AUDIT
COMMITTEE CHARTER
OF
NF
ENERGY SAVING CORPORATION
Purpose
The Audit
Committee is appointed by the Board of Directors (“Board”) of NF Energy Saving
Corporation (“Company”) to assist the Board in fulfilling its oversight
responsibility for monitoring (1) the integrity of the Company’s accounting and
financial reporting and its systems of internal controls, (2) the performance,
qualifications and independence of the Company’s independent auditors, and (3)
the Company’s compliance with legal and regulatory requirements.
The Audit
Committee shall prepare the report required by the rules of the Securities and
Exchange Commission (“Commission”) to be included in the Company’s annual proxy
statement.
Committee
Membership
The Audit
Committee shall consist of no fewer than three members, absent a temporary
vacancy. Notwithstanding the foregoing, for such time as the Company qualifies
as a “Smaller Reporting Company” as defined in Regulation S-K, Item 10(f)(1),
the Audit Committee need only consist of no fewer than two members.
The
members of the Audit Committee shall meet the independence and experience
requirements of the NYSE AMEX, Section 10A(m)(3) of the Securities Exchange Act
of 1934 (“Exchange Act”) and the rules and regulations of the
Commission. Notwithstanding the foregoing, membership of the Audit
Committee will comply with the credential requirements of applicable law,
regulation and listing requirements, as applicable to the Company from time to
time.
At a
minimum, the members of the Audit Committee shall meet the following
requirements: (i) satisfies the independence standards specified in Section 803A
of the NYSE AMEX Rules (see attached Annex A) and Rule 10A-3 under the
Securities Exchange Act of 1934; (ii) must not have participated in the
preparation of the financial statements of the issuer or any current subsidiary
of the issuer at any time during the past three years; and (iii) is able to read
and understand fundamental financial statements, including a company's balance
sheet, income statement, and cash flow statement.
The Board
of Directors will assess and certify that it has, and will continue to have, at
least one member of the audit committee who is financially sophisticated, in
that he or she has 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 but not limited to being or having been a chief
executive officer, chief financial officer, other senior officer with financial
oversight responsibilities. A director who qualifies as an audit committee
financial expert under Items 407(d)(5)(ii) and (iii) of Regulation S-K is
presumed to qualify as financially sophisticated.
The Board
of Directors will assess and determine the qualifications of the Audit Committee
members. The members of the Audit Committee shall be appointed by the Board, and
may be replaced by the Board.
The Board
of Directors shall select the Audit Committee Chair. If a Chair is not
designated or present, a Chair may be designated by a majority vote of the Audit
Committee members present.
Director’s
compensation is the only compensation which members of the Audit Committee may
receive from the Company.
Meetings
and Procedures
The Audit
Committee shall meet at least quarterly and more frequently as circumstances
dictate. The Audit Committee shall meet periodically with management
and the independent auditor in separate executive sessions. The Audit Committee
may request any officer or employee of the Company or the Company’s outside
counsel or independent auditor to attend a meeting of the Audit Committee or to
meet with any members of, or consultants to, the Audit Committee.
The
Committee will keep written minutes of its meetings, which minutes will be
maintained with the books and records of the Company. The Committee will provide
the Board with regular reports of its activities.
The Audit
Committee shall review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval. The Audit Committee
annually shall review the Audit Committee’s own performance.
The
Committee may form subcommittees for any purpose that the Committee deems
appropriate and may delegate to such subcommittees such power and authority as
the Committee deems appropriate. The Committee will not delegate to a
subcommittee any power or authority required by any law, regulation or listing
standards to be exercised by the Committee as a whole.
