Document:

Exhibit 10.2

 

Effective January 11, 2021

 

CHARTER
OF THE AUDIT COMMITTEE

OF THE
BOARD OF DIRECTORS OF

RED CAT HOLDINGS, INC.

 

This
Charter outlines the purpose, composition and responsibilities of the Audit Committee (the “Committee”) of the
Board of Directors (the “Board”) of Red Cat Holdings, Inc., a Nevada corporation (the “Company”).

 

		I.	PURPOSE

 

The Committee
has been established to: (a) represent and assist the Board in its oversight responsibilities regarding the Company’s accounting
and financial reporting processes, the audits of the Company’s financial statements, including the integrity of the financial
statements, and the independent auditors’ qualifications and independence; (b) oversee the preparation of the report required
by Securities and Exchange Commission (“SEC”) rules for inclusion in the Company’s annual proxy statement;
(c) retain and terminate the Company’s independent auditors; (d) approve in advance all audit and permissible non-audit services
to be performed by the independent auditors; (e) approve related person transactions; and (f) perform such other functions as the
Board may from time to time assign to the Committee.

 

		II.	COMPOSITION

 

The Committee
shall be composed of at least three members (including a Chairperson), all of whom shall be “independent,” as such
term is defined for directors and audit committee members in the rules and regulations of the SEC and the listing standards of
the NASDAQ Stock Market LLC, as determined by the Board. The members of the Committee and the Chairperson shall be selected annually
by the Board and serve at the pleasure of the Board. A Committee member (including the Chairperson) may be removed at any time,
with or without cause, by the Board. All members of the Committee shall be able to read and understand financial statements at
the time of their appointment and at least one member of the Committee shall qualify as an “audit committee financial expert”
as such term is defined in the rules and regulations of the SEC, as determined by the Board. In addition, no Committee member may
have participated in the preparation of the financial statements of the Company or any of the Company’s current subsidiaries
at any time during the past three years. The Chairperson shall maintain regular communication with the Company’s Chief Executive
Officer, Chief Financial Officer and the lead partner of the independent auditors. The Committee shall have authority to delegate
responsibilities listed herein to subcommittees of the Committee if the Committee determines such delegation would be in the best
interest of the Company.

 

		III.	MEETING REQUIREMENTS

 

The
Committee shall meet as necessary to enable it to fulfill its responsibilities but at least quarterly. A majority of the
members, but not less than two members, shall constitute a quorum. The Committee shall act on the affirmative vote of a
majority of the members present at a meeting at which a quorum is present. Without a meeting, the Committee may act by
unanimous written consent of all members.

 

The Committee
may ask members of management, employees, outside counsel, the independent auditors, or others whose advice and counsel are relevant
to the issues then being considered by the Committee, to attend any meetings and to provide such pertinent information as the Committee
may request.

 

The Chairperson
of the Committee shall be responsible for leadership of the Committee, including preparing the agenda, presiding over Committee
meetings, making Committee assignments, reporting on the Committee’s activities to the Board and being the lead liaison between
the Committee and the Company’s management and independent auditors.

 

As part of
its responsibility to foster free and open communication, the Committee shall meet periodically in separate executive sessions
with the independent auditors, and may also meet in separate executive sessions with such other individuals as the Committee chooses,
including the principal internal auditor and/or a senior attorney within the office of the General Counsel.

 

		IV.	COMMITTEE RESPONSIBILITIES

 

In carrying
out its oversight responsibilities, the Committee’s policies and procedures should remain flexible to enable the Committee
to react to changes in circumstances. In addition to such other duties as the Board may from time to time assign, the Committee
shall have the following responsibilities:

 

		A.	Oversight of the Financial Reporting Processes

 

		1.	Review and discuss with the independent auditors
the matters required to be discussed by the independent auditors under Auditing Standard No. 16, as adopted by the Public Company
Accounting Oversight Board (“PCAOB”) and amended from time to time, or any successor standard, rule or regulation.

 

		2.	Discuss with management and legal counsel
the status of pending litigation, taxation matters, compliance policies and other areas that may materially impact the Company’s
financial statements or accounting policies.

