. The Committee's review shall include discussion of the Company's risk assessment and risk management policies, including the Company's guidelines and policies governing the process by which risk assessment and management are undertaken, the adequacy of the Company's risk management infrastructure, and the Company's overall risk appetite and risk tolerance levels as they pertain to financial risk.
2. Enterprise Risk Management. The Committee shall receive periodic reports from management on the Company's enterprise risk management ("ERM") framework and processes. The Committee shall coordinate with other Board committees that have risk oversight responsibilities, including the Technology & Cybersecurity Committee regarding cybersecurity and technology-related risks, to ensure comprehensive Board-level risk oversight. The Committee shall periodically assess whether the allocation of risk oversight responsibilities among the Board and its committees is appropriate and effective, and shall recommend any changes to the Board for consideration.
3. Cybersecurity Risk Oversight. In light of the evolving cybersecurity threat landscape and the SEC's cybersecurity disclosure rules adopted in July 2023, the Committee shall have the following responsibilities with respect to cybersecurity risk:
(a) Management of Cybersecurity Risks. Oversee management's assessment and management of material cybersecurity risks, including the adequacy of the Company's cybersecurity programs, incident response plans, disaster recovery plans, and data protection measures. The Committee shall assess whether the Company's cybersecurity risk management program is appropriately integrated into the Company's overall enterprise risk management framework.
(b) SEC Cybersecurity Disclosure. Review the Company's disclosures relating to cybersecurity risks, strategy, governance, and incidents as required by the SEC's cybersecurity disclosure rules, including Item 106 of Regulation S-K (requiring annual disclosure of cybersecurity risk management, strategy, and governance) and Form 8-K Item 1.05 (requiring disclosure of material cybersecurity incidents within four business days of determining materiality). The Committee shall ensure that the Company has established appropriate processes and controls for determining the materiality of cybersecurity incidents and for preparing and filing timely disclosures.
(c) Coordination with the Technology & Cybersecurity Committee. Coordinate with the Technology & Cybersecurity Committee regarding the allocation of cybersecurity oversight responsibilities. The Audit Committee shall retain primary oversight of cybersecurity risk as it relates to financial reporting, internal controls over financial reporting, and regulatory disclosure obligations. The Technology & Cybersecurity Committee shall retain primary oversight of cybersecurity strategy, technology infrastructure, and operational security matters. The chairs of both committees shall communicate regularly to ensure alignment and avoid gaps or unnecessary duplication in oversight.
(d) Cybersecurity Briefings. Receive periodic briefings from the Company's Chief Information Security Officer (or equivalent), the Chief Information Officer, and other appropriate members of management regarding cybersecurity threats, vulnerabilities, incidents, and the effectiveness of the Company's cybersecurity controls. Such briefings shall be provided no less frequently than quarterly, or more frequently as circumstances warrant.
4. Insurance Coverage. The Committee shall periodically review the adequacy of the Company's insurance coverage, including the directors' and officers' liability insurance ("D&O insurance") program. As of the date of this Charter, the Company's D&O insurance program is maintained with Broadview Insurance Group as the primary carrier, with current policy limits of $50 million per occurrence and $50 million in the aggregate, for the policy period June 1, 2023, through June 1, 2024. The Committee shall review, or cause to be reviewed, the adequacy of such coverage in light of the Company's risk profile, the availability of coverage in the marketplace, and any changes in the legal or regulatory environment that may affect the Company's exposure to liability. The Committee shall also review the adequacy of the Company's other insurance programs to the extent they relate to financial risk or risk arising from matters within the Committee's areas of oversight.
5. Caremark Compliance Oversight. Consistent with the Board's oversight obligations under In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), and its progeny, including In re McDonald's Corp. Stockholder Derivative Litigation, C.A. No. 2021-0324-JTL (Del. Ch. 2023), and In re Harborview & Co. Derivative Litigation, C.A. No. 2019-0907-MTZ (Del. Ch. 2021), the Committee shall:
(a) ensure that the Company has implemented adequate information and reporting systems reasonably designed to provide the Committee and the Board with timely, accurate information sufficient to allow the Board to reach informed business judgments regarding the Company's compliance with applicable legal and regulatory requirements and the Company's material risks;
(b) receive and review regular reports from management on material legal, regulatory, and compliance risks facing the Company, and any material violations or suspected violations of applicable law, regulations, or the Company's compliance policies;
