Ex-10.18 Audit Committee Charter



 





EXHIBIT 10.18




The Audit Committee Charter




of




PharmaNet Development Group, Inc.

 





As originally approved by the Board of Directors

of

PharmaNet Development Group, Inc.

on

February 19, 2004 and as amended on August 24, 2006




1. Statement of Purpose and Policy




     There shall be a committee of the board of directors of PharmaNet Development Group, Inc. (the
“Company”) to be known as the Audit Committee. The Audit Committee is appointed by the board to
assist the board in monitoring (1) the integrity of the financial statements of the Company, (2)
the independent auditor’s qualifications and independence, (3) the performance of the Company’s
internal audit function and independent auditors, and (4) the compliance by the Company with legal
and regulatory requirements. The Audit Committee shall also be responsible for engaging and firing
the Company’s independent registered public accounting firm.



     The Audit Committee shall fulfill its oversight responsibility to the stockholders relating to
the annual independent audit of the Company’s financial statements, the internal financial
reporting practices of the Company, any special audits, and the quality and integrity of the
financial statements of the Company. In addition, the Audit Committee shall provide assistance
with regard to the systems of internal accounting and financial controls, disclosure controls, and
the legal compliance and ethics programs as established by management and the board. In so doing,
it is the responsibility of the Audit Committee to maintain free and open means of communication
between the directors, the independent auditors, and the financial management of the Company. The
Audit Committee, as representatives of the stockholders, is charged with the ultimate authority and
responsibility to select, evaluate, and where appropriate, replace the Company’s independent
auditors.



2. Organization




     (a) The Audit Committee shall have at least three members, comprised solely of Independent
Directors (as defined in Section 2(b) below), each of whom is able to read and understand
fundamental financial statements, including the Company’s balance sheet, income statement, and cash
flow statement, and at least one of whom is an Audit Committee Financial Expert (as defined in
Section 2(c) below).



     (b) Independent Directors shall not be officers or employees or affiliated persons of the
Company or its subsidiaries or any other individual having a relationship, which would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director. The
following persons shall not be considered independent:



 









 






     (i) a director who has been employed by the Company or any of its affiliates for
the current year or any of the past three completed fiscal years;




     (ii) a director who during the current fiscal year has accepted any compensation
from the Company or any of its affiliates, other than compensation for board or
committee service, or who during any of the past three completed fiscal years has
received compensation from the Company or any of its affiliates, other than compensation
for board or committee service, in excess of $60,000;




     (iii) a director who is a member of the immediate family of an individual who is,
or has been in any of the past three completed fiscal years, employed by the Company or
any of its affiliates as an executive officer. Immediate family includes a person’s
spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law,
sister-in-law, son-in-law, daughter-in-law, and anyone who resides in such person’s
home;




     (iv) a director who is a partner in, or a controlling shareholder or an executive
officer of, any for-profit business organization to which the Company made, or from
which the Company received, payments (other than those arising solely from investments
in the corporation’s securities) that exceed 5% of the Company’s or business
organization’s consolidated gross revenues for that year, or $200,000, whichever is
more, in the current year or any of the past three completed fiscal years;




     (v) a director who is employed as an executive of another entity where any of the
Company’s executives serve on that entity’s compensation committee; or




     (vi) a director who was a partner or employed by the Company’s independent auditor
during the current year or any of the past three completed fiscal years.



     (c) An Audit Committee Financial Expert shall mean a person who has the following attributes:




     (i) An understanding of generally accepted accounting principles and financials
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; or




     (iv) An understanding of internal controls and procedures for financial reporting;
and



 









 






     (v) An understanding of Audit Committee functions.



     (d) A person shall have acquired such attributes through:




     (i) Education and experience as a principal financial officer, principal accounting
officer, controller, public accountant, or auditor, or experience in one or more
positions that involve the performance of similar functions;




     (ii) Experience actively supervising a principal financial officer, principal
accounting officer, controller, public accountant, auditor, or person performing similar
functions;




     (iii) Experience overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing, or evaluation of financial
statements; or




     (iv) Other relevant experience.



3. Responsibilities




     In carrying out its responsibilities hereunder, the Audit Committee’s policies and procedures
should remain flexible, in order to best react to changing conditions and to ensure to the
directors and stockholders that the corporate accounting and reporting practices of the Company are
in accordance with all current requirements and are of the highest quality. The Audit Committee
shall review and reassess the adequacy of this charter in meeting these objectives on an annual
basis.



