Audit Committee


(As amended by the Board of Directors on May 4, 2015)

The Audit Committee (the "Committee") shall:

  1. Provide assistance to the Board of Directors in fulfilling its responsibilities with respect to its oversight of:

    1. the quality and integrity of the corporation's financial statements;
    2. the corporation's compliance with legal and regulatory requirements;
    3. the independent auditor's qualifications and independence; and
    4. the performance of the corporation's independent auditors.

  2. Prepare the audit committee report that the Securities and Exchange Commission (the "SEC") requires be included in the corporation's annual proxy statement.

Independence Requirement

The Committee shall be comprised of three or more members of the Board of Directors, each of whom is determined by the Board of Directors to be "independent" as such term is defined by the NASDAQ Stock Market ("NASDAQ") Marketplace Rule 5605(a)(2) and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, one director who does not meet the NASDAQ definition of independence, but who meets the criteria set forth in Section 10A(m)(3) under the Exchange Act and the rules thereunder, and who is not a current officer or employee or a family member of such person, may serve for no more than two years on the Committee if the Board of Directors, under exceptional and limited circumstances, determines that such individual's membership is required by the best interests of the corporation and its stockholders. Such person may not be the chairman of the Committee. The use of "exceptional and limited" circumstances exception, as well as the nature of the individual's relationship to the corporation and the basis for the Board of Directors' determination, shall be disclosed in the corporation's annual proxy statement.

If a Committee member ceases to be independent for reasons outside the member's reasonable control, his or her membership on the Committee may continue until the earlier of the corporation's next annual stockholders' meeting or one year from the occurrence of the event that caused the failure to qualify as independent. If the corporation is not already relying on this provision, and falls out of compliance with the requirements regarding Committee composition due to a single vacancy on the Committee, then the corporation will have until the earlier of the next annual stockholders' meeting or one year from the occurrence of the event that caused the failure to comply with this requirement; provided, however, that if the annual stockholders' meeting occurs no later than 180 days following the event that caused the vacancy, the corporation shall instead have 180 days from such event to regain compliance. The corporation shall provide notice to NASDAQ immediately upon learning of the event or circumstance that caused the noncompliance, if it expects to rely on either of these provisions for a cure period.

Financial Literacy & Expertise Requirement

All members of the Committee shall be able to read and understand fundamental financial statements, including the corporation's balance sheet, income statement and cash flow statement. No member of the Committee may have participated in the preparation of the financial statements of the corporation or any current subsidiary of the corporation at any time during the preceding three years. At least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or comparable experience or background which results in financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

Limitation on Memberships of other Audit Committees

No member of the Committee may serve on the audit committee of more than three public companies, including the corporation, unless the Board of Directors determines that such simultaneous service would not impair the ability of such member to effectively serve on the Committee and the corporation's annual proxy statement discloses such determination.

Limitation on Other Compensation

No member of the Committee shall receive compensation from the corporation or its affiliates other than (i) director's fees for service as a director of the corporation or an affiliate, but only to the extent the directorship on the affiliate's board of directors and related compensation has been approved by the corporation's Board of Directors and (ii) a pension or similar compensation for past performance, provided that such compensation is fixed and is not contingent on continued or future service to the corporation.

Appointment and Removal

The members of the Committee shall be appointed by the Board of Directors and shall serve until such member's successor is duly elected and qualified or until such member's earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority vote of the Board of Directors.

Chairman

Unless a Chairman is elected by the full Board of Directors, the members of the Committee shall designate a Chairman by the majority vote of the full Committee membership. The Chairman will chair all regular sessions of the Committee and set the agendas for Committee meetings.

Subcommittees

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; provided, however, that (i) no subcommittee will consist of fewer than two members and (ii) no subcommittee will hold any power or authority required by any law, regulation or listing standards to be exercised by the Committee as a whole.

The Committee shall meet at least quarterly, or more frequently as circumstances dictate. As part of its goal to foster open communication, the Committee shall periodically meet separately with each of the following:

  1. management (including the chief financial officer and chief accounting officer); and
  2. the independent auditors,

in each case, to discuss any matters that the Committee or any of these groups believe would be appropriate to discuss privately. In addition, the Committee should meet with the independent auditors and management quarterly to review the corporation's financial statements in a manner consistent with that outlined in Section IV of this Charter.

