The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight

responsibilities by reviewing:

• The financial reports, reports on internal controls, and other financial information provided by the

Corporation to its shareholders, the public, the SEC, NASDAQ and any other governmental or

regulatory body,

• The Corporation’s systems of internal controls regarding finance, accounting, legal compliance

(including disclosure controls and procedures and internal control over financial reporting) and

ethics that management and the Board have established; and

• The Corporation’s auditing, accounting and financial reporting processes generally.

The Audit Committee, to the extent consistent with this function should encourage continuous

improvement of, and should foster adherence to, the Corporation’s policies, procedures and practices at all

levels. The Audit Committee’s primary duties and responsibilities are to:

• Serve as an independent and objective party to monitor the Corporation’s financial reporting process

and internal control system.

• Retain and appraise the audit efforts of the Corporation’s independent auditors, determine the

compensation to be paid to the Corporation’s independent auditors, review and approve all non-audit

services to be performed by the Corporation’s independent auditors, and serve as the point of contact

for reports to be made by the independent auditors concerning the Corporation’s critical accounting

policies and practices and other communications relating to the Corporation’s financial matters.

• Review and appraise the audit efforts of the Corporation’s internal audit department.

• Provide an open avenue of communication among the Corporation’s independent auditors, financial

and senior management, the internal audit department, and the entire Board of