 

		3.	Review with management and the independent
auditors the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures, on the Company’s
financial statements.

 

		B.	Review of Documents and Reports

 

		1.	Review and discuss with management and the
independent auditors the Company’s annual audited financial statements and quarterly financial statements (including disclosures
under the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations and any
report by the independent auditors related to the financial statements. Based on the review, the

 

		2.	Committee shall make its recommendation to
the Board as to the inclusion of the Company’s audited consolidated financial statements in the Company’s annual report
on Form 10-K.

 

		3.	Review and discuss earnings press releases
with management and the independent auditors.

 

		4.	Oversee the preparation of the report required
by the rules of the SEC to be included in the Company’s annual proxy statement.

 

		C.	Independent Auditors Matters

 

		1.	Be directly responsible for the appointment,
compensation, retention and oversight of the work of the independent auditors. In this regard, the Committee shall appoint and
retain, and submit for ratification by the Company’s stockholders, compensate, and evaluate the independent auditors and
terminate the independent auditors when circumstances warrant. The independent auditors shall report directly to the Committee.

 

		2.	Evaluate, on an annual basis, the independent
auditors’ qualifications, performance and independence, including the experience and qualifications of the senior members
of the audit team. In doing its evaluation, the Committee shall consider all professional services rendered by the independent
auditors and its affiliates. Consistent with the rules of the PCAOB, the Committee shall obtain and review a report by the independent
auditors describing any relationships between the independent auditors, and the Company or individuals in financial reporting oversight
roles at the Company, that may reasonably be thought to bear on the independent auditors’ independence and discuss with the
independent auditors the potential effects of any such relationships on independence.

 

		3.	Approve, in advance, all audit and permissible
non-audit services to be provided by the independent auditors, and establish policies and procedures for the preapproval of audit
and permissible non-audit services to be provided by the independent auditors.

 

		4.	The Committee shall oversee the regular rotation
of the lead audit partner and audit review partner as required by law and consider whether there should be a periodic rotation
of the Company’s independent auditors.

 

		5.	As appropriate, review and approve the hiring
of employees or former employees of the independent auditors.

 

		D.	Internal Controls and Disclosure Controls

 

		1.	Review and discuss the adequacy and effectiveness
of the Company’s internal controls, including periodically receiving reports from the Company’s independent auditors
and Chief Executive Officer and Chief Financial Officer regarding the Company’s system of internal controls.

 

		2.	Review and discuss the adequacy and effectiveness
of the Company’s disclosure controls and procedures, including periodically receiving reports from management regarding the
Company’s disclosure controls and procedures.

 

		3.	Establish and oversee procedures for the receipt,
retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters,
and confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

 

		E.	Internal Audit (if applicable)

 

		1.	Review and discuss with the principal internal
auditor of the Company the results of the internal audit.

 

		2.	Annually review and discuss with the principal
internal auditor of the Company the annual internal audit plan and the adequacy of internal audit resources, and the performance
and effectiveness of the internal audit function.

 

		3.	Review and concur in the appointment, and dismissal
when appropriate, of the principal internal auditor, and the compensation of the principal internal auditor.

 

		F.	Other Responsibilities

 

		1.	Review and approve “related person transactions”
as such term is defined in the rules and regulations of the SEC.

 

		2.	Review and discuss the Company’s practices
with respect to risk assessment and risk management.

 

		3.	Annually evaluate the adequacy of the Committee’s charter.

 

		4.	To the extent the Company plans to rely on
“end-user exception” regulations established by the Commodity Futures Trading Commission, at least annually, review
and approve on behalf of the Company and any applicable subsidiaries, the Company’s decision to enter into swaps that are
exempt from exchange- execution and clearing under the end-user exception, and review and discuss with management applicable Company
policies governing the Company’s use of swaps subject to the end-user exception.

