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Committee Charters
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
AUDIT COMMITTEE CHARTER
COMPENSATION COMMITTEE CHARTER
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
CHARTER
- Purpose
The Nominating and Corporate Governance Committee (the "Committee") of
Tapestry Pharmaceuticals, Inc. (the "Company") is a committee of the Board
of Directors (the "Board") established to review and report to the
Board on matters of corporate governance. The Committee's
responsibilities shall include, among other matters (i) assisting the
Board in identifying individuals qualified to become members of the
Board and its committees, (ii) recommending to the Board nominees for
election as Directors by the Company's stockholders; and (iii)
developing and recommending to the Board a set of effective corporate
governance practices and policies applicable to the Company.
- Committee Membership
The Committee shall consist of at least two directors, all of whom shall
satisfy the definition of "independent" under the listing standards of
The Nasdaq Stock Market Inc. ("Nasdaq"). Members of the Committee
shall be appointed and may be removed by the Board in its discretion.
The Board shall designate a chairperson of the Committee, or, if the
Board does not so designate a chairperson, the Committee shall elect a
chairperson.
- Committee Authority and Responsibilities
The Committee, to the extent that it considers necessary or appropriate,
shall:
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Review the qualifications of persons identified as prospective
nominees for director to serve on the Board and recommend to the
Board (a) nominees for director to be submitted to the stockholders
for approval at the annual meeting for election and (b) nominees for
director to be elected by the Board to fill vacancies and newly
created directorships;
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Certify to Nasdaq that the Committee has adopted a formal written
charter addressing the nominations process and such related matters
as required under federal securities laws;
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Consider and make recommendations to the Board concerning the
appropriate size, function, needs and composition of the Board
and the Board's committees;
-
Review the Board's committee structure (including assignment
rotation schedules and authority to delegate to subcommittees) and
recommend to the Board for its approval directors to serve as
members of each committee;
-
Review, recommend and periodically re-examine a set of corporate
governance practices and policies of the Company;
-
Maintain minutes or other records of meetings and activities of the
Committee and report to the Board following meetings of or actions
taken by the Committee;
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Have authority to form and delegate any of its responsibilities (to
the extent permitted by this Charter and applicable law and
regulations that govern its actions) to subcommittees consisting of
one or more members of the Committee when appropriate;
-
Review and reassess the powers of the Committee and the adequacy of
this Charter at least annually and recommend any proposed changes
to the Board for approval; and
-
Consider such other matters in relation to the corporate governance
practices and policies of the Company as the Committee or the Board
may, in its discretion, determine to be advisable.
- Committee Resources
The Committee shall have the authority, to the extent it deems necessary
or appropriate, to consult with and to retain legal, accounting or other
advisors, which may include counsel to the Company. Each member of the
Committee, in the performance of such member's duties, will be entitled
to rely in good faith upon the information, opinions, reports or
statements presented to the Committee by any of the Company's officers or
employees or by any other person as to matters such member reasonably
believes are within such other person's professional or expert competence
and who has been selected with reasonable care by or on behalf of the
Company. The Company shall provide for appropriate funding, as
determined by the Committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit
report and to any advisors employed by the Committee.
- Meetings
The Committee shall meet as often as its members deem necessary to
fulfill the Committee's responsibilities. When necessary, the Committee
shall meet in executive session outside of the presence of any senior
executive officer of the Company. The Committee may request any officer
or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.
Regular meetings of the Committee may be held at such time and at such
place as shall from time to time be determined by the Committee or the
chairperson of the Committee. Special meetings of the Committee shall be
called by the chairperson at the request of any member of the Committee,
any of the Company's executive officers or the independent auditor, in
each case on at least twenty-four hours notice to each Committee
member.
A majority of the Committee members shall constitute a quorum for the
transaction of the Committee's business. The Committee shall act upon
the vote of a majority of its members at a duly called meeting at which a
quorum is present. Any action of the Committee may be taken by a
written instrument signed by all of the members of the Committee.
Meetings of the Committee may be held at such place or places as the
Committee shall determine or as may be specified or fixed in the
respective notice or waiver of notice for a meeting. Members of the
Committee may participate in Committee proceedings by means of conference
telephone or similar communications equipment by means of which all
persons participating in the proceedings can hear each other, and such
participation shall constitute presence in person at such
proceedings.