Committee
Authority and Responsibilities
The
primary responsibility of the Committee is to oversee the Company’s financial
controls and reporting processes on behalf of the Board and report the results
of its activities to the Board. The Audit Committee recognizes that
the Company’s management is responsible for the completeness and accuracy of the
Company’s financial statements and disclosures and for maintaining effective
internal controls. The Committee also realizes that the independent auditor is
responsible for auditing the Company’s financial statements. Accordingly,
management and the independent auditor have more knowledge and more detailed
information about the Company than do Audit Committee members and the Audit
Committee’s primary responsibility is oversight. In carrying out its oversight
responsibilities, the Audit Committee will rely, in part, on the expertise of
management and the independent auditor. The Committee should take the
appropriate actions to set the overall corporate “tone” for quality financial
reporting, sound business risk practices, and ethical behavior.
The Audit
Committee shall have the authority, to the extent it deems necessary or
appropriate, to retain independent legal, accounting or other advisors. The
Company shall provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to (i) the independent auditor for the
purpose of rendering or issuing an audit report and (ii) any advisors (including
counsel) employed by the Audit Committee.
The
following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The Committee may perform such
other duties and responsibilities as are consistent with its purpose and as the
Board or the Committee deems appropriate.
Financial
Reporting and Internal Controls
Review of Annual
Audited Financial Statements.
The Committee shall review with
management and the independent auditors the financial statements to be included
in the Company’s Annual Report to be filed with the Securities and Exchange
Commission (or the annual report to shareholders if distributed prior to the
filing of the Annual Report with the Securities and Exchange Commission). The
Committee will review the (a) quality, not just acceptability, of the Company’s
accounting principles, including significant financial reporting issues and
judgments made in connection with the preparation of the financial statements
including alternative methods for presenting financial information that have
been discussed with management, the impact of the use of the alternative
methods, the methods preferred by management and all material written
communications between the independent auditor and management; (b) the clarity
and adequacy of disclosures in the financial statements; and the Company’s
disclosures under Management’s Discussion and Analysis of Financial Condition
and Results of Operations, including the critical accounting policies; and (c)
major issues regarding the adequacy of internal controls and steps taken in
light of material deficiencies (if any were noted).
The
Committee will discuss the results of the annual audit and any difficulties the
independent auditors encountered in the course of their audit work, including
any restrictions on the scope of the auditors’ activities or access to requested
information, and any significant disagreements with management. The Committee
will also discuss any other matters required to be communicated to the Committee
by the independent auditors under generally accepted auditing standards, and the
annual report on controls by the Chief Executive Officer and the Chief
Accounting Officer, as received by the independent auditors.
Based on
these reviews and the discussions with management and the independent auditors,
the Committee will make a recommendation to the Board whether the audited
financial statements should be included in the Company’s Annual Report to be
filed with the Securities and Exchange Commission.
Review of Interim
Financial Statements; Earnings Releases
. The Committee shall
review the interim financial statements, and the Company’s disclosures under
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, with management and the independent auditors prior to the filing of
any Company quarterly report. The Committee shall also review any other report
to be filed with the Securities and Exchange Commission that includes financial
disclosures prior to its filing. The Committee will discuss with management any
proposed release of earnings or guidance information, and financial information
and earnings guidance provided to analysts and rating agencies. The Committee
will discuss 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.
Risk Assessment
and Risk Management
. The Audit Committee shall review with
management and independent auditors the Company’s policies for assessing and
managing financial risk and the actual risk exposure of the
Company.
Internal
Controls, Disclosure Controls and Procedures.
The Audit
Committee shall review with management and the independent auditors the
Company’s policies and procedures for maintaining the adequacy and effectiveness
of internal controls and disclosure controls procedures. As part of this effort,
the Committee will inquire of management and the independent auditor about
controls management has implemented to minimize significant risks to the Company
and the effectiveness of these controls. The Committee will review the quarterly
assessments of such controls and procedures by the Chief Executive Officer and
Chief Accounting Officer.
The
Committee will also review with management and the independent auditor the
effect on the Company’s financial statements of regulatory and accounting
initiatives and off balance sheet structures.
Independent
Auditors
The Audit
Committee shall have the sole authority to appoint or replace the independent
auditor. The Audit Committee shall be directly responsible for determining the
compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Audit Committee.