At all meetings of the Committee, a majority of the members shall constitute a quorum for the transaction of business and the act of a majority of Committee members at any meeting at which there is a quorum shall be an act of the Committee. Any matter that is put to a vote that results in a tie shall be decided by a vote of the full Board of Directors. The Chairman of the Board of Directors or any member of the Committee may call meetings of the Committee. All meetings of the Committee may be held telephonically, and the Committee may act by unanimous written consent. All non-management directors who are not members of the Committee may attend meetings of the Committee but may not vote. Additionally, the Committee may invite to its meetings, or communicate with, any director, officer or employee of the corporation, including the director of internal audit, and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities.

Overview

The following functions shall be the common recurring activities of the Committee in carrying out its responsibilities outlined in Section I of this Charter. These functions should serve as a guide with the understanding that the Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal or other conditions as the Committee shall determine. The Committee shall also carry out any other responsibilities and duties delegated to it by the Board of Directors from time to time related to the purposes of the Committee outlined in Section I of this Charter.

Review of Financial and Other Information

  1. Review with management and the independent auditors prior to public dissemination the corporation's annual audited financial statements and quarterly financial statements, including the corporation's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," any comments or recommendations of the independent auditor, any reports of the independent auditor with respect to interim financial reviews.
  2. Discuss with the independent auditors the matters required to be discussed under the standards of the Public Company Accounting Oversight Board.
  3. Review and discuss with management prior to dissemination: (i) the corporation's earnings press releases (paying particular attention to the use of any "pro forma" or "adjusted" non-GAAP financial measures) and (ii) financial information and earnings guidance provided to analysts and rating agencies. The Committee's discussion in this regard may be general in nature (i.e., discussion of the types of information to be disclosed and the type of presentation to be made). The Committee, however, need not discuss in advance each earnings release or each instance in which the corporation may provide earnings guidance.
  4. Perform any functions required to be performed by it or otherwise appropriate under applicable law, rules or regulations, the corporation's bylaws and the resolutions or other directives of the Board of Directors, including review of any certification required to be reviewed in accordance with applicable law or the rules and regulations of the SEC.

Independent Auditors

  1. Directly appoint, retain, review and terminate independent auditors and approve all audit engagement fees and terms.
  2. Inform the corporation's independent auditors that such auditing firm shall report directly to the Committee.
  3. Review, at least annually, the qualifications, performance and independence of the independent auditors. In conducting its review and evaluation, the Committee should:
    1. obtain and review a report by the corporation's independent auditors describing:
      1. the auditing firm's internal quality-control procedures;
      2. any material issues raised by the most recent internal quality control review, or peer review, of the auditing firm, 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 auditing firm, and any steps taken to deal with any such issues; and
      3. all relationships between the independent auditors and the corporation in order to assess the auditors' independence;
    2. ensure the timely rotation of the lead and concurring audit partners and other "audit partners", in each case to the extent required by the rules and regulations promulgated by the SEC, and consider whether there should be regular rotation of the audit firm itself;
    3. confirm with the independent auditor that the audit partners do not earn or receive any compensation based on selling engagements to the corporation to provide any services, other than audit, review or attest services, to the extent such compensation would compromise the independence of accountant or auditor under the rules and regulations promulgated by the SEC; and
    4. take into account the opinions of management.
  4. Oversee the work of the corporation's independent auditors, including the resolution of any disagreement between management and the auditors regarding financial reporting, for the purpose of preparing or issuing an audit report or related work.

Pre-Approval of Auditor Engagements

  1. Approve in advance any audit or non-audit engagement or relationship between the corporation and the independent auditors, other than "prohibited non-auditing services," as determined from time to time by the SEC, the Public Company Accounting Oversight Board or NASDAQ through regulation or listing requirements. The Committee may pre-approve audit and non-audit services based on policies and procedures adopted by the Committee, provided: (a) the policies and procedures are detailed as to the particular service, (b) the Committee is informed of each service on a timely basis, (c) such policies and procedures do not include delegation of the Committee's responsibilities to management and (d) such policies and procedures are disclosed in the corporation's annual reports. In addition, any member of the Committee may approve in advance all audit or non-audit services to be provided by the independent auditors so long as decisions made by such member are presented to the full Committee at the immediately subsequent scheduled meeting.