(c) oversee the Company's compliance programs, including the Company's Code of Business Conduct and Ethics, anti-corruption compliance (including compliance with the Foreign Corrupt Practices Act of 1977, as amended ("FCPA"), and the United Kingdom Bribery Act 2010), trade compliance, anti-money laundering compliance, sanctions compliance, and other material regulatory compliance matters;
(d) monitor the adequacy of the Company's compliance infrastructure, including the designation of a chief compliance officer or equivalent, the allocation of compliance resources, the effectiveness of compliance training programs, and the Company's compliance culture; and
(e) receive and review reports on the results of any material compliance audits, investigations, or examinations conducted by internal personnel or external advisors.
E. Legal and Regulatory Compliance
1. The Committee shall review with the General Counsel (currently Priya Sundaram) legal matters that may have a material impact on the Company's financial statements, the Company's compliance policies, or the Company's business and operations. Such review shall include discussion of material contingent liabilities, potential claims and assessments, and the adequacy of related reserves and disclosures.
2. The Committee shall receive periodic reports from the General Counsel on material pending or threatened litigation, government investigations, regulatory proceedings, enforcement actions, and related matters. The Committee shall assess the potential financial and reputational impact of such matters and the adequacy of the Company's legal defense and indemnification arrangements.
3. The Committee shall review and approve the Company's policies and procedures regarding related party transactions in accordance with Nasdaq Listing Rule 5630 and the Company's Related Party Transactions Policy. The Committee shall review all related party transactions (or any material amendments thereto) for potential conflicts of interest and shall approve or ratify only those transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.
F. Whistleblower and Complaint Procedures (Enhanced)
1. Establishment and Oversight. The Committee shall establish and maintain procedures for:
(a) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, in compliance with Section 301 of the Sarbanes-Oxley Act of 2002 and Rule 10A-3 under the Exchange Act; and
(b) the confidential, anonymous submission by employees of the Company and its subsidiaries of concerns regarding questionable accounting or auditing matters (whistleblower procedures).
The Committee shall periodically review these procedures to ensure their continued effectiveness and compliance with applicable laws and regulations, including the whistleblower protections set forth in Section 806 of the Sarbanes-Oxley Act of 2002 and Rule 21F under the Exchange Act.
2. Reporting and Review. The Committee shall receive periodic reports from the General Counsel, the head of internal audit, or such other officer or employee as the Committee may designate, on the nature, volume, and disposition of complaints and concerns received through the Company's reporting channels. The Committee shall receive reports on the status and resolution of any significant matters, including the results of any investigations conducted in response to complaints.
3. Non-Retaliation. The Committee shall oversee the Company's non-retaliation policies designed to protect individuals who report concerns in good faith from retaliation, harassment, discrimination, or adverse employment actions. The Committee shall ensure that the Company's non-retaliation policies are clearly communicated to all employees, officers, and directors, and that any reports of retaliation are promptly investigated and addressed.
4. Hotline and Channels. The Committee shall ensure that the Company maintains appropriate reporting channels, including a confidential and, where practicable, anonymous hotline operated by a third-party provider. Information regarding these reporting channels shall be prominently communicated to all employees, officers, and directors of the Company and its subsidiaries through employee handbooks, intranet postings, training programs, and other appropriate means.
5. Escalation Protocols. The Committee shall establish and maintain clear escalation protocols for complaints and concerns that may involve senior management, executive officers, or members of the Board. Complaints or concerns involving members of senior management or the Board, or that allege material fraud or violations of law, shall be reported directly to the Chair of the Committee (or, if the Chair is the subject of the complaint, to another independent member of the Committee designated for such purpose). The Committee shall have the authority to engage outside counsel or other advisors to assist in the investigation and resolution of such matters.
G. Tax and Other Matters
1. The Committee shall review the Company's tax planning strategies and any significant tax matters, including the status of material tax audits, assessments, or disputes, the Company's overall effective tax rate, and any significant changes to tax positions or reserves. The Committee shall receive periodic reports from management and, as appropriate, from outside tax advisors regarding the foregoing matters.