The
Committee shall review the auditors’ independence from management and the
Company, including whether the auditors’ performance of permissible non-audit
services is compatible with their independence. This process will include, as
least annually, the Committee’s review of the independent auditors’ internal
control procedures, any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditors, or by any
inquiry or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the independent auditors, and any steps taken to deal with any such issues; and
(to assess the auditors’ independence) all relationships between the independent
auditors and the Company.
Annually,
the Committee will review the qualifications and performance of the Company’s
current independent auditors and select the Company’s independent auditors for
the next year.
The
Committee shall review with the independent auditors prior to the audit the
overall scope, planning and staffing of their audit. The Audit Committee shall
pre-approve all auditing services and permitted non-audit services to be
performed for the Company by its independent auditor, including the fees and
terms thereof (subject to the de minimus exceptions for non-audit services
described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the
Audit Committee prior to the completion of the audit).
The
Committee shall verify the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner responsible
for reviewing the audit as required by law. The Committee shall consider
whether, in order to assure continuing auditor independence, it is appropriate
to adopt a policy of rotating the independent auditing firm on a regular
basis.
The
Committee shall oversee the Company’s hiring of employees or former employees of
the independent auditor who participated in any capacity in the audit of the
Company.
Compliance
with Legal and Regulatory Requirements
The
Committee shall inquire and review with management the Company’s compliance with
applicable laws and regulations and, where applicable, recommend policies and
procedures for future compliance. The Committee shall review with management and
the independent auditor any correspondence with regulators or governmental
agencies and any published reports that raise material issues regarding the
Company’s financial statements or accounting policies. The Committee shall also
review with the Company’s General Counsel legal matters that may have a material
impact on the financial statements or the Company’s compliance
policies
The
Committee shall review and approve all related-party transactions.
The
Committee shall establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or reports which raise material issues regarding the Company’s
financial statements or accounting policies.
Limitation
of Audit Committee’s Role
While the
Audit Committee has the responsibilities and powers set forth in this Charter,
it is not the duty of the Audit Committee to plan or 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. These are the responsibilities of
management and the independent auditor.
Annex A – Definition of
Independent under Rule 803A of NYSE AMEX Rules.
[(2)
"Independent director" means a person other than an executive officer or
employee of the company. No director qualifies as independent unless the
issuer's board of directors affirmatively determines that the director does not
have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. In addition to the
requirements contained in this Section 803A, directors serving on audit
committees must also comply with the additional, more stringent requirements set
forth in Section 803B(2) below. The following is a non-exclusive list of persons
who shall not be considered independent:
(a) a director who is, or during the
past three years was, employed by the company, other than prior employment as an
interim executive officer (provided the interim employment did not last longer
than one year) (See Commentary .08);
(b) a director who accepted or has an
immediate family member who accepted any compensation from the company in excess
of $120,000 during any period of twelve consecutive months within the three
years preceding the determination of independence, other than the
following:
(i) compensation for board or board
committee service,
(ii) compensation paid to an immediate
family member who is an employee (other than an executive officer) of the
company,
(iii) compensation received for former
service as an interim executive officer (provided the interim employment did not
last longer than one year) (See Commentary .08), or
(iv) benefits under a tax-qualified
retirement plan, or non-discretionary compensation;
(c) a director who is an immediate
family member of an individual who is, or at any time during the past three
years was, employed by the company as an executive officer;
(d) a director who is, or has an
immediate family member who is, a partner in, or a controlling shareholder or an
executive officer of, any organization to which the company made, or from which
the company received, payments (other than those arising solely from investments
in the company's securities or payments under non-discretionary charitable
contribution matching programs) that exceed 5% of the organization's
consolidated gross revenues for that year, or $200,000, whichever is more, in
any of the most recent three fiscal years;
(e) a director who is, or has an
immediate family member who is, employed as an executive officer of another
entity where at any time during the most recent three fiscal years any of the
issuer's executive officers serve on the compensation committee of such other
entity; or
(f) a director who is, or has an
immediate family member who is, a current partner of the company's outside
auditor, or was a partner or employee of the company's outside auditor who
worked on the company's audit at any time during any of the past three years.
