ex426.htm


    EXHIBIT 4.26

     

    


     

    NORTHCORE
TECHNOLOGIES INC.

     

    (the
“Company”)

     

    AUDIT
COMMITTEE CHARTER

     

    


     

    Adopted
by the Board of Directors on May 18, 2005

    


    ORGANIZATION

    


    There
shall be a committee of the Board of Directors (the “Board”) to be known as the
Audit Committee (the “Committee”).  The Committee shall be composed of
at least three directors and any vacancies shall be filled as soon as
practicable.

     

    All
of the members of the Committee must be “independent”1 as such term is defined in
Multilateral Instrument 52-110 “Audit Committees” (the “Instrument”) (or exempt
therefrom), and free of any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Committee.

     

    All
members of the Committee should have a working familiarity with basic finance
and accounting practices and be “financially literate”2 as such term is defined in the
Instrument.

     

    The
Committee members and the Committee chairman shall be appointed by the Board and
members of the Committee shall hold office until the next annual meeting of the
shareholders or until they cease to be directors of the
Company.  Where a vacancy occurs at any time in the membership of the
Committee, it may be filled by the Board on the recommendation of the Committee,
and shall be filled by the Board if membership of the Committee falls below
three directors.  If the Chair of the Committee is absent from any
meeting, the Committee shall select one of the other members of the Committee to
preside at the meeting.

     

    The
Chair of the Committee shall be responsible for:

     

    (i)
developing and setting the agenda for Committee meetings; and

     

    (ii)
determining the time, place and frequency of Committee meetings.

     

    Any
member of the Committee or the external auditor may call a meeting of the
Committee.

     

    

      

    

     

      1 Meaning
of Independence pursuant to s. 1.4 of the Instrument –  A member of an
audit committee is independent if the member has no direct or indirect material
relationship with the issuer and subject to subsections 1.4(2) through (8) of
the Instrument.

    

     

      2 Meaning
of Financial Literacy pursuant to s. 1.5 of the Instrument - An individual is
financially literate if he or she has the ability to read and understand a set
of financial statements that presents a breadth and level of complexity of
accounting issues that are general comparable to the breadth and complexity of
the issues that can reasonably be expected to be raised by the issuer’s
financial statements.

    


    
      
         


      

      
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    The
quorum for a meeting of the Committee is a majority of the members. With the
exemption of the foregoing quorum requirement, the Committee may determine its
own procedures.

     

    Notice
of the time and place of every meeting shall be given in writing, verbally, by
facsimile or by phone to each member of the Committee, the Chairman of the
Board, the Chief Executive Officer of the Company and the Chief Financial
Officer of the Company, at least 48 hours prior to the time fixed for the
meeting.  The notice period may be waived by all members of the
Committee. The external auditor of the Company shall be given notice of every
meeting of the Committee, and, at the expense of the Company, shall be entitled
to attend and be heard thereat. If requested by a member of the Committee, the
external auditor shall attend every meeting of the Committee held during the
term of office of the external auditor.

     

    STATEMENT OF
POLICY

    


     

    The
Committee shall provide assistance to the Board in fulfilling their
responsibility to the shareholders, potential shareholders and the investment
community relating to:

     

    (i)
corporate accounting;

     

    (ii)  reporting
practices of the Company;

     

    (iii)  the
quality and integrity of the financial reports of the Company;

     

    (iv)
the Company’s compliance with legal and regulatory requirements, as they relate
to the Company’s financial statements;

     

    (v)
the qualifications, independence and performance of the external
auditor;

     

    (vi)
internal controls and disclosure controls;

     

    (v)
the performance of the Company’s internal audit function; and

     

    (vi)
performing the additional duties set out in this Charter or otherwise delegated
to the Committee by the Board.

     

    In
so doing, it is the responsibility of the Committee to maintain free and open
means of communications between and among the auditors, the directors and the
financial management of the Company.