 

		V.	ADVISORS TO THE COMMITTEE

 

The
Committee may retain, at the Company’s expense, legal, accounting or other advisors, as it deems necessary to carry out
its duties, and shall receive appropriate funding, as determined by the Committee, from the Company for payment of
compensation to any such advisors and for the payment of ordinary administrative expenses that are necessary or appropriate
in carrying out the Committee’s duties. The Committee shall have sole authority to retain and terminate any such
advisors, including the sole authority to negotiate and approve reasonable fees and retention terms of such advisors. The
Committee shall comply with the Company’s then-current level review of contracts and budget procedures.Exhibit 10.3

 

Effective January 11, 2021

 

CHARTER
OF THE COMPENSATION COMMITTEE

OF THE
BOARD OF DIRECTORS OF

RED CAT HOLDINGS, INC.

 

The Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of Red Cat Holdings,
Inc. (the “Company”) is responsible for the overall design, approval and implementation of the executive compensation
plans, policies and programs for officers and other key executives of the Company. This Charter outlines the purpose, composition
and responsibilities of the Committee.

 

		I.	PURPOSE

 

The Committee
has been established to: (a) assist the Board in seeing that a proper system of long-term and short-term compensation is in place
to provide performance oriented incentives to attract and retain management, and that compensation plans are appropriate and competitive
and properly reflect the objectives and performance of management and the Company; (b) assist the Board in discharging its responsibilities
relating to compensation of the Company’s executive officers; (c) evaluate the Company’s Chief Executive Officer and
set his or her remuneration package; (d) make recommendations to the Board with respect to incentive- compensation plans and equity-based
plans; and (e) perform such other functions as the Board may from time to time assign to the Committee.

 

		II.	COMPOSITION

 

The Committee
shall be composed of at least three, but not more than five, members (including a Chairperson), all of whom shall be “independent,”
as such term is defined for directors and compensation committee members in the listing standards of the NASDAQ Stock Market LLC
(“NASDAQ”), as determined by the Board. Additionally, members of the Committee shall qualify as “non-employee
directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 and as “outside directors” for
purposes of Section 162(m) of the Internal Revenue Code (“Section 162(m)”). The members of the Committee and
the Chairperson shall be selected annually by the Board and serve at the pleasure of the Board. A Committee member (including the
Chairperson) may be removed at any time, with or without cause, by the Board. The Committee shall have authority to delegate responsibilities
listed herein to subcommittees of the Committee if the Committee determines such delegation would be in the best interest of the
Company.

 

		III.	MEETING REQUIREMENTS

 

The
Committee shall meet as necessary to enable it to fulfill its responsibilities, but at least twice each year. The Committee
shall meet at the call of the Chairperson. The Committee may meet by telephone conference call or by any other means
permitted by law or the Company’s Bylaws. A majority of the members, but not less than two members, shall constitute a
quorum. The Committee shall act on the affirmative vote of a majority of the members present at a meeting at which a quorum
is present. Without a meeting, the Committee may act by unanimous written consent of all members.

 

The Committee
may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee
to attend any meetings and to provide such pertinent information as the Committee may request.

 

The Chairperson
of the Committee shall be responsible for leadership of the Committee, including preparing the agenda, presiding over Committee
meetings, making Committee assignments, reporting on the Committee’s activities to the Board and being the lead liaison between
the Committee and the Company’s management and compensation consultants.

 

		IV.	COMMITTEE RESPONSIBILITIES

 

In carrying
out its oversight responsibilities, the Committee’s policies and procedures should remain flexible to enable the Committee
to react to changes in circumstances. In addition to such other duties as the Board may from time to time assign, the Committee
shall have the following responsibilities:

 

		A.	Compensation Policies

 

		1.	To review and make periodic recommendations
to the Board as to the general compensation and benefits policies and practices of the Company;

 

		2.	To oversee the assessment of the incentives and
risks arising from or related to the Company’s compensation policies and practices, including but not limited to those applicable
to executive officers, and to evaluate whether the incentives and risks are appropriate;

 

		3.	To establish an overall compensation policy
applicable to executive officers and periodically review that policy; and

 

		4.	To assess the results of the Company’s
most recent advisory vote on executive compensation.

 

		B.	Chief Executive Officer Evaluation and Compensation

 

		1.	To (a) review and approve goals and objectives
relevant to the Chief Executive Officer’s compensation package, (b) establish a procedure for evaluating the Chief Executive
Officer’s performance, (c) annually evaluate the performance of the Chief Executive Officer in conjunction with the Nominating
and Governance Committee in light of the goals and objectives established, and (d) review with the Chief Executive Officer the
results of the Committee’s performance evaluation. The Chief Executive Officer may not be present during voting or deliberations
on his or her compensation; and

 

		2.	To review, at least annually, and set the
base salary and annual and long-term incentive compensation of the Chief Executive Officer, after taking into account the annual
evaluation of the Chief Executive Officer.