]
NOMINATING
COMMITTEE CHARTER
OF
NF
ENERGY SAVING CORPORATION
Purpose
The
Nominating Committee (“Committee”) is appointed by the Board of Directors
(“Board”) of NF Energy Saving Corporation (the “Company”) to (1) recommend to
the Board director nominees to be presented at the annual meeting of
stockholders and nominees to fill vacancies on the Board, whether caused by
retirement, resignation, death, increase in the number of authorized directors
or otherwise and (2) identify individuals qualified to become members of the
Board.
Committee
Membership
The
Committee will consist of no fewer than two members, each of whom will be a
director of the Company. Each member of the Committee will meet the listing
standards of the NYSE AMEX relating to independence and all other applicable
legal requirements. Members will be appointed and removed by the
Board. A majority of the members of the Committee will constitute a
quorum.
Notwithstanding
the preceding paragraph, if the Committee is comprised of at least three
members, one member of the Board who is not defined as “independent,” and is not
a current officer or employee or an immediate family member of such person, may
be appointed to the Committee, if the Board determines that it is an exceptional
and limited circumstance and that membership of such person on the Committee is
required by the best interests of NFES and its shareholders, and the Board makes
appropriate disclosure in the next annual meeting proxy statement (or in the
next annual report of NFES on SEC Form 10-K or equivalent) subsequent to such
determination, concerning the nature of the relationship and the reasons for
that determination. A member of the Board appointed to the Committee pursuant to
this exception may not serve for in excess of two years.
Committee
Authority and Responsibilities
1.
The
Committee will have the responsibility to develop and recommend criteria for the
selection of new directors to the Board including, but not limited to, skills,
experience, time availability and such other criteria as the Committee shall
determine to be relevant at the time.
2.
The
Committee will have the power to apply such criteria in connection with the
identification of individuals to be Board members, as well as to apply the
standards for independence imposed by the NYSE AMEX and all applicable federal
laws and the underlying purpose and intent thereof in connection with such
identification process.
3.
When
vacancies occur or otherwise at the direction of the Board, the Committee
actively will seek individuals who the Committee determines meet such criteria
and standards for recommendation to the Board.
4.
The
Committee will have the authority to retain any search firm to be used to
identify director candidates and to approve the search firm’s fees and other
retention terms, at the company’s expense. The Committee also will have the
authority to obtain advice and assistance from internal or external legal or
other advisors, without consulting or obtaining the prior approval of any
officer of the Company.
5.
The
Committee will evaluate candidates for nomination to the Board, including those
recommended by shareholders. In that connection, the Committee will adopt
procedures for the submission of recommendations by shareholders as it deems
appropriate.
6.
The
Committee will recommend to the Board, on an annual basis, nominees for election
as directors for the next annual meeting of shareholders.
7.
The
Committee may form and delegate authority to subcommittees or members when
appropriate.
8.
The
Committee will review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval. The Committee will
annually review its own performance.
COMPENSATION
COMMITTEE CHARTER
OF
NF
ENERGY SAVING CORPORATION
The
purpose of the Compensation Committee (the “Committee’’) of the Board of
Directors (the “Board’’) of NF Energy Saving Corporation (“NFES’’) is to assist
the Board in carrying out its responsibilities with respect to:
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Oversight
of the development, implementation, and effectiveness of NFES’s
compensation philosophy, policies, and strategies which are designed to
support the business objectives of NFES by attracting, retaining,
rewarding, and motivating the technical and entrepreneurial skills and
talent needed to achieve those
objectives.
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Oversee
and assure regulatory compliance and reporting requirements with respect
to compensation or related matters.
