Exhibit 99.1
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
CELERITEK, INC.
(as adopted by the Board of Directors on March 27, 2003)
PURPOSE:
The purpose of the Audit Committee of the Board of Directors of Celeritek, Inc.,
a California corporation (the "Company"), shall be to:
- Oversee the accounting and financial reporting processes of
the Company and audits of the financial statements of the
Company;
- Assist the Board in oversight and monitoring of (i) the
integrity of the Company's financial statements, (ii) the
Company's compliance with legal and regulatory requirements,
(iii) the independent auditor's qualifications, independence
and performance, and (iv) the Company's internal accounting
and financial controls;
- Prepare the report that the rules of the Securities and
Exchange Commission (the "SEC") require be included in the
Company's annual proxy statement;
- Provide the Company's Board with the results of its monitoring
and recommendations derived therefrom; and
- Provide to the Board such additional information and materials
as it may deem necessary to make the Board aware of
significant financial matters that require the attention of
the Board.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the Board of Directors
may from time to time prescribe.
MEMBERSHIP:
The Audit Committee members will be appointed by, and will serve at the
discretion of, the Board of Directors. The Audit Committee will consist of at
least three members of the Board of Directors. Members of the Audit Committee
must meet the following criteria (as well as any criteria required by the SEC):
- Each member will be an independent director, as defined by (i)
the Nasdaq Stock Market, Inc. Marketplace Rules (the "Nasdaq
Rules"), (ii) the rules of the SEC and (iii) applicable law,
as in effect from time to time.
- Each member will be able to read and understand fundamental
financial statements, in accordance with the Audit Committee
requirements of the Nasdaq Rules; and
- At least one member will (i) have past employment experience
in finance or accounting, requisite professional certification
in accounting, or other comparable experience or background,
including a current or past position as a principal financial
officer or other senior officer with financial oversight
responsibilities, or (ii) be an "audit committee financial
expert" as such term is defined by Item 401 of Regulation S-K.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
- Reviewing on a continuing basis the adequacy of the Company's
system of internal controls, including meeting periodically
with the Company's management and the independent auditors to
review the adequacy of such controls and to review before
release the disclosure regarding such system of internal
controls required under SEC rules to be contained in the
Company's periodic filings and the attestations or reports by
the independent auditors relating to such disclosure;
- Appointing, compensating and overseeing the work of the
independent auditors (including resolving disagreements
between management and the independent auditors regarding
financial reporting) for the purpose of preparing or issuing
an audit report or related work; in this regard, the Audit
Committee shall have the sole authority to approve the hiring
and firing of the independent auditors, all audit engagement
fees and terms and all non-audit engagements, as may be
permissible, with the independent auditors;
- Pre-approving audit and permissible non-audit services
provided to the Company by the independent auditors (or
subsequently approving non-audit services in those
circumstances where a subsequent approval is necessary and
permissible). The Audit Committee may delegate to one or more
designated members of the Audit Committee the authority to
pre-approve audit and permissible non-audit services, provided
that such pre-approval decision is presented to the full Audit
Committee at its scheduled meetings.
- Reviewing and providing guidance with respect to the external
audit and the Company's relationship with its independent
auditors by (i) reviewing the independent auditors' proposed
audit scope, approach and independence; (ii) obtaining on a
periodic basis a statement from the independent auditors
regarding relationships and services with the Company which
may impact independence and presenting this statement to the
Board of Directors, and to the extent there are relationships,
monitoring and investigating them; (iii) reviewing the
independent auditors' peer review conducted every three years;
(iv) discussing with the Company's independent auditors the
financial statements and audit
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findings, including any significant adjustments, management
judgments and accounting estimates, significant new accounting
policies and disagreements with management and any other
matters described in SAS No. 61, as may be modified or
supplemented; and (v) reviewing reports submitted to the audit
committee by the independent auditors in accordance with the
applicable SEC requirements;
- Reviewing and discussing with management and the independent
auditors the annual audited financial statements and quarterly
unaudited financial statements, including the Company's
disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations," prior to
filing the Company's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, respectively, with the SEC;
- Directing the Company's independent auditors to review before
filing with the SEC the Company's interim financial statements
included in Quarterly Reports on Form 10-Q, using professional
standards and procedures for conducting such reviews;
- Conducting a post-audit review of the financial statements and
audit findings, including any significant suggestions for
improvements provided to management by the independent
auditors;
- Reviewing before release the unaudited quarterly operating
results in the Company's quarterly earnings release;
- Overseeing compliance with the requirements of the SEC for
disclosure of auditor's services and audit committee members,
member qualifications and activities;
- Reviewing, approving and monitoring the Company's code of
ethics for its senior executive and financial officers, in
accord with applicable law;
- Reviewing management's monitoring of compliance with the
Company's standards of business conduct and with the Foreign
Corrupt Practices Act;
- Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on the Company's financial
statements;
- Providing oversight and review at least annually of the
Company's risk management policies, including its investment
policies;
- Overseeing and reviewing the Company's policies regarding
information technology and management information systems;
- If necessary, instituting special investigations with full
access to all books, records, facilities and personnel of the
Company;
- Reviewing and approving in advance any proposed related party
transactions;
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- Reviewing its own charter, structure, processes and membership
requirements;
- Providing a report in the Company's proxy statement in
accordance with the rules and regulations of the SEC; and
- Establishing procedures for receiving, retaining and treating
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and
procedures for the confidential, anonymous submission by
employees of concerns regarding questionable accounting or
auditing matters.
In performing its responsibilities, the Audit Committee shall have the authority
to hire and obtain advice, assistance, reports or opinions from internal or
external legal counsel, accounting or other expert advisors.
MEETINGS:
The Audit Committee will meet at least four times each year. The Audit Committee
may establish its own meeting schedule, which it will provide to the Board of
Directors in advance.
The Audit Committee will meet separately with the Chief Executive Officer and
separately with the Chief Financial Officer of the Company at such times as are
appropriate to review the financial affairs of the Company. The Audit Committee
will meet separately with the independent auditors of the Company, at such times
as it deems appropriate, to fulfill the responsibilities of the Audit Committee
under this charter.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which minutes
will be filed with the minutes of the meetings of the Board of Directors.
REPORTS:
In addition to preparing the report in the Company's proxy statement in
accordance with the rules and regulations of the SEC, the Audit Committee will
summarize its findings and recommendations to the Board of Directors as may be
appropriate, consistent with the Committee's charter.
COMPENSATION:
Members of the Audit Committee shall receive such fees, if any, for their
service as Audit Committee members as may be determined by the Board of
Directors. Such fees may include retainers and per meeting fees. Fees may be
paid in such form of consideration as is determined by the Board of Directors.
Members of the Audit Committee may not receive any compensation from the Company
except the fees that they receive for service as a member of the Board of
Directors or any committee thereof.
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