    Notwithstanding the foregoing, pre-approval is not necessary for minor non-audit services if:
    1. the aggregate amount of all such non-audit services provided to the corporation constitutes not more than five percent of the total amount of revenues paid by the corporation to its auditors during the fiscal year in which the non-audit services are provided;
    2. isuch services were not recognized by the corporation at the time of the engagement to be non-audit services; and
    3. such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated.

Financial Reporting Process

  1. In consultation with the independent auditors and management, review the integrity of the corporation's financial reporting processes, both internal and external. In that connection, the Committee shall, prior to the filing by the corporation of its annual report and at such other times that the Committee deems appropriate, obtain and discuss with management and the independent auditors reports from management and the independent auditors regarding:
    1. all critical accounting policies and practices to be used by the corporation;
    2. analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including all alternative treatments of financial information within generally accepted accounting principles related to material items that have been discussed with the corporation's management, the ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the independent auditors;
    3. major issues regarding accounting principles and financial statement presentations, including any significant changes in the corporation's selection or application of accounting principles;
    4. major issues as to the adequacy of the corporation's internal controls and any specific audit steps adopted in light of material control deficiencies; and
    5. any other material written communications between the independent auditors and the corporation's management.
  2. Review periodically the effect of regulatory and accounting initiatives, as well as any off balance sheet structures, on the financial statements of the corporation.
  3. Review with the independent auditors any audit problems or other difficulties encountered by the auditors in the course of the audit process, including any restrictions on the scope of the independent auditors' activities or on access to requested information, and resolve any significant disagreements with management and management's responses to such matters. Without excluding other possibilities, the Committee may wish to review with the independent auditors:
    1. any accounting adjustments that were noted or proposed by the auditor but were "passed" (as immaterial or otherwise);
    2. any communications between the audit team and the audit firm's national office respecting auditing or accounting issues presented by the engagement; and
    3. any "management" or "internal control" letter issued, or proposed to be issued, by the independent auditors to the corporation.
  4. Review and discuss with management and the independent auditors the policies and procedures in place to ensure the quality and integrity of the financial statements of the corporation's unconsolidated subsidiaries and investments that are accounted for under the equity method of accounting are properly reflected and accounted for in the corporation's financial statements.

Risk Management

  1. Review with management and, to the extent the Committee deems it appropriate, with the independent auditors or counsel to the corporation, compliance with laws and regulations, major pending litigation, and risks and exposures relating to financial reporting, particularly disclosure and SEC reporting, disclosure controls, internal control over financial reporting, accounting, internal and independent auditors, financial policies, and tax, investment, credit and liquidity matters.

General

  1. Set clear hiring policies for employees and former employees of the independent auditors. At a minimum, these policies must prohibit:
    1. the hiring of members of the corporation's audit engagement team in a position at the corporation which would cause the auditing firm to no longer qualify as independent under the rules and regulations promulgated by the SEC; and
    2. the hiring of any employee or former employee:
      1. of the corporation's independent auditor without the prior approval of the Committee; or
      2. of any firm providing the corporation with internal auditing services without the prior approval of the Committee.
  2. Establish procedures for the receipt, retention and treatment of complaints received by the corporation regarding accounting, internal accounting controls, or auditing matters; and the confidential, anonymous submission by employees of the corporation of concerns regarding questionable accounting or auditing matters.
  3. The Committee shall conduct an appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing basis.

Preparation of Reports

  1. Prepare all Committee reports required to be included in the corporation's proxy statement, in accordance with applicable rules and regulations of the SEC.
  2. Report to the Board of Directors:
    1. with respect to any issues that arise with respect to the quality or integrity of the corporation's financial statements, the corporation's compliance with legal or regulatory requirements or the performance and independence of the corporation's independent auditors;
    2. with respect to such other matters as are relevant to the Committee's discharge of its responsibilities; and
    3. with respect to such recommendations as the Committee may deem appropriate.