     In carrying out these responsibilities, the Audit Committee shall:




     (i) As a committee of the board of directors, appoint, rotate lead audit partners
(to the extent required by law or deemed prudent to ensure independence), and determine
the compensation of, and oversee the work of the independent auditors of the Company;




     (ii) Approve, in advance, the provision by the independent auditors of any and all
permissible non-audit services, and require the provision of any such non-audit services
be disclosed in periodic reports filed by the Company with the Securities and Exchange
Commission subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended;




     (iii) Meet with the independent auditors and financial management of the Company to
review the scope of the proposed audit for the current year and the audit procedures to
be utilized, and at the conclusion thereof review such audit, including any comments or
recommendations of the independent auditors;




     (iv) Review with the independent auditors and the Company’s financial and
accounting management, the adequacy and effectiveness of the accounting and



 









 







financial controls of the Company, and elicit any recommendations for the
improvement of such internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis should be given to
the adequacy of such internal controls to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper;




     (v) Have the sole authority to review and approve all related party transactions
between the Company or any subsidiary and any executive officer, director or affiliate
of the Company, including persons or entities controlled by or under common control with
such executive officers, directors or affiliates, and such other persons or entities
described in SEC Regulation S-K, Item 404;




     (vi) Establish procedures for the receipt, retention, and treatment of complaints
regarding accounting, internal controls, and Audit Committee matters. These procedures
shall provide for the confidential and anonymous submission of complaints;




     (vii) Require the independent auditors to report to the Audit Committee the
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, the ramifications of the use of such alternative disclosures
and treatments, the treatment preferred by the independent auditor, any accounting
disagreements between the independent auditors and management, and all other material
written communications between the independent auditors and management, such as any
management letter or schedule of unadjusted differences;




     (viii) Review the financial statements to be included in the Annual Report on Form
10-K, and the disclosures made in management’s discussion and analysis, with management
and the independent auditors to determine that the independent auditors are satisfied
with the disclosure and content of the financial statements, and to recommend to the
board whether the audited financial statements should be included in the Annual Report.
Any changes in accounting procedures should be explained in the Annual Report;




     (ix) Review the interim financial statements, management’s discussion and analysis,
and earnings releases with management and the independent auditors prior to the filing
of the Company’s Quarterly Report on Form 10-Q. The Audit Committee will recommend to
the board whether the interim financial statements should be included in the Quarterly
Report. Also, the Audit Committee shall discuss the results of the quarterly review and
any other matters required to be communicated to the Audit Committee by the independent
auditors under generally accepted auditing standards. The chair of the Audit Committee
may represent the entire committee for the purposes of this review;




     (x) Provide sufficient opportunity for the independent auditors to meet with the
members of the Audit Committee without members of management present. Among the items to
be discussed in these meetings are the independent auditor’s



 









 







evaluation of the Company’s financial and accounting personnel, the adequacy of the
Company’s internal controls, and the cooperation that the independent auditors received
during the course of the audit;




     (xi) Resolve all disagreements between the Company’s management and the auditor
regarding financial reporting;




     (xii) Ensure receipt from the independent auditors of a formal written statement
delineating all relationships between the auditors and the Company;




     (xiii) Inquire about the independent auditors’ past and continuing compliance with
auditor independence rules and about their program for enhancing safeguards to ensure
that conflicts do not arise in the future;




     (xiv) Submit the minutes of all meetings of the Audit Committee to, or discuss the
matters discussed at each committee meeting with, the board of directors;




     (xv) Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in its judgment,
that is appropriate;




     (xvi) Review the Company’s Code of Ethics and the Company’s compliance therewith;
and




     (xvii) Review and discuss with management all Section 302 and 906 certifications
that are required.



4. Meetings




     The Audit Committee shall meet a minimum of four times annually to discuss with management the
annual audited financial statements and quarterly financial statements.



5. Resources and Authority




     The Audit Committee shall have the resources and authority appropriate to discharge its
responsibilities, including the exclusive authority to engage outside auditors for regular and
special audits, reviews and other procedures, and to retain independent legal counsel and other
advisors, as it determines necessary to carry out its duties. In furtherance of this
responsibility, the Company shall provide the funding as required by Section 301 of the
Sarbanes-Oxley Act of 2002 and Section 10A(m)(6) of the Securities Exchange Act of 1934, as
amended.



6. 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.



 









 





7. Effective Date




     This Audit Committee Charter shall become effective immediately upon its approval and adoption
by the board of directors of the Company. This Audit Committee Charter shall be reviewed on an
annual basis to assess its adequacy. This Audit Committee Charter replaces the Charter adopted on
February 19, 2004.