The Board of Directors (the "Board") of Marchex,
Inc. (the "Company") has established an Audit Committee (the
"Committee") whose role is to assist the Board in oversight and
monitoring of: (i) the quality and integrity of the
Company's financial statements and related disclosure; (ii) the Company's
compliance with legal and regulatory requirements; (iii) the independent
auditors, including their qualification and independence; (iv) the Company's
system of internal controls; and (v) the auditing, accounting and financial
reporting process in general.
Committee does not prepare financial statements or perform audits, and its
members are not auditors or certifiers of the Company's financial statements.
It is not the duty of the Committee to conduct audits or to determine that the
Company's financial statements and disclosures are complete and accurate and
are in accordance with Generally Accepted Accounting Principles and applicable
rules and regulations. The Committee serves a board level oversight role
through which it provides advice, counsel and direction to management and the
independent auditors on the basis of information it receives, discussions with
accountants and its members" experience in business, financial and
accounting matters. It is not the responsibility of the Committee to resolve
disagreements, if any, between management and the independent auditors or to
ensure that the Company complies with all laws and regulations and its code of
contained in this Charter is intended to, or should be construed as, creating
any responsibility or liability of the members of the Committee except to the
extent otherwise provided under Delaware law which shall continue to set the
legal standard for the conduct of the members of the Committee.
The Committee shall consist of a minimum of three members of the Board, each of
whom shall meet the independence requirements of the Securities and Exchange
Commission and the Nasdaq
Stock Market, Inc. ("Nasdaq") then in
effect. Each member shall be financially literate, in accordance with the Nasdaq Audit Committee requirements, and at least one
member will have (i) past employment experience in
finance or accounting; (ii) requisite professional certification in accounting;
or (iii) other comparable experience or background. At least one member of the
Committee shall meet the definition of an Audit Committee Financial Expert, in
accordance with the Securities and Exchange Commission rules and regulations.
All determinations regarding independence, financial literacy and qualification
as an Audit Committee Financial Expert shall be made by the Board of Directors.
shall appoint one member of the Committee to act as its Chair. The members of
the Committee will be appointed by the Board. The members of the Committee will
serve at the discretion of the Board. The members of the Committee shall serve
terms of one year, and shall be eligible for re-appointment.
Duties and Responsibilities
In carrying out its duties and responsibilities, the
Committee's policies and procedures shall remain flexible, so that it may be in
the best position to react and respond to changing circumstances or conditions.
The following offers guidelines regarding the Committee's duties and
- Review and reassess the adequacy of this
Charter each year. Submit the Charter to the Board for approval and
publish the document as required by law or Securities and Exchange
respect to the Independent Auditor
- Appoint, compensate and oversee the work of the
independent auditors (including resolution of disagreements between
management and the independent auditors regarding financial reporting) for
the purpose of preparing or issuing an audit report or related work. The
independent auditor shall report directly to the Committee.
- Pre-approve all audit and non-audit services to
be provided to the Company by the independent auditors (except for certain
de minimus actions permitted under the
Securities and Exchange Commission rules and regulations) and review and
approve disclosures with respect to non-audit services. The Committee
shall have the sole authority to approve the hiring and firing of the
independent auditors and all fees and terms of audit and non-audit
engagements with the independent auditors, in each case as may be
permissible and compatible with the auditors" independence.
- Review and provide 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, and to the extent
there are relationships, monitoring and investigating them; (iii) ensuring
that the independent auditors submit to the Committee on an annual basis a
formal written statement delineating all relationships and services that
may impact the objectivity and independence of the independent auditors;
and (iv) reviewing reports submitted to the Committee by the independent
auditors in accordance with the applicable Securities and Exchange
Commission requirements. An accounting firm may not perform any audit
service for the Company if a Chief Executive Officer, Chief Financial
Officer, Controller or chief accounting officer of the Company was
employed by that firm and participated in any capacity in the audit of the
Company during the one-year period preceding the date of initiation of the
- Obtain and review a timely report to the
Committee regarding: (i) all critical accounting
policies and practices to be used; (ii) alternative treatments of
financial information within GAAP that have been discussed with
management; (iii) ramifications of the use of such alternative and the
treatment preferred by the auditor; and (iv) any other material written
communications between the auditor and management.
- Periodically discuss with the independent
auditors: (i) their judgments about the quality,
appropriateness, and acceptability of the Company's accounting principles
and financial disclosure practices, as applied in its financial reporting;
and (ii) the completeness and accuracy of the Company's financial
- Review the experience and qualifications of the
senior members of the independent auditor team.
- Review and concur with the Company's hiring of
employees of the independent auditor who were engaged on the Company's
- Review the performance of the independent
auditors on an annual basis.
respect to Financial Reporting
- Review the Company's audited financial
statements and the documents containing such filings, including the
Company's disclosures under “Management's Discussion and Analysis of
Financial Condition and Results of Operations”, prior to filing or
distribution. Include in such review discussion with management and
independent auditors of significant issues regarding accounting
principles, practices, audit findings, disclosures, judgments and any
other requirements under accounting standards or rules.
