EXHIBIT 3.3
CHARTER FOR THE AUDIT COMMITTEE
OF AMERICAN HOMESTAR CORPORATION
SEPTEMBER 19, 2001
I. DESCRIPTION AND PURPOSE
The Audit Committee (the "Committee") is a standing committee of the Board of
Directors (the "Board") of American Homestar Corporation (the "Company") whose
primary function is to ensure the integrity of the Company's financial
statements. The Committee shall assist the Board in fulfilling its oversight
responsibilities by reviewing the financial information which will be provided
to the Board and others, the internal control structure, the audit process, and
the adherence to applicable laws and regulations. Considering the size and
complexity of the Company, the Committee shall apply reasonable materiality
standards to all of its activities.
II. COMPOSITION/EXPERTISE REQUIREMENT OF AUDIT COMMITTEE MEMBERS
A. IN GENERAL
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1. The Committee shall consist of at least two members, comprised solely
of Independent Directors, as that term is defined below.
2. Each member of the Committee must be able to read and understand
fundamental financial statements, including the Company's balance
sheet, income statement, and cash flow statement or must become able
to do so within a reasonable period of time after his or her
appointment to the Committee.
3. At least one member of the Committee must have past employment
experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication,
including being or having been a chief executive officer, chief
financial officer, or other senior officer with financial oversight
responsibilities.
4. Each member shall be appointed by the Board and shall serve for a
period of one year or until such time as his or her successor has been
duly appointed and qualified.
B. INDEPENDENT DIRECTOR
As used in this Charter, "Independent Director" means a person other than an
officer or employee of the Company or its subsidiaries or any other individual
having a relationship which, in the opinion of the Board, would interfere with
the exercise of their independence from management and the Company. The
following persons shall not be considered independent:
1. Employees. A director who is an employee (including non-employee
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executive officers) of the Company or any of its affiliates may not
serve on the Committee until three years following the termination of
his or her employment. In the event the employment relationship is
with a former parent or predecessor of the Company, the director could
serve on the Committee after three years following the termination of
the relationship between the Company and the former parent or
predecessor.
2. Business Relationship. A director (i) who is a partner, controlling
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shareholder, or executive officer of an organization that has a
business relationship with the Company, or (ii) who has a direct
business relationship with the Company (e.g., a consultant) may serve
on the Committee only if the Board determines in its business judgment
that the relationship does not interfere with the director's exercise
of independent judgment. In making a determination regarding the
independence of a director pursuant to this paragraph, the Board
should consider, among other things, the materiality of the
relationship to the Company, to the director, and, if applicable, to
the organization with which the director is affiliated. "Business
relationships" can include commercial, industrial, banking,
consulting, legal, accounting and other relationships. A director can
have this relationship directly with the Company, or the director can
be a partner, officer or employee of an organization that has such a
relationship. The director may serve on the Committee without the
above-referenced Board's determination after three years following the
termination of, as applicable, either (a) the relationship between the
organization with which the director is affiliated and the Company,
(b) the relationship between the director and his or her partnership
status, shareholder interest or executive officer posit ion, or (c)
the direct business relationship between the director and the Company.
3. Cross Compensation Committee Link. A director who is employed as an
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executive of another corporation where any of the Company's executives
serves on that corporation's compensation committee may not serve on
the Committee.
4. Immediate Family. A director who is an Immediate Family member of an
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individual who is an executive officer of the Company or any of its
affiliates cannot serve on the Committee until three years following
the termination of such employment relationship, "Immediate Family"
includes a person's spouse, parents, children, siblings,
mothers-in-law and fathers-in-law, sons and daughters-in-law, brothers
and sisters-in-law, and anyone (other than employees) who shares such
person's home.
C. LIMITED EXCEPTION TO INDEPENDENT DIRECTOR REQUIREMENT.
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Notwithstanding the requirements of subparagraphs II.B.1 and II.B.4 of this
Charter, one director who is no longer an employee or who is an Immediate Family
member of a former executive officer of the Company or its affiliates, but is
not considered independent pursuant to these
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provisions due to the three-year restriction period, may be appointed, under
exceptional and limited circumstances, to the Committee if the Board determines
in its business judgment that membership on the Committee by the individual is
required by the best interests of the Company and its shareholders, and the
Company discloses, in the next annual proxy statement subsequent to such
determination, the nature of the relationship and the reason for that
determination.
III. MEETINGS
The Committee shall meet as frequently as circumstances require, but in any
event on a quarterly basis. The Committee may ask members of management or
others to attend meetings and may provide pertinent information to them as the
Committee deems necessary. The Committee should meet privately in executive
session at least annually with management, the director of the Company's
internal auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or any of those groups believe should be
discussed. In addition, the Committee should communicate with management and the
independent -auditors quarterly to review the Company's financial statements and
significant findings based upon the auditors' limited review procedures. Minutes
shall be taken for each Committee meeting which shall then be approved at the
next meeting of the Committee.