- Limitation of Committee's Role
Management of the Company is responsible for the day-to-day operation of
the Company's business. As a result, the Company's officers and
employees and other persons who may be engaged by the Committee may have
more time, knowledge and detailed information about the Company than do
the Committee members. The Committee will review information, opinions,
reports or statements presented to the Committee by the Company's
officers or employees or other persons as to matters the Committee
members reasonably believe are within such other person's professional
or expert competence and who has been selected with reasonable care by
or on behalf of the Company. While the Committee has the
responsibilities and powers set forth in this charter, each member of
the Committee, in the performance of his or her duties, will be entitled
to rely in good faith upon reports presented to the Committee by these
experts. Accordingly, the Committee's role does not provide any special
assurances with regard to matters that are outside the Committee's area
of expertise or that are the traditional responsibility of
management.
AUDIT COMMITTEE CHARTER
- Purpose
The Audit Committee of Tapestry Pharmaceuticals, Inc. is appointed
by the Board of Directors of the Company to assist the Board in
monitoring (i) the integrity of the financial statements of the
Company, (ii) the independent auditor’s qualifications and
independence, (iii) the performance of the Company’s internal
audit function (if any) and independent auditors, and (iv) the
compliance by the Company with financially related legal and
regulatory requirements.
- Committee Membership
The Audit Committee shall consist of no fewer than three members
and each member shall also be a member of the Board of Directors.
The members of the Audit Committee shall meet the independence and
experience requirements of the NASDAQ National Market, Section
10A(m)(3) of the Securities Exchange Act of 1934 and the rules
and regulations of the SEC. At least one member of the Audit
Committee shall be an “Audit Committee financial expert” as defined
by the SEC. Audit Committee members shall not simultaneously serve
on the Audit Committees of more than two other public companies.
The members of the Audit Committee shall be appointed by the Board
upon the recommendation of the Nominating & Governance Committee.
Audit Committee members may be replaced by the Board. The Board
shall designate a chairperson of the Audit Committee, or, if the
Board does not so designate a chairperson, the Audit Committee shall
elect a chairperson.
- Committee Authority and Responsibilities
The Audit Committee shall have the sole authority to appoint or replace the independent auditor (subject to shareholder ratification). The Audit Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditor shall report directly to the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Audit Committee shall be provided with full access to all books, records, facilities and personnel of the Company in carrying out its duties.
The Audit Committee shall pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which shall be approved by the Audit Committee prior to the completion of the audit). The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.
The Audit Committee shall:
Financial Statement and Disclosure Matters
- Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K.
- Prepare the report required by the rules of the SEC to be included in the Company’s annual proxy statement.
- Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor’s review of the quarterly financial statements.
- Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls and any special steps adopted in light of material control deficiencies.
- Review and discuss quarterly reports from the independent auditors on:
- All critical accounting policies and practices to be used.
- All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and any recommendations or advice from the independent auditor.
- Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
- Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made).
- Discuss with management and the independent auditor the effect on the Company’s financial statements of regulatory and accounting initiatives and, if applicable, off-balance sheet structures.
- Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
- Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.
- Review disclosures made to the Audit Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls.
Oversight of the Company’s Relationship with the Independent
Auditor
- Review and evaluate the lead partner of the independent auditor team.
- Obtain and review a report from the independent auditor at least annually regarding:
- the independent auditor’s internal quality-control procedures,
- any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm,
- any steps taken to deal with any such issues, and
- all relationships between the independent auditor and the Company.
- Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence, taking into account the opinions of management and the internal auditor. The Audit Committee shall present its conclusions with respect to the independent auditor to the Board.
- Ensure the rotation of the audit partners as required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis.
- Discuss with the independent auditor issues on which they consulted their national office in regards to matters of accounting or of audit quality and consistency.
- Discuss with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
To the extent that the Company has an Internal Audit department, the Audit Committee shall:
Oversight of the Company’s Internal Audit Activities
- Review the appointment and replacement of the Company’s management responsible for internal audit activities.
- Review the significant reports to management prepared by staff with responsibility for internal audit activities and/or and management’s responses.
- Discuss with the staff member(s) with responsibility for internal audit activities and management the staff’s responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit activities.
Compliance Oversight Responsibilities
- Obtain from the independent auditor assurance that Section 10A(b) of the Exchange Act (Required Response to Audit Discoveries) has not been implicated.
- Obtain reports from management, the Company’s staff members with responsibility for internal audit activities and the independent auditor that the Company and its subsidiary/foreign affiliated entities (if any) are in conformity with applicable legal requirements and the Company’s Code of Business Conduct and Ethics. Review reports and disclosures of insider and affiliated party transactions. Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics. Institute and oversee special investigations as needed.
- Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies.
- Discuss with the Company’s General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies.