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The
Committee shall be comprised of at least two members of the Board, each of whom
shall serve for such term or terms as the Board may determine, and shall be
“independent’’ according to the listing standards of the NYSE AMEX (“AMEX”) and
the rules and regulations of the Securities and Exchange Commission (“SEC”), as
amended from time to time.
Notwithstanding
the preceding paragraph, if the Committee is comprised of at least three
members, one member of the Board who is not defined as “independent,” and is not
a current officer or employee or an immediate family member of such person, may
be appointed to the Committee, if the Board determines that it is an exceptional
and limited circumstance and that membership of such person on the Committee is
required by the best interests of NFES and its shareholders, and the Board makes
appropriate disclosure in the next annual meeting proxy statement (or in the
next annual report of NFES on SEC Form 10-K or equivalent) subsequent to such
determination, concerning the nature of the relationship and the reasons for
that determination. A member of the Board appointed to the Committee pursuant to
this exception may not serve for in excess of two years.
Unless a
chair is elected by the Board, the members of the Committee shall designate a
chair by majority vote of the full Committee membership.
Determinations
of independence shall be made by the Board as the Board interprets such
qualifications in its business judgment and in accordance with applicable law
and regulation and SEC and AMEX rules and standards.
The
Committee will meet at least two times each year or more frequently as it deems
necessary or appropriate to carry out its duties and
responsibilities.
The
Chairman shall, in consultation with management and other Committee members, set
the agenda for and preside at meetings of the Committee. The Chairman shall
designate an individual to record and keep minutes of all Committee
meetings.
The
Committee may invite such members of management to its meetings as it may deem
desirable or appropriate, consistent with the maintenance of the confidentiality
of compensation discussions.
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IV.
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COMMITTEE
DUTIES AND RESPONSIBILITIES
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The
following are the duties and responsibilities of the Committee:
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A.
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Approve
NFES’s employee and director compensation plans, including any new equity
compensation plans or material change to an existing equity compensation
plans, and oversee the administration of these
plans.
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B.
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Evaluate
the CEO’s performance in light of Board approved goals and objectives, and
determine and approve the CEO’s equity and non-equity compensation,
including salary, bonus, and
incentives.
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C.
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Taking
into account the recommendations of the CEO, evaluate the performance of
other senior executive in light of approved goals and objectives, and
determine and approve their equity and non-equity compensation, including
salary, bonus, and incentives.
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D.
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Approve,
or delegate where appropriate, all grants of equity-based
awards.
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E.
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Review
annually and approve:
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Benefits
and perquisites provided to NFES’s executives or other senior management
members (where appropriate).
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Employment
agreements, severance arrangements and change in control agreements and
provisions relating to NFES’s executives or other senior management
members (where appropriate).
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F.
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Prepare
any report on executive compensation or related issue, as required of the
Committee by the rules and regulations of the
SEC.
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G.
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Engage
outside advisors, as appropriate, to advise the Committee on compensation
matters.
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H.
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Report
to the Board on a regular and timely basis, the actions taken by the
Committee.
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I.
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To
discharge any other duties or responsibilities delegated to the Committee
by the Board from time to time.
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The
Committee shall prepare the following reports and provide them to the
Board:
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A.
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A
Compensation Committee Report on Executive Compensation as required by the
SEC to be included in NFES’s annual proxy statement, in accordance with
applicable SEC rules and
regulations.
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B.
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A
summary of the actions taken at each Committee
meeting.
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VI.
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RESOURCES
AND AUTHORITY OF THE COMMITTEE
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The
Committee shall have direct access to, and complete and open communication with,
senior management and may obtain advice and assistance from internal legal,
accounting, and other advisors to assist it. In performing its functions, the
Committee is entitled to rely on the findings of fact, advice, reports and
opinions of management as well as legal, accounting and other advisors retained
by NFES The Committee may retain, if appropriate, independent legal,
accounting, and other advisors to assist it, and may determine the compensation
of such advisors, and NFES shall be responsible for any costs or expenses so
incurred.
