Amended and Restated Audit Committee Charter

(Amended December 2003)

Purpose

      The Audit Committee of Retek Inc. (the “Corporation”) is a standing committee of the Board of Directors (“Board”). The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibility relating to (1) the Corporation’s accounting and financial reporting processes and the audits and financial statements of the Corporation, including the systems of internal accounting and internal controls; (2) the appointment, compensation, qualifications, independence and work of the Corporation’s independent accountants; (3) the Corporation’s compliance with legal and regulatory requirements; (4) the Corporation’s internal audit function; and (5) other responsibilities set forth herein. The report of the Committee required by the rules of the Securities and Exchange Commission (“SEC”) shall be included in the Corporation’s annual proxy statement.

      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 Corporation’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 accountants.

Composition and Qualifications

      The Audit Committee shall be comprised of that number of directors as the Board of Directors shall determine from time to time, provided, however, that, in accordance with the listing standards of the National Association of Securities Dealers, Inc. (the “NASD”), such number of directors shall not be less than three. Each member of the Audit Committee shall meet all applicable requirements of the NASD with respect to independence, experience, financial literacy, accounting or related financial expertise, and any other matters required by the NASD. All members shall be independent as defined in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and applicable rules of the SEC. At least one member of the Audit Committee will be an audit committee financial expert as defined by the SEC.

      Subject to the other requirements of this Charter, the Board may appoint and remove committee members and the chair of the Committee in accordance with the Corporation’s bylaws. Upon expiration of any term or to fill any vacancy on the Committee, the Board shall appoint members of the Committee and shall consider the recommendation of the Nominating Committee. A member of the Committee may resign by delivering written notice to the Board within 30 days prior to the effective date of his or her resignation and such resignation shall take effect on the date specified in such notice.

     Authority

      In discharging its oversight responsibilities, the Audit Committee shall have unrestricted access to the Company’s management, books and records and the authority to retain outside counsel, accountants or other consultants at the Audit Committee’s sole discretion. The Corporation shall provide funding, as determined by the Audit Committee, for (1) payment of compensation to the independent accountants; (2) payment of compensation to any advisors employed by the Audit

Committee; and (3) payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

      The Audit Committee may form and delegate authority to subcommittees, comprised of one or more members of the Committee, as necessary or appropriate. Each subcommittee shall have the full power and authority of the Audit Committee.

Responsibilities

      The Audit Committee shall have the following duties and responsibilities:

     Financial Statements and the Disclosure Process

 

 

 

 

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Determine whether to recommend to the Board that the Corporation’s financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” be included in its Annual Report on Form 10-K for filing with the SEC. To carry out this responsibility, the Committee shall:

 

 

 

 

 

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Review and discuss the audited financial statements, including disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” with management and the independent accountants;

 

 

 

 

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Discuss with the independent accountants the matters required by Statement on Auditing Standards No. 61; and

 

 

 

 

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Review and discuss with the independent accountants the written disclosures required by Independence Standards Board Standard No. 1 regarding their independence, including whether the provision of permitted non-audit services is compatible with maintaining the independent accountants’ independence, and, where appropriate, recommend that the Board take appropriate action in response to the disclosures to satisfy itself of the independence of the Corporation’s independent accountants;

 

 

 

 

 

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Review and discuss with management and the independent accountants the Corporation’s interim financial statements to be included in the Corporation’s quarterly reports to be filed with the SEC;

 

 

 

 

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Discuss generally the Corporation’s earnings press releases, as well as financial information and earnings guidance provided to analysts to the extent required by applicable law or listing standards;

 

 

 

 

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Review the certification of the Chief Executive Officer and the Chief Financial Officer during their certification process for the 10-K and the 10-Q’s to the extent that such certification is expected to include information about any significant deficiencies in design or operation of internal controls or material weaknesses therein and any fraud, whether or not material, involving management or other employees who have a significant role in the Corporation’s internal controls;

 

 

 

 

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Review and discuss periodically reports from the independent accountants on, among other things, certain:

 

 

 

 

 

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Critical accounting policies and practices to be used;

 

 

 

 

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Alternative treatments of financial information within generally accepted accounting principles;

 

 

 

 

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Other material written communications between the independent accountants and management; and

 

 

 

 

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Difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, any significant disagreements with management, and communications between the audit team and audit firm’s national office with respect to difficult auditing or accounting issues presented by the engagement;

 

 

 

 

 

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Oversee the internal audit function, including a review with management and the senior internal auditor the charter, scope, plans and results of the internal audit function; and

 

 

 

 

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Review with management its evaluation of the effectiveness of the Corporation’s internal control structure and procedures for financial reporting and review with the independent accountants the attestation and report on, the assessment made by management, and consider whether any changes to internal controls are appropriate in light of management’s assessment.

     Oversight of Relationship with Independent Accountants

 

 

 

 

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Be directly responsible for the appointment (subject, if applicable, to stockholder ratification), compensation, retention 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 Committee;

 

 

 

 

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Approve guidelines, in accordance with law and listing standards, for the retention of the independent accountants for any permitted non-audit services and determine procedures for the pre-approval of audit and non-audit services. Pre-approval authority may be delegated to one or more members of the Committee, but may not be delegated to management, and any such preapprovals must be presented to the full Committee at its next scheduled meeting;

 

 

 

 

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Review and discuss the scope and plan of the independent audit;

 

 

 

 

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At least annually, obtain and review a report by the independent accountant describing its own internal quality-control procedures, any material issues raised by its most recent quality-control review or peer review and any inquiry or investigation by governmental or professional authorities respecting any such audits; and

 

 

 

 

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Recommend to the Board policies for the Corporation’s hiring of employees or former employees of the independent accountants, which guidelines shall meet the requirements of applicable law and listing standards.

 

 

 

 

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Ensure the rotation of the audit partner, lead partner and concurring partner of the independent auditor as required by law.

     Compliance Oversight Responsibilities

 

 

 

 

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Obtain from the independent auditor assurance that the audit was conducted in a manner consistent with Section 10A(b) of the Exchange Act;

 

 

 

 

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Review periodically with management and the independent accountants any correspondence with, or other action by, regulators or governmental agencies, any material legal affairs of the Corporation and the Corporation’s compliance with applicable law and listing standards; and

 

 

 

 

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Oversee compliance with the Corporation’s Code of Ethical Business Conduct and periodically review the adequacy of the Code of Ethical Business Conduct and recommend proposed changes to the Board.

     Other Responsibilities

 

 

 

 

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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;

 

 

 

 

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Develop, in coordination with the Nominating Committee, and implement an annual performance evaluation of the Committee;

 

 

 

 

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Regularly report to the Board of Directors its conclusions with respect to the matters that the Audit Committee has considered; and

 

 

 

 

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Review and reassess the adequacy of this Charter annually and submit it to the Board of Directors for approval.

     Meetings

      Subject to the Company’s Bylaws and resolutions of the Board, the Audit Committee shall meet at least quarterly at such times as the Chair of the Committee shall designate. The Committee may also hold special meetings or act by unanimous written consent as the Committee may decide. Committee meetings will be governed by the quorum and other procedures generally applicable to meetings of the Board under the Corporation’s bylaws. Minutes shall be kept of each meeting.

      The Committee, to the extent required by the listing standards and as it may otherwise determine to be appropriate, will meet in separate executive sessions with the chief financial officer, the controller, the internal auditor and representatives of the independent accountants.