- Conduct an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis and approve all such transactions. For purposes of this rule, the term “related party transaction” shall refer to transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.
- Review with management the policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal auditor (if applicable) or the independent auditors.
- Inquire of the CEO and CFO regarding the ‘quality of earnings” of the Company from a subjective as well as an objective standpoint.
- The Audit Committee shall annually review its effectiveness.
- Committee Resources
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to consult with and to retain legal, accounting or other advisors, which may include counsel to the Company. Each member of the Audit Committee, in the performance of such member’s duties, will be entitled to rely in good faith upon the information, opinions, reports or statements presented to the Audit Committee by any of the Company’s officers or employees or by any other person as to matters such member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report and to any advisors employed by the Audit Committee.
- Meetings
The Audit Committee shall meet as often as it determines, but not less frequently than quarterly. The Audit Committee shall meet periodically with management, the internal auditor (if applicable) and the independent auditor in separate executive sessions as deemed necessary by the Audit Committee. The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
Regular meetings of the Audit Committee may be held at such time and at such place as shall from time to time be determined by the Audit Committee or the chairperson of the Audit Committee. Special meetings of the Audit Committee shall be called by the chairperson at the request of any member of the Audit Committee, any of the Company’s executive officers or the independent auditor, in each case on at least twenty-four hours notice to each Audit Committee member.
A majority of the Audit Committee members shall constitute a quorum for the transaction of the Audit Committee’s business. The Audit Committee shall act upon the vote of a majority of its members at a duly called meeting at which a quorum is present. Any action of the Audit Committee may be taken by a written instrument signed by all of the members of the Audit Committee. Meetings of the Audit Committee may be held at such place or places as the Audit Committee shall determine or as may be specified or fixed in the respective notice or waiver of notice for a meeting. Members of the Audit Committee may participate in Audit Committee proceedings by means of conference telephone or similar communications equipment by means of which all persons participating in the proceedings can hear each other, and such participation shall constitute presence in person at such proceedings.
- Limitation of Audit Committee’s Role
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit 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 and applicable rules and regulations. These are the responsibilities of management and the independent auditor; management is responsible for preparing the Company’s financial statements and the Company’s independent auditor is responsible for auditing the financial statements. The activities of the Audit Committee are in no way designed to supersede or alter these traditional responsibilities. The Company’s independent auditor and management have more time, knowledge and detailed information about the Company than do the Audit Committee members. Accordingly, the Audit Committee’s role does not provide any special assurances with regard to the Company’s financial statements.
COMPENSATION COMMITTEE CHARTER
- Purpose
The Compensation Committee (the "Committee") of Tapestry Pharmaceuticals,
Inc. (the "Company") is a committee of the Board of Directors (the
"Board") established to (i) assist the Board in carrying out
its responsibilities relating to compensation of the executive officers
of the Company, (ii) administer the Company's incentive and equity-based
plans, (iii) produce an annual report on executive compensation for
inclusion in the Company's annual proxy statement; and (iv) work with the
Chief Executive Officer and Board in matters concerning organization
development and succession planning of officers.
- Committee Membership
The Committee shall consist of at least three directors, all of whom
shall satisfy the definition of "independent" under listing standards of
The Nasdaq Stock Market Inc. ("Nasdaq"). All Committee members shall
also be "Non-Employee Directors" as defined by Rule 16b-3 under the
Securities Exchange Act of 1934 and "outside directors" as defined by
Section 162(m) of the Internal Revenue Code. Members of the Committee
shall be appointed by the Board upon the recommendation of the Nominating
and Corporate Governance Committee and may be removed by the Board in its
discretion. The Board shall designate a chairperson of the Committee,
or, if the Board does not so designate a chairperson, the Committee shall
elect a chairperson.
