Purpose

The main function of the Audit Committee is to oversee XYZ Ltd’s accounting and financial reporting processes, internal systems of control, independent auditor relationships and audits of XYZ Ltd’s consolidated financial statements.

The Audit Committee is also responsible for carrying out the appointment of XYZ Ltd’s independent auditors and any change in that appointment, and for ensuring the auditors' independence.

Appointment and Membership Requirements The Audit Committee shall be made up of at least three (X) independent members appointed by the Board of Directors. The Board of Directors decides the Audit Committee's exact number and can at any time remove or replace a Committee member.

At least o(x) member of the Audit Committee must have past employment experience in finance or accounting, or comparable experience or background which results in financial sophistication. Having been a CEO, CFO or other senior officer with financial oversight, responsibilities, for instance, would qualify.

Each member of the Audit Committee must be able to read and understand fundamental financial statements, including XYZ Ltd's balance sheet, income statement and cash flow statement.

The following list includes the Audit Committee's main recurring processes in carrying out its responsibilities. This list is intended as a guide, with the understanding that the Audit Committee can supplement it as appropriate.

1) Hiring and Selection of Auditors. The Audit Committee will directly appoint, retain and compensate XYZ Ltd's independent auditors. These independent auditors will report directly to, and be responsible to, the Audit Committee.

2) Approval of Audit and Non-Audit Services. The Audit Committee will decide what services will be performed by the independent auditors and approve in advance all the services they provide.

3) Auditor Independence

• The Audit Committee is responsible for making sure it reviews at least annually a formal written statement explaining all relationships between the outside auditors and XYZ Ltd. and its subsidiaries, consistent with the regulatory standard.

• The Audit Committee will maintain an active dialogue with the independent auditors, covering any disclosed relationships or services that may impact their objectivity and independence.

• The Audit Committee will review the independent auditors' peer review, which is conducted every (X number of years).

• The Audit Committee will review all proposed hires by XYZ Ltd. or its subsidiaries of individuals formerly employed by the independent auditors.

• The Audit Committee will take, or recommend to the Board of Directors that it take, appropriate actions to oversee the independence of XYZ Ltd's outside auditors.

4) Oversight of Auditors Audit Plan.

• The Audit Committee will be responsible for oversight of the auditors' work and XYZ Ltd's relationship with its independent auditors.

• The Audit Committee will discuss with the independent auditors the overall scope and plans for their audits and other financial reviews, including the adequacy of staffing, compensation and resources.

• The Audit Committee will be responsible for reviewing and resolving any disagreements between XYZ Ltd's management and the independent auditors regarding financial controls or financial reporting.

5) Internal Controls and Risk Assessment.

• The Audit Committee will discuss with management and the independent auditors the design, implementation, adequacy and effectiveness of XYZ Ltd's internal controls, including XYZ Ltd's system to monitor and manage business risk, legal and ethical compliance programs and financial reporting.

• The Audit Committee also will meet separately with the independent auditors, with and without management present, to discuss the results of their examinations.

• The Audit Committee will provide oversight over the system of internal controls, relying upon management's and the independent auditors' representations and assessments of, and recommendations regarding, the controls.

6) Quarterly and Annual Financial Statements. The Audit Committee will review and discuss the annual audited financial statements and quarterly financial statements with management and the independent auditors’.

9) Critical Accounting Policies. The Audit Committee will obtain, review and discuss reports from the independent auditors about:

• all critical accounting policies and practices which XYZ Ltd. will use, and the qualities of those policies and practices;

• all alternative treatments of financial information within generally accepted accounting principles that the auditors have discussed with management officials of XYZ Ltd, ramifications of the use of these alternative disclosures and treatments, the treatment preferred by the independent auditors and the reasons for favoring that treatment; and

• other material written communications between the independent auditors and XYZ Ltd management, such as any management letter or schedule of unadjusted differences.

10) The Audit Committee will also discuss with the independent auditors and then disclose to management any difficulties the independent auditors encountered in the course of the audit work, any restrictions on the scope of the independent auditors' activities or on their access to requested information, and any significant disagreements with management.

11) Related Party Transactions. The Audit Committee will review and approve all related party transactions.

12) Anonymous Complaint Handling Process. The Audit Committee will have responsibility for establishment and oversight of processes and procedures for

(a) the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters and

(b) confidential and anonymous submissions by employees concerning questionable accounting, auditing and internal control matters. All such relevant complaints and submissions must be reported to the Audit Committee.

13) Ability to Investigate. The Audit Committee has the power to investigate any matter brought to its attention, with full access to all XYZ Ltd books, records, facilities and employees.

14) Review of Charter. The Audit Committee will review and reassess the adequacy of this charter at least once a year. Every year, the Audit Committee will submit this charter for approval by the Board of Directors.

Restrictions on Independent Auditors Services

XYZ Ltd's independent auditors cannot perform any of the following services for XYZ Ttd.:

• bookkeeping or other services related to XYZ Ltd's accounting records or financial statements;

• financial information systems design and implementation;

• appraisal or valuation services, fairness opinions or contribution-in-kind reports;

• actuarial services;

• internal audit outsourcing services;

• management or human resources functions;

• broker or dealer, investment adviser or investment banking services;

• legal services and expert services unrelated to the audit.

Compensation

The Board of Directors determines the amount of any fees, if any, that Audit Committee members receive for their services. These fees can include retainers or per meeting fees.

Audit Committee members cannot receive any compensation from ZYZ Ltd. except the fees they receive for their services as members of the Board of Directors or any committee of the Board of Directors, and except for reimbursement of their expenses.

Meetings and Minutes

The Audit Committee will meet at least (X) times each year, and will keep minutes of each meeting. The Audit Committee decides when and where it will meet, and must deliver a copy of this schedule in advance to the Board of Directors.

Delegation of Authority: Chair of Audit Committee

The Audit Committee can appoint a chair of the committee, and can change its decision regarding who will be chair at any time.

T he Audit Committee cannot delegate its responsibilities to non-committee members.