     

    AUTHORITY AND
RESPONSIBILITIES

     

    In
carrying out its responsibilities, the Committee believes its policies and
procedures should remain flexible, in order to best react to changing conditions
and to ensure that the corporate accounting and reporting practices of the
Company are in accordance with all applicable requirements and are of the
highest quality.  The duties and responsibilities of the members of
the Committee are in addition to those of a member of the Board.

     

    The
Company’s external auditor is required to report directly to the
Committee.

     

    In
carrying out these responsibilities, the audit committee will:

     


    
      
         


      

      
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              1.

            	
              General.
      Provide an open avenue of communication among the directors, auditors and
      financial management of the
Company.

            


    

     

    
      	
               
      

            	
              The
      Committee has the authority:

            


    

     

    
      	
               
      

            	
              (i)
      to engage independent counsel and other advisors as it determines
      necessary to carry out its duties,

            


    

    
      	
               
      

            	
              (ii)
      to set and pay the compensation for any advisors employed by the audit
      committee, and

            


    

    
      	
               
      

            	
              (iii)
      to communicate directly with the internal and external
      auditors.

            


    

    


    
      	
              2.

            	
              Committee
      Charter. Review and update
      the Committee’s charter annually.

            


    

     

    
      	
              3.

            	
              Auditor
      Selection. Review and recommend to the Board the auditors to be selected
      to be nominated for the purpose of preparing or issuing an auditor’s
      report or performing other audit, review or attest services for the
      Company and review and recommend the compensation of the independent
      auditor.

            


    

     

    
      	
              4.

            	
              Auditor
      Oversight.  Be directly responsible for overseeing the work of
      the external auditor engaged for the purpose of preparing or issuing an
      auditor's report or performing other audit, review or attest services for
      the issuer, including the resolution of disagreements between management
      and the external auditor regarding financial
  reporting.

            


    

     

    
      	
              5.

            	
              Review
      of Audit. Meet with the auditors, the Board 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
      auditors.

            


    

     

    
      	
              6.

            	
              Appointment
      of CFO. Review and concur in the appointment, replacement, reassignment,
      or dismissal of the Chief Financial Officer (the “CFO”) and any other key
      financial executives involved in the financial reporting
      process.

            


    

     

    
      	
              7.

            	
              Auditor
      Independence. Confirm and assure the independence of the
      auditors.

            


    

     

    
      	
              8.

            	
              Review
      Financial Reporting and Accounting Standards. Review with the auditors,
      the competitiveness and suitability of the financial and accounting
      personnel and the adequacy and effectiveness of the financial reporting
      and accounting standards and 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.   The Committee is also responsible for reviewing
      the Company’s accounting policy note to ensure completeness and
      acceptability with GAAP as part of the approval of the financial
      statements.

            


    

     

    
      	
              9.

            	
              Internal
      Audit Function. Review the applicability of an internal audit function of
      the Company including the independence and authority of its reporting
      obligations, the proposed audit plans for the coming year and the
      coordination of such plans with the
auditors.

            


    

     

    
      	
              10.

            	
              Pre-approval
      of Non-audit Services. Be responsible for the pre-approval of all
      non-audit services to be provided to the Company or its subsidiary
      entities by the independent
auditor.

            


    

     


    
      
         


      

      
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              11.

            	
              Review
      Annual Financial Statements. Review the annual financial statements and
      MD&A contained in the annual report to shareholders with management
      and the auditors to determine that the auditors are satisfied with the
      disclosure and content of the financial statements to be presented to the
      shareholders. Upon review, recommend the annual financial statements and
      MD&A for approval by the Board.  Any changes in accounting
      principles should be reviewed.

            


    

     

    
      	
              12.

            	
              Review
      Interim Financials. Review with management and the CFO the interim
      financial reports and MD&A and recommend that such reports and
      MD&A be approved by the Board before they are filed with the OSC, SEC
      or other regulators.

            


    

     

    
      	
              13.

            	
              Risk
      and Uncertainty.  The Committee is responsible for reviewing, as
      part of its approval of the financial statements, uncertainty notes and
      disclosures, and MD&A
disclosures.

            


    

     

    
      	
              14.

