CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
BLACK BOX CORPORATION
ADOPTED AS OF JUNE 25, 2004
I. PURPOSE AND AUTHORITY OF THE COMMITTEE
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Black Box Corporation ("Black Box" or the "Company") shall oversee
the Company's discharge of its financial reporting obligations and its
relationship with the Company's independent auditors, and it shall assist the
Board in fulfilling its fiduciary obligations with respect to the financial
reporting, accounting, internal control and auditing functions of the Company
and its subsidiaries. The Committee shall also have responsibility for reviewing
compliance with the Company's Code of Ethics.
The Committee shall provide an avenue for open communications between and
among the Board, the independent auditors, management and counsel to the Company
as their duties relate to financial reporting, accounting and internal controls.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of not less than three directors appointed by
the Board, each of whom qualifies as an independent director under the
independence standards set forth in Securities and Exchange Commission ("SEC")
Rule 10A-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") and satisfies all other requirements applicable to audit committee members
under applicable Nasdaq National Market ("NASDAQ") rules, as then in effect, and
SEC rules and regulations. Each Committee member shall be able to read and
understand fundamental financial statements, including a company's balance
sheet, income statement and cash flow statement. At least one member shall have
"financial sophistication" within the meaning of NASDAQ requirements. It is the
intention of the Board that at least one member of the Committee satisfy the
definition of an "audit committee financial expert" under SEC rules and
regulations. No member of the Committee shall have participated in the
preparation of the financial statements of the Company or any current subsidiary
of the Company at any time during the prior three years.
The members of the Committee shall be appointed annually to one-year terms
by majority vote of the Board at the first meeting of the Board following the
annual meeting of the Company's stockholders. The Committee shall, by majority
vote of the appointed Committee members, appoint one of the appointed members as
Committee Chair. Vacancies on the Committee shall be filled by majority vote of
the Board at the next Board meeting following the occurrence of the vacancy or
as soon as practicable thereafter. A vacancy in the position of Committee Chair
shall be filled by majority vote of the Committee at the next Committee meeting
following the occurrence of the vacancy or as soon as practicable thereafter. No
member of the Committee shall be removed except by majority vote of the
independent directors then in office.
No member of the Committee may receive, directly or indirectly, any
compensation or consulting or advisory fee from the Company, other than
director's fees (including any additional amounts paid to the chair of
committees and to members of committees of the Board), except as may otherwise
be permitted under the Sarbanes-Oxley Act, the rules of NASDAQ, as then in
effect, and applicable SEC rules and regulations, nor may any member of the
Committee be an "affiliated person" of the Company or any subsidiary thereof,
within the meaning of SEC Rule 10A-3 under the Exchange Act.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall fix its own rules of procedure, which shall be
consistent with the By-laws of the Company and this charter. The Committee is to
meet at least once each fiscal quarter or more frequently as the Committee deems
necessary. Members of the Committee shall strive to be present at all meetings.
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority within the scope of the Committee's authority as the Committee deems
appropriate; provided, however, that no subcommittee shall consist of fewer than
two members; and provided further that the Committee shall not delegate to a
subcommittee any power or authority required by any law, regulation or listing
standard to be exercised by the Committee as a whole.
The Committee may request that any directors, officers or Team Members of
the Company, or other persons whose advise and counsel are sought by the
Committee, attend any meetings of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its
deliberations at the next meeting of the Board, including a description of all
actions taken by the Committee at the meeting and an identification of any
matters that require action by the Board. The Committee shall keep written
minutes of its meetings, which minutes shall be maintained with the books and
records of the Company.
IV. DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
1. The Committee shall have sole authority and direct responsibility over
the selection of the Company's independent auditors, subject to stockholder
ratification if the Committee so elects. The Committee shall also have sole
authority and direct responsibility over the evaluation, retention and
replacement (as the Committee may deem appropriate) of the independent auditors
and for determining the compensation and other terms of engagement of such
independent auditors. The Committee shall review the selection, performance and
compensation of the Company's independent auditors on an annual basis and
consider periodic rotation of the independent audit firm.