2. The Committee shall review and discuss any significant findings, recommendations, or reports issued by regulatory agencies, examiners, or auditors (including the PCAOB), and management's responses thereto. The Committee shall monitor the implementation of any recommended corrective actions and shall follow up on the status of unresolved matters.
VI. Interaction with Other Board Committees
The Committee recognizes that effective governance requires coordination among the various committees of the Board to ensure comprehensive oversight and to avoid gaps or unnecessary duplication of effort. Accordingly:
(a) Technology & Cybersecurity Committee. The Committee shall coordinate with the Technology & Cybersecurity Committee regarding cybersecurity risk oversight. As described in Section V.D.3 above, the Audit Committee retains primary responsibility for cybersecurity risk as it relates to financial reporting, internal controls over financial reporting, and SEC disclosure compliance, while the Technology & Cybersecurity Committee retains primary responsibility for cybersecurity strategy, technology infrastructure, and operational security. The chairs of the two committees shall communicate regularly and, when appropriate, may hold joint sessions to discuss matters of shared concern. Dr. Anwar Farouk, who serves on both committees, shall serve as a liaison to facilitate coordination.
(b) Compensation & Human Capital Committee. The Committee shall coordinate with the Compensation & Human Capital Committee regarding any financial reporting implications of the Company's compensation arrangements, including stock-based compensation expense, the Company's clawback policies adopted in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Nasdaq Listing Rule 5608, and pay-versus-performance disclosures required by Item 402(v) of Regulation S-K.
(c) Nominating & Corporate Governance Committee. The Committee shall coordinate with the Nominating & Corporate Governance Committee regarding oversight of the Company's Code of Business Conduct and Ethics, ESG-related compliance matters and disclosures, governance risk, and the annual board and committee self-evaluation process.
The Committee may request information from, or provide information to, any other committee of the Board, and may request joint meetings with other committees when the Committee determines that such meetings would be beneficial to the discharge of the Committee's or the other committee's responsibilities.
VII. Annual Performance Evaluation
The Committee shall conduct an annual self-evaluation of its own performance and the adequacy of this Charter. The evaluation process shall assess the following:
(a) whether the Committee has fulfilled its duties and responsibilities as set forth in this Charter;
(b) whether the Committee's composition, including the number of members, the independence and qualifications of its members, and the designation of an audit committee financial expert, remain appropriate;
(c) whether the Committee's meeting practices, including the frequency and duration of meetings, the quality of meeting materials and presentations, and the effectiveness of executive sessions, are adequate;
(d) whether the Committee's interactions with the independent auditor, the internal audit function, and management are productive and effective;
(e) whether any changes to this Charter or to the Committee's practices, procedures, or areas of focus are advisable in light of changes in the legal, regulatory, business, or risk environment; and
(f) any other matters that the Committee deems relevant to its effectiveness.
The results of the Committee's annual self-evaluation shall be reported to the Board, and any recommended amendments to this Charter shall be submitted to the Board for review and approval. The evaluation process shall be coordinated with the Nominating & Corporate Governance Committee's annual board and committee self-evaluation process established under the revised Nominating & Corporate Governance Committee Charter adopted by the Board on March 11, 2024.
VIII. Reporting to the Board
The Chair of the Committee shall report to the Board at each regularly scheduled meeting of the Board (or more frequently as warranted by the circumstances) regarding the activities of the Committee, significant issues discussed, actions taken, and recommendations. Such reports shall include, as appropriate, summaries of the Committee's discussions with the independent auditor, the head of internal audit, and management, as well as any matters requiring Board action.
In addition, the Committee shall prepare the report required by the rules of the SEC (Item 407(d) of Regulation S-K) to be included in the Company's annual proxy statement (the "Audit Committee Report"). The Audit Committee Report shall include, among other things, a statement regarding whether the Committee has reviewed and discussed the audited financial statements with management and the independent auditor, whether the Committee has discussed the matters required to be discussed by applicable PCAOB standards, whether the Committee has received the required disclosures from the independent auditor regarding independence, and the Committee's recommendation to the Board regarding the inclusion of the audited financial statements in the Company's Annual Report on Form 10-K.