The report to the Board of Directors may be written, in the form of minutes or otherwise, or take the form of an oral report by the Chairman or any other member of the Committee designated by the Committee to make such report, and may be omitted when all members of the Board of Directors present at the meeting at which the report would otherwise be given were also present at the meeting of the Audit Committee.

  1. Maintain minutes or other records of meetings and activities of the Committee.

Outside Advisors and Funding

The Committee, in discharging its oversight role, is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate. In this regard, the Committee shall have the authority to retain outside legal, accounting or other advisors as it reasonably deems necessary to carry out its duties, including the authority to approve the fees payable to such advisors and any other terms of retention. The Committee shall be provided with funds necessary to engage outside advisors and to fund its ordinary administrative expenses that are necessary or appropriate to carry out its duties, in each case, as determined by the Committee in its sole discretion.

Access

The Committee, in discharging its oversight role, shall be given full access to all of the following:

  1. the Board of Directors;
  2. all employees of the corporation;
  3. counsel to corporation; and
  4. the independent auditors,

in each case, as necessary, to carry out these responsibilities.

The Committee shall perform a review and evaluation, at least annually, of the performance of the Committee and its members, including by reviewing the compliance of the Committee with this Charter. In addition, the Committee shall review and reassess, at least annually, the adequacy of this Charter and recommend to the Board of Directors any improvements to this Charter that the Committee considers necessary or valuable. The Committee shall conduct such evaluations and reviews in such manner as it deems appropriate.

The management of the corporation is responsible for the preparation, presentation and integrity of the corporation's financial statements. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for planning and carrying out a proper audit and reviews, including audits of the corporation's annual financial statements, reviews of the quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and other procedures.

In fulfilling their responsibilities hereunder, it is recognized that the members of the Committee are not employees of the corporation and are not, and do not represent themselves to be, accountants or auditors by profession or experts in the fields of accounting or auditing, including in respect of auditor independence. Therefore, it is not the duty or responsibility of the Committee to conduct "field work" or other types of auditing or accounting reviews or procedures or to set audit or independence standards, and each member of the Committee shall be entitled to rely on: (i) the integrity and skill of those persons and organizations within and outside the corporation from which it receives information; and (ii) the accuracy of the financial and other information provided by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors).


Committee Members

Maribeth S. Rahe
Maribeth S. Rahe
Director

Maribeth S. Rahe has served as a director since July 2005. Ms. Rahe has served as President and Chief Executive Officer of Fort Washington Investment Advisors, Inc. since November 2003. Ms. Rahe is currently a member of the board of directors of First Financial Bancorp and First Financial Bank. From January 2001 to October 2002, Ms. Rahe was President and a member of the board of directors of U.S. Trust Company of New York, and from June 1997 to January 2001, was its Vice Chairman and a member of the board of directors.

Dale E. Parker
Dale E. Parker
Director

Dale E. Parker joined the Consolidated Communications board of directors in October 2014, following the acquisition of Enventis, at which Mr. Parker had been a director since 2006 and its Chair from January 2011 to May 2013. Mr. Parker has been the Interim President and Chief Executive Officer of Image Sensing Systems, Inc. since December 2014 and is also a member of the board. He previously served as Chief Operating Officer and Chief Financial Officer (CFO) for Image Sensing Systems since June 2013.

From 2011 to 2012, Mr. Parker served as interim CFO for Ener1, Inc. and, in 2010, he was CFO of Neenah Enterprises, Inc. From 2009 to 2010, Mr. Parker was the Vice President of Finance for Paper Works and from 2007 to 2008, Mr. Parker was CFO at Forest Resources, LLC. Mr. Parker is a CPA and holds an MBA.

Timothy D. Taron
Timothy D. Taron
Director

Timothy D. Taron joined the Consolidated Communications board of directors in June 2012, following the acquisition of SureWest Communications, at which Mr. Taron had been a director since 2000.

Mr. Taron chaired the Nominating and Governance Committee, was a member of the Compensation Committee and was president of the Political Action Committee board while with SureWest. He has served in leadership positions in numerous non-profit community organizations, including as a member of the board of directors and president of the Sacramento Metropolitan Chamber of Commerce.

Mr. Taron is currently a senior partner in the Sacramento, California law firm of Hefner, Stark & Marois, LLP.