 

		C.	Other Executive Officers’ Compensation and Evaluations

 

		1.	To (a) review and approve goals and objectives
relevant to the other executive officers’ compensation packages, (b) establish a procedure for evaluating such executive
officers’ performance, (c) annually evaluate such performance in light of the goals and objectives established, and (d) if
requested by the Chief Executive Officer, have the Committee Chairperson review, after completion of the annual evaluation, with
each executive officer the results of the Committee’s evaluation of such executive officer’s performance; and

 

		2.	To review, at least annually, and set the
base salary and annual and long-term incentive compensation of the other executive officers, after taking into account the annual
evaluation of each such executive officer referred to in the preceding paragraph and the input of the Chief Executive Officer.

 

		D.	Incentive-Compensation and Equity-Based Plans

 

		1.	To review and to make periodic recommendations
to the Board as to the Company’s incentive-compensation plans and equity-based plans;

 

		2.	To administer the Company’s equity incentive
plan, share tracking awards plans, employee stock purchase plan, supplemental executive retirement plan, change of control severance
plan and any similar plans in accordance with their respective plan documents;

 

		3.	To review and approve or recommend to the Board,
as applicable, (and for stockholder approval where required by applicable law, the Certificate of Incorporation, Bylaws or other
policies) compensation and benefits policies, plans and programs and amendments thereto, and to determine eligible employees and
the type, amount and timing of such compensation and benefits; and

 

		4.	To oversee the administration of such policies,
plans and programs and, on an ongoing basis, to monitor them to assess whether they remain competitive and within the Board’s
compensation objectives for executive officers and other members of senior management.

 

		E.	Other Duties

 

		1.	To review and discuss with management the Company’s
Compensation Discussion and Analysis section (“CD&A”) and related disclosures that Securities and
Exchange Commission (“SEC”) rules require be included in the Company’s annual report and proxy statement,
recommend to the Board based on the review and discussions whether the CD&A should be included in the annual report and proxy
statement, and oversee the preparation of the compensation committee report required by
SEC rules for inclusion in the Company’s annual report and proxy statement;

 

		2.	To review and recommend employment agreements
and severance arrangements for executive officers, including change-in-control provisions, plans or agreements;

 

		3.	To review and consider recommendations from
the Nominating and Corporate Governance Committee with respect to the compensation and benefits of non- employee directors and
to recommend any changes to the Board that the Committee deems appropriate;

 

		4.	To review the impact of executive compensation
that is not deductible under Section 162(m) and to determine the Company’s policy with respect to the application of Section
162(m); and

 

		5.	To assess, at least annually, whether the work
of compensation consultants involved in determining or recommending executive or director compensation has raised any conflict
of interest that is required to be disclosed in the Company’s annual report and proxy statement.

 

		6.	To annually evaluate and the adequacy of the Committee’s charter.

 

		V.	ADVISORS TO THE COMMITTEE

 

The Committee
shall have the authority, in its sole discretion, to retain or obtain the advice of such outside counsel, experts, and other advisors,
as it deems necessary to carry out its duties, including any compensation consultant used to assist the Committee in the evaluation
of director, Chief Executive Officer or executive compensation. The Committee shall be directly responsible for the appointment,
compensation and oversight of the work of any outside counsel, experts, and other advisors retained by the Committee, and will
receive appropriate funding, as determined by the Committee, from the Company to pay for such advisor’s services. The Committee
shall assess the independence of outside counsel, experts, and other advisors (whether retained by the Committee or management)
that provide advice to the Committee, in accordance with NASDAQ listing standards. The Committee shall comply with the Company’s
then-current level review of contracts and budget procedures.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00319-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00319-of-00352.parquet"}]]