2. The Committee shall receive a written statement from the auditors
delineating all relationships between the auditors and the Company as
contemplated by Independence Standards Board Standard 1. It shall discuss with
the auditors any disclosed relationship as well as the auditors' independence
from management and the Company, and it shall take, or recommend that the Board
take, any appropriate action to ensure the auditors' independence.
3. The Committee shall discuss with the independent auditors the overall
scope and plans for their audit, including the adequacy of staffing and
4. The Committee shall review and evaluate the performance of the lead
audit partner and ensure the periodic rotation of the lead audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit.
5. The Committee shall pre-approve all audit services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditors, subject to any de minimis exceptions
for non-audit services that are authorized by law and approved by the Committee
prior to the completion of the audit. The Committee shall consider whether the
Company's independent auditors' provision of any permitted non-audit services is
compatible with their independence.
6. The Committee shall oversee the work of the independent auditors and
shall resolve any disputes between management and the independent auditors
concerning financial reporting or accounting matters.
7. The Committee shall review, with management and the independent
auditors, the following:
- prior to their public release, the Company's annual and quarterly
- prior to the filing of each of the Company's Quarterly Reports on Form
10-Q, the Company's quarterly financial statements together with the
results of the quarterly review and any other matters required to
be communicated to the Committee by the independent auditors under
generally accepted auditing standards; the Committee Chair may represent
the entire Committee for the purposes of this review;
- the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to stockholders if distributed prior to
the filing of Form 10-K), including disclosures made in management's
discussion and analysis, and it shall recommend to the Board whether the
audited financial statements should be included in the Company's Form
- the results of the annual audit, including material written
communications between the independent auditors and management, such as
any management letter or schedule of unadjusted differences, the adequacy
and effectiveness of the Company's accounting and financial controls,
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.
8. The Committee shall review disclosures made to the Committee by the
Company's Chief Executive Officer and Chief Financial Officer during their
certification process for the Form 10-K and the Form 10-Q about any significant
deficiencies in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or other Team Members who
have a significant role in the Company's internal controls.
9. The Committee shall establish, review and oversee the implementation of
the Committee's procedures for the receipt, retention and treatment of reported
complaints and concerns regarding accounting, internal accounting controls or
auditing matters, and the confidential, anonymous submission by Team Members of
concerns regarding questionable accounting or auditing matters.
10. Obtain periodic reports from the Company's General Counsel regarding
the Company's Code of Ethics and the implementation of its procedures and any
reported violations thereof.
11. Conduct a review of any proposed related party transactions, all of
which shall be reported to the Committee by the Chief Financial Officer, for
potential conflict of interest situations on an ongoing basis. All such related
party transactions shall be subject to approval by the Committee.
The Company shall provide the necessary funding for the compensation of the
Company's independent auditors engaged for the purpose of rendering an audit
report on the Company's annual financial statements and for any related work or
other audit, review or attest services for the Company that the Committee has
The Committee may conduct or authorize investigations into or studies of
any matter or activity involving the financial reporting, accounting practices
or internal controls of the Company, the audit of the Company's financial
statements, any violations of the Company's Code of Ethics or any other matter
within the scope of the Committee's responsibility. All Team Members shall
cooperate with respect thereto as requested by the Committee or its authorized
The Committee may retain, at the Company's expense, or terminate such
independent counsel, accountants, consultants or other advisors as it deems
necessary to assist the Committee in the discharge of its responsibilities
hereunder or in the conduct of any investigation it has authorized, and the
Committee shall have sole authority to approve the fees, expenses and other
retention terms for any and all such advisors.
V. EVALUATION OF THE CHARTER
The Committee shall periodically, and at least annually, evaluate this
charter. The Committee shall report to the Board the results of its evaluation,
including any recommended amendments to this charter and any recommended changes
to the Company's or the Board's policies or procedures.