On February 12, 1999, the Board of Directors of The Fairchild
Corporation adopted resolutions amending and restating in their
entirety the provisions of the Corporation's Bylaws relative to
the Audit Committee as set forth below:
REVISIONS TO
ARTICLE III, SECTIONS 11 THROUGH 13 OF
THE AMENDED AND RESTATED BYLAWS OF
THE FAIRCHILD CORPORATION
(UPDATING THE PROVISIONS RELATING TO THE AUDIT COMMITTEE)
ARTICLE III
Directors
* * * * *
Audit Committee
Section 11. General.
(a) Membership. The corporation shall have an audit
committee (the "Audit Committee") comprised of at least three
members of the corporation's board of directors. Each member of
the Audit Committee shall be independent of the corporation's
management and shall be free from any relationship that would
interfere with the exercise of judgment independent of the
corporation's management.
(b) Purpose. The purpose of the Audit Committee shall be
to assist the corporation's board of directors in discharging its
responsibilities with respect to (1) the corporation's internal
accounting, auditing and financial reporting controls, policies,
procedures and practices (collectively, "Internal Controls"), and
(2) the corporation's independent public accountants.
(c) Appointment and Term. The Chairman and each member of
the Audit Committee shall be appointed by the corporation's board
of directors to serve a term of one year or until their
successors have been duly appointed and assume office.
(d) Committee Meetings. The Audit Committee shall hold at
least four regular meetings each year, and such additional
meetings as the Chairman or a majority of the members of the
Audit Committee may deem necessary or advisable. The Audit
Committee may require the presence and participation of any
officer or employee of the corporation, the corporation's
internal auditors, or the corporation's independent public
accountants at any meeting of the Audit Committee.
(e) Minutes. The Audit Committee shall prepare and approve
minutes of its meetings, and such minutes shall be submitted to
the corporation's board of directors for review and to the
corporation's Secretary for inclusion in the corporation's minute
books.
(f) Reports of Actions. The Audit Committee shall promptly
report all actions it has taken to the corporation's board of
directors for ratification.
Section 12. Responsibilities of the Audit Committee.
(a) Internal Controls. The Audit Committee shall review
the actions taken by the corporation's management to ensure that
the corporation adopts, maintains and adheres to a system of
Internal Controls that provides reasonable assurances that (1)
all transactions of the corporation are properly authorized and
are reflected in the books and records of the corporation, (2)
the risk of financial misconduct is minimized and any such
misconduct is promptly detected and reported, (3) the corporation
is able to prepare and publish financial statements that are
fairly presented, have been prepared in accordance with generally
accepted accounting principles, and comply with all applicable
requirements, and (4) the internal and external audits of the
corporation are adequate and comply with all applicable
requirements. The Audit Committee shall review with the
corporation's Chief Financial Officer and independent public
accountants at least annually the adequacy and effectiveness of
the corporation's Internal Controls.
(b) Financial Statements. The Audit Committee shall review
the corporation's published financial statements, including
without limitation (1) any unusual or non-recurring items
therein, (2) the accounting principles applied therein, (3) any
changes in previously applied accounting principles, and (4)
management's report accompanying the corporation's annual
financial statements included in the corporation's Annual Report
to Shareholders.
(c) Internal Audit. The Audit Committee shall review (1)
the corporation's internal audit plans with management and the
corporation's independent public accountants (which review shall
be conducted at least annually), (2) management's appointment,
replacement, reassignment or dismissal of the corporation's
internal auditors, (3) the progress and key findings of the
corporation's internal audits, (4) the compensation paid by the
corporation to its internal auditors for all services rendered
(which review shall be conducted at least annually), (5) all
reports, criticisms, problems, issues, recommendations or other
matters submitted or raised by the corporation's internal
auditors, and management's responses, actions and follow-up with
respect thereto, and (6) all disagreements between management and
the corporation's internal auditors.
(d) Independent Public Accountants. The Audit Committee
shall annually review (1) management's recommendation with
respect to the selection of the corporation's independent public
accountants, and provide to the corporation's board of directors
a recommendation with respect to such selection, (2) the scope of
the corporation's annual examination and audit with the
corporation's independent public accountants, (3) management's
evaluation of the independence of the corporation's independent
public accountants, (4) the letter from the corporation's
independent public accountants with respect to their independence
from the corporation's management and their unrestricted access
to the Audit Committee, (5) the report from the corporation's
independent public accountants with respect to the services that
they have provided to the corporation and other related matters,
(6) the compensation paid by the corporation to its independent
public accountants for all services rendered, (7) all reports,
criticisms, problems, issues, recommendations or other matters
submitted or raised by the corporation's independent public
accountants, and management's responses, actions and follow-up
with respect thereto, and (8) all disagreements between
management and the corporation's independent public accounts.
(e) Second Opinions. The Audit Committee shall review
decisions by management to obtain second opinions on significant
accounting issues and any actions taken by management in reliance
on such opinions.
(f) Meetings. The Audit Committee shall meet at least
annually with (1) appropriate officers and employees of the
corporation to discuss tax matters affecting the corporation, and
(2) in-house counsel to discuss legal matters affecting the
corporation.
Section 13. Independent Public Accountants. In order to
ensure that the Audit Committee receives all the information
necessary to carry out its responsibilities, the Audit Committee
shall request, at least annually, confirmation from the
corporation's independent public accountants that they have
informed the Audit Committee as to (a) the initial selection of
and changes in significant accounting policies and their
application, (b) the process used in formulating sensitive
accounting estimates, (c) adjustments proposed by the auditor but
not recorded by the corporation that could cause future financial
statements to be materially misstated, (d) disagreements with
management and whether or not satisfactorily resolved, (e) cases
when management consulted with other accountants about auditing
and accounting matters, (f) difficulties encountered in
performing the annual audit, and (g) any other significant
Internal Control or financial reporting matter.