- Review and discuss with management, the
Company's internal procedures.
- In consultation with management and the
independent auditors, consider the integrity of the Company's financial
reporting processes and controls. Assess significant financial risk
exposures and the steps management has taken to monitor, control and
report such exposures. Review significant findings prepared by the
independent auditor together with management's responses.
- Prior to issuing quarterly financial statements,
review those statements and the related filings with management and the
independent auditors and consider any items required to be communicated by
the independent auditors in accordance with the Statements on Auditing
Standards No. 61.
- Review the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and
discuss with the independent accountant the independent accountant's
- Review the Company's management report on
internal controls over financial reporting disclosure requirements, which
explains the management's responsibility for maintaining an internal
control structure and assesses the effectiveness of the internal control
structure for the past year, to be contained in the Company's Annual
Report on Form 10-K. Review the independent auditor's attestation to and
report on management's assessment.
- Review with management and the independent
auditor any material changes to the Company's accounting principles and
- Review with management and the independent
auditor any significant changes required in the independent auditor's
audit plan. Provide a report for inclusion in the Company's proxy
statement in accordance with the rules and regulations of the Securities
and Exchange Commission.
- Oversee compliance with the requirements of the
Securities and Exchange Commission for disclosure of auditors"
services and audit committee member qualifications and activities.
respect to Internal Controls
- Coordinate the Board's oversight of the
Company's internal accounting controls for financial reporting, the
Company's disclosure controls and procedures and the Company's code of
- Review the independent auditor's communication
of any material weaknesses in internal controls, and assess the adequacy
of management's corrective action.
- Review and approve the internal audit plan and
enable direct communication between the Committee and the finance
- Review and approve all related party
transactions required to be disclosed by Item 404 of Regulation S-K.
- Receive and review the reports of the Chief
Executive Officer and the Chief Financial Officer required by Section 302
of the Sarbanes-Oxley Act and Rule 13a-14 of the Securities Exchange Act
of 1934, as amended.
- Establish procedures for: (i)
the receipt, retention and resolution of complaints received by the
Company regarding accounting, internal accounting controls or auditing
matters; and (ii) the confidential, anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
- Review with the Company's counsel any legal
matters that could have a significant impact on the Company's financial
statements, the Company's compliance with applicable laws and regulations
and inquiries received from regulators or other governmental agencies.
respect to Other Responsibilities
- Provide an open avenue of communication between
the independent auditor and the Board.
- Review the Committee's structure, processes and
membership requirements at least once a year.
- Report Committee actions to the Board with such
recommendations as the Committee deems appropriate.
- Review and approve in advance any proposed
related party transactions and report to the full Board on any approved
- Annually evaluate the Committee's performance
of its responsibilities.
- Periodically review materials or receive
education on audit committee-related and new accounting and auditing-related
developments and best practices.
The Committee shall meet at such times as it determines to be necessary or
appropriate, but not less than four times per year. A majority of the members
of the Committee shall constitute a quorum for the transaction of business. The
Committee shall keep minutes of its proceedings that shall be signed by the
person whom the Chair designates to act as secretary of the meeting. The
minutes of a meeting shall be approved by the Committee at its next meeting,
shall be available for review by the entire Board, and shall be filed as
permanent records with the Secretary of the Company. The Committee shall be
governed by the same rules regarding meetings (including meetings by conference
telephone, remote communication or similar communications equipment), action
without meetings, notice, waiver of notice, and quorum and voting requirements
as are applicable to the Board. The Committee shall be authorized to adopt its
own rules of procedure not inconsistent with (i) any
provision of this Charter; (ii) any provision of the Bylaws of the Company; or
(iii) applicable law.
Committee will meet separately with each of the Chief Executive Officer and the
Chief Financial Officer at least annually to review the Company's financial
affairs. As necessary or desirable, the Chair may request that members of
management and representatives of the independent auditors be present at
meetings of the Committee.
the Committee are expected to use all reasonable efforts to attend each
The Committee shall prepare and, through its Chair, submit periodic reports of
the Committee's work and findings to the Board of Directors; the Committee shall
include recommendations for Board action when appropriate.
The Committee shall have the funding, resources and authority necessary to
discharge its duties and responsibilities, including the funding and authority
to compensate audit firms or other advisors and for other ordinary
administrative expenses that are necessary or appropriate in carrying out its
duties. The Committee shall also have authority to retain outside counsel or
other experts or consultants, as it deems appropriate.
shall have the authority to investigate any activity of the Company within its
scope of responsibilities and shall have unrestricted access to members of
management and all information relevant to its responsibilities. The Committee
shall have the authority to form and delegate responsibilities to
subcommittees, as may be necessary or appropriate.
The Company shall make this Charter freely available to shareholders on request
and shall publish it on the Company’s Website.
is intended to provide a set of guidelines for the effective functioning of the
Audit Committee. Subject to Board approval, the Committee may at any time
modify or amend (i) this Charter, and (ii) the
authority and responsibilities of the Committee set forth herein.