- Committee Authority and Responsibilities
The Committee, to the extent that it considers necessary or appropriate,
shall:
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Review and approve the compensation of the Chief Executive Officer
and the other executive officers of the Company on an annual basis,
or more frequently, if appropriate, including salary, bonuses,
incentive and equity compensation and other benefits. In
determining the amount, form, and terms of such compensation, the
Committee should consider the performance of the Chief Executive
Officer and the other executive officers in light of relevant
corporate goals and objectives, competitive market data pertaining
to compensation at comparable companies and other relevant
factors;
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Review and approve corporate goals and objectives relevant to the
compensation of the Chief Executive Officer;
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Review and approve the Chief Executive Officer's recommendations
concerning the corporate goals and objectives relevant to the
compensation of the Company's other executive officers;
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Review and recommend to the Board executive compensation policies
and practices for executive officers of the Company and its
subsidiaries generally;
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Review and make recommendations to the Board with respect to
compensation plans, incentive and equity-based plans and retirement
savings plans. The Committee shall exercise all authority with
respect to administration of the Company's various stock option and
incentive plans, including the review and grant of stock options to
eligible employees under such plans, except as otherwise provided
in such plans;
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Review and recommend to the Board any employment contract or
related agreement, such as a severance arrangement or a
supplementary pension, for any executive officer;
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Review director compensation and benefits, if any, and recommend to
the Board on an annual basis, or more frequently, if appropriate, or
requested by the Board, any proposed changes;
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Assist the Board in developing and evaluating potential candidates
for executive positions, including the Chief Executive Officer, and
to oversee the development of executive succession
plans;
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Serve as a counseling committee to the Chief Executive Officer
regarding matters of key personnel selection, compensation matters
and such other matters as the Board may from time to time
direct;
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Review the procedures and policies of the Company designed to
ensure compliance with applicable laws and regulations relating to
compensation of executive officers and to monitor the results of
these compliance efforts;
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Prepare and publish a report on executive compensation for
inclusion in the Company's annual proxy statement that complies
with the rules and regulations of the Securities and Exchange
Commission, Nasdaq and other applicable rules and
regulations;
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Review and make recommendations to the Board regarding the
Company's responses to stockholder proposals related to
compensation matters;
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Maintain minutes or other records of meetings and activities of the
Committee and to report to the Board following meetings of or
actions taken by the Committee;
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Conduct or authorize reviews of any matters within the Committee's
purpose and powers;
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Have authority to form and delegate any of its responsibilities (to
the extent permitted by this Charter and applicable law and
regulations that govern its actions) to subcommittees consisting of
one or more members of the Committee when appropriate;
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Review and reassess the powers of the Committee and the adequacy of
this Charter periodically and recommend any proposed changes to the
Board for approval; and
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Annually review the Committee's own performance.
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Consider such other matters in relation to the compensation polices
of the Company as the Committee or the Board may, in its discretion,
determine to be advisable.
- Committee Resources
The Committee shall have the authority, to the extent it deems necessary
or appropriate, to consult with and to retain legal, accounting or other
advisors, which may include counsel to the Company. Each member of the
Committee, in the performance of such member's duties, will be entitled
to rely in good faith upon the information, opinions, reports or
statements presented to the Committee by any of the Company's officers
or employees or by any other person as to matters such member reasonably
believes are within such other person's professional or expert competence
and who has been selected with reasonable care by or on behalf of the
Company. The Company shall provide for appropriate funding, as
determined by the Committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit
report and to any advisors employed by the Committee.
- Meetings
The Committee shall meet as often as its members deem necessary to
fulfill the Committee's responsibilities. When necessary, the Committee
shall meet in executive session outside of the presence of any senior
executive officer of the Company. The Committee may request any officer
or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.
Regular meetings of the Committee will be held at such time and at such
place as shall from time to time be determined by the Committee or the
chairperson of the Committee. Special meetings of the Committee shall be
called by the chairperson at the request of any member of the Committee,
any of the Company's executive officers or the independent auditor, in
each case on at least twenty-four hours notice to each Committee
member.
A majority of the Committee members shall constitute a quorum for the
transaction of the Committee's business. The Committee shall act upon
the vote of a majority of its members at a duly called meeting at which
a quorum is present. Any action of the Committee may be taken by a
written instrument signed by all of the members of the Committee.
Meetings of the Committee may be held at such place or places as the
Committee shall determine or as may be specified or fixed in the
respective notice or waiver of notice for a meeting. Members of the
Committee may participate in Committee proceedings by means of conference
telephone or similar communications equipment by means of which all
persons participating in the proceedings can hear each other, and such
participation shall constitute presence in person at such
proceedings.
- Limitation of Committee's Role
Management of the Company is responsible for the day-to-day operation of
the Company's business. As a result, the Company's officers and employees
and other persons who may be engaged by the Committee may have more time,
knowledge and detailed information about the Company than do the
Committee members. The Committee will review information, opinions,
reports or statements presented to the Committee by the Company's
officers or employees or other persons as to matters the Committee members
reasonably believe are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf
of the Company. While the Committee has the responsibilities and powers
set forth in this charter, each member of the Committee, in the
performance of his or her duties, will be entitled to rely in good faith
upon reports presented to the Committee by these experts. Accordingly,
the Committee's role does not provide any special assurances with regard
to matters that are outside the Committee's area of expertise or that are
the traditional responsibility of management.
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