IX. Limitations of the Committee's Role
While the Committee has the responsibilities and authority set forth in this Charter, the Committee's role is one of oversight. The members of the Committee are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management, the independent auditor, or the internal audit function.
Management is responsible for the preparation, presentation, and integrity of the Company's financial statements and for maintaining appropriate internal controls over financial reporting and disclosure controls and procedures. Management is also responsible for the Company's compliance with applicable laws, regulations, and Company policies. The independent auditor is responsible for planning and carrying out an audit in accordance with the standards of the PCAOB to provide reasonable assurance about whether the Company's financial statements are free of material misstatement and for reviewing the Company's unaudited interim financial statements. The independent auditor is also responsible for auditing the effectiveness of the Company's internal controls over financial reporting.
It is not the duty of the Committee to certify the Company's financial statements, to guarantee the independent auditor's report, or to ensure that the Company is in compliance with all applicable laws, regulations, and Company policies. The Committee's role does not provide any special assurance with regard to the Company's financial statements or any professional certification as to the independent auditor's work.
Nothing in this Charter is intended to expand the applicable standard of liability under federal or state law for the directors of the Company or the members of the Committee. Each member of the Committee shall be entitled to rely on the integrity of those persons and organizations within and outside of the Company from whom the member receives information and on the accuracy of the financial and other information provided to the Committee absent actual knowledge to the contrary.
X. Charter Review and Amendment
This Charter shall be reviewed at least annually by the Committee to determine whether any amendments or modifications are necessary or appropriate in light of developments in applicable law, regulation, or listing standards, or changes in the Company's business, risk profile, or governance practices.
Any amendments to this Charter shall be recommended by the Committee and submitted to the Board for review and approval. This Charter may not be amended except by action of the Board, upon the recommendation of the Committee.
This Charter supersedes the prior Audit Committee Charter of Cascade Retail Holdings Inc. last revised in February 2020, in its entirety. In the event of any conflict between this Charter and the Company's Restated Certificate of Incorporation, Amended and Restated Bylaws, or applicable law, the provisions of the applicable law, the Restated Certificate of Incorporation, and the Amended and Restated Bylaws shall control.
This Charter was adopted by the Board of Directors on March 11, 2024.
XI. Governing Law
This Charter and the Committee's authority and responsibilities hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. The Committee's authority and responsibilities shall also be subject to, and exercised consistently with, the Company's Restated Certificate of Incorporation (filed with the Secretary of State of the State of Delaware on October 3, 2016), the Amended and Restated Bylaws of the Company (adopted by the Board on March 11, 2024), and applicable federal securities laws and regulations (including the Exchange Act, the Sarbanes-Oxley Act of 2002, and the rules and regulations of the SEC) and Nasdaq listing standards.
XII. Adoption and Effective Date
This Charter was adopted by the Board of Directors of Cascade Retail Holdings Inc. at a duly called meeting held on March 11, 2024, upon the recommendation of the Nominating & Corporate Governance Committee, chaired by Margaret "Meg" Holliday, Lead Independent Director.
Thomas R. Kinsley presided as Chairman of the Board at the meeting at which this Charter was adopted.
This Charter was prepared by Calderwood & Harkness LLP (C&H Matter No. 1038-00005).
This Charter is effective as of March 11, 2024.
\  \  \*
APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: Thomas R. Kinsley
Title: Chairman of the Board
Date: March 11, 2024
ATTESTED:
By: ________
Name: Priya Sundaram
Title: General Counsel & Corporate Secretary
Date: March 11, 2024
Prepared by Calderwood & Harkness LLP | C&H Matter No. 1038-00005 | Confidential
Member | Position | Board Tenure | Designation
Sandra Chen-Watkins | Chair | Board member since 2017 | Independent Director; Audit Committee Financial Expert
Dr. Anwar Farouk | Member | Board member since 2021 | Independent Director; also serves on the Technology & Cybersecurity Committee
James D. Okafor | Member | Board member since 2019 | Independent Director; also serves on the Compensation & Human Capital Committee
Patricia "Trish" Lundgren | Member | Board member since 2022 | Independent Director; also serves on the Nominating & Corporate Governance Committee

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF CASCADE RETAIL HOLDINGS INC.

APPROVED AND ADOPTED BY THE BOARD OF DIRECTORS

CASCADE RETAIL HOLDINGS INC.

ATTESTED:

Record

Parties

Dates

Amounts