            	
              Press
      Releases and MD&A. Prior to release, review with management and, where
      necessary, recommend for approval by the Board any press releases and
      MD&A that disclose annual or interim financial results or that contain
      other significant financial
information.

            


    

     

    
      	
               
      

            	
              The
      Committee is responsible for being satisfied that adequate procedures are
      in place for the review of the Company’s public disclosure of financial
      information extracted or derived from the Company’s financial statements,
      other than the public disclosure referred to in the preceding paragraph,
      and must periodically assess the adequacy of those
    procedures.

            


    

     

    
      	
              15.

            	
              Review
      Related Party and Conflicts of Interest. Review with management and the
      independent auditor significant risks or exposures and assess the steps
      management has taken to minimize such risk to the Company.  This
      includes a review of related party transactions and conflict of interest
      transactions and the public disclosure of such transactions, if
      required.

            


    

     

    
      	
              16.

            	
              Review
      of Accounting and Financial Disclosure Policies. Provide sufficient
      opportunity for the 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 auditors’ evaluation of
      the Company’s accounting policies and the clarity of the financial
      information and disclosure practices adopted by the Company, and the
      cooperation that the auditors received during the course of the
      audit.

            


    

     

    
      	
              17.

            	
              Audit
      Resources. Review accounting and financial human resources and succession
      planning and audit efforts of the Company to assure completeness of
      coverage, reduction of redundant efforts and the effective use of audit
      resources.

            


    

     

    
      	
              18.

            	
              Committee
      Minutes. Appoint a secretary to the Committee who need not be a director
      or officer of the Company and will submit the minutes of all meetings of
      the audit committee to, or discuss the matters discussed at each committee
      meeting with, the Board.

            


    

     

    
      	
              19.

            	
              Committee
      Reports. Report the Committee’s actions to the Board, including
      recommendations that the Committee may deem
  appropriate.

            


    

     

    
      	
              20.

            	
              Review
      Internal Controls. Be responsible for reviewing the plan and scope of the
      annual audit with respect to planned reliance and testing of controls, and
      for reviewing major points contained in the auditor’s management letter
      resulting from control evaluation and testing.  The Committee is
      also responsible for receiving reports from management when significant
      control deviations occur.

            


    

     


    
      
         


      

      
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              The
      Committee will also establish and review the Company’s procedures for
      the:

            


    

     

    
      •         Receipt,
retention and treatment of complaints regarding accounting, financial
disclosure, internal controls or auditing matters; and

       

      •         Confidential,
anonymous submission by employees regarding questionable accounting auditing and
financial reporting and disclosure matters.

    

     

    
      	
              21.

            	
              Hiring
      Policies.  Be responsible for reviewing and approving the
      Company’s hiring policies regarding partners, employees and former
      partners and employees of the present and former external auditor of the
      Company.

            


    

     

    
      	
              22.

            	
              Authority
      to Investigate. Investigate any matter brought to its attention within the
      scope of its duties, with the power to retain outside counsel, accountants
      and others for this purpose if, in its judgment, that is
      appropriate.

            


    

     

    
      	
              23.

            	
              Review
      of Expense Accounts and Perquisites. Review policies and procedures with
      respect to expense accounts and perquisites, including their use of
      Company assets and address the results of any review of these areas with
      the CFO.

            


    

     

    
      	
              24.

            	
              Legal
      and Regulatory Matters. Review legal and regulatory matters that may have
      a material impact on the Company’s financial statements and on its
      compliance policies programs and procedures, including compliance with tax
      and financial reporting laws and regulations, if and when issues
      arise.

            


    

     

    
      	
              25.

            	
              Committee
      Letter for Annual Report. Prepare a letter for inclusion in the annual
      report that describes the Committee’s composition and responsibilities,
      and how they were discharged.

            


    

     

    
      	
              26.

            	
              Other
      Functions and Powers. The Committee will perform such other functions and
      exercise such other powers as are assigned by the Company’s charter or
      bylaws, or the Board or are prescribed from time to time for the audit
      committee of a reporting company in Parts 2 and 4 of the Instrument and
      other relevant legislation.

            


    

     

     

    
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