IV. RESPONSIBILITIES AND DUTIES
The Committee's primary responsibilities and duties are as follows:
A. IN GENERAL
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1. Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
2. Monitor the independence and performance of the Company's independent
auditors and the performance of the Company's internal auditing
department.
3. Provide an avenue of communication between the independent auditors
and the Company's internal auditing department.
4. Provide an avenue of communication among the independent auditors,
management, the Company's internal auditing department, and the Board.
B. Review Procedures
1. Review and reassess the adequacy of this Charter on an annual basis.
Submit the Charter to the Board for approval and have the document
published at least every three years in accordance with SEC
regulations and the rules of the stock exchange on which the Company's
securities are traded.
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2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
principals, practices, and judgments.
3. In conjunction with management, the independent auditors, and the
Company's internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control and report such exposures. Review significant
findings prepared by the independent auditors and the Company's
internal auditing department together with management's responses.
4. Review with management and the independent auditors the Company's
quarterly financial results prior to the release of earnings and/or
the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principals and any items required to be communicated by the
independent auditors in accordance with SAS 61 (Codification of
Statements on Auditing Standards, AU 380), as may be modified or
supplemented. The Chairman of the Committee may represent the entire
Committee for purposes of this review.
5. Review with the independent auditor:
a. The Company's financial statements and related footnotes and the
independent auditor's report thereon, including their report on
the adequacy of the Company's internal controls and any
significant recommendations they may offer to improve internal
controls;
b. Any significant accruals, reserves or estimates which may have a
material impact on the financial statements; and
c. Any difficulties or disputes with management encountered by the
independent auditor during the course of the audit and any
instances of second opinions sought by management.
6. Consider and review with the independent auditor:
a. The adequacy of the Company's internal controls and any
significant findings during the year and management's responses
thereto; and
b. Any difficulties, encountered in the course of the internal
audits, including any restrictions on the scope of their work or
access to required information.
7. Consider with management and the independent auditor the possible
impact of any pending changes in accounting standards or rules as
promulgated by the FASB or others.
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8. Review with legal counsel any legal and regulatory matters that may
have a material impact on the financial statements and any reports
received from regulators, and any environmental compliance and
reserves.
9. Report Committee actions to the Board with such recommendations as the
Committee may deem appropriate.
C. INDEPENDENT AUDITORS
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1. The independent auditors are ultimately accountable to the Committee
and the Board. The Committee and the Board have the ultimate authority
and responsibility to select, evaluate and, where appropriate, replace
the independent auditor (or to nominate the independent auditor to be
proposed for shareholder approval in any proxy statement).
2. The Committee is responsible for ensuring that the independent auditor
submits on a periodic basis to the Committee a formal written
statement delineating all relationships between the independent
auditor and the Company, consistent with Independence Standards Board
Standard I (Independence Discussions with Audit Committees), as may be
modified or supplemented, and the Committee is responsible for
actively engaging in a dialogue with the independent auditor with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the independent auditor and for
taking, or recommending that the Board take appropriate action to
oversee the independence of the independent auditor. The Committee
shall review the independence and the performance of the auditors and
annually recommend to the Board the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant. To ensure independence, on an annual basis, the Committee
shall review and discuss with the independent auditors all significant
relationships they have with the Company that could impair the
auditors' independence.
3. Review the independent auditors' audit plan, discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach to ensure completeness of coverage, reduction in
redundant efforts, and the effective use of audit resources.
4. Approve the fees and other significant compensation to be paid to the
independent auditors.
V. INVESTIGATIONS
The Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities and duties and it has direct access to the
independent auditors as well as anyone in the Company. The Committee has the
ability to retain, at the Company's expense, special
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legal, accounting, or other consultants or experts it deems necessary to fulfill
its responsibilities and duties.
VI. WRITTEN AFFIRMATION
Once each year the Committee shall provide the Company through the Board, and
the Company shall provide to the stock exchange on which the Company's
securities are traded, written confirmation regarding:
1. Any determination that the Board has made regarding the independence
of directors who are members of the Committee pursuant to this
Charter;
2. The financial literacy of the Committee members;
3. The determination that at least one of the Committee members has
accounting or related financial management expertise; and
4. The annual review and reassessment of this Charter.
VII. AUDIT COMMITTEE REPORT
In its annual proxy statement, the Company must include a report of the
Committee, it must provide disclosures regarding the independence of the
Committee members, and at least once every three (3) years it must attach a copy
of the Committee Charter as an exhibit to the proxy statement. As set forth in
Item 306 of Regulation S-K and Item 7(e)(3) of Schedule 14A, the Committee's
report must state whether:
1. the Committee has reviewed and discussed the audited financial
statements with management;
2. the Committee has discussed with the Company's independent auditors
the matters required to be discussed by SAS 61;
3. the Committee has received the written disclosures and the letter from
the Company's independent auditors required by Independence Standards
Board Standard No. I and has discussed with the independent auditors
the independent auditor's independence; and
4. based on the review and discussions referred to in paragraphs 1
through 4, the Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on
Form 10-K for the last fiscal year for filing with the SEC.
The name of each member of the Committee must appear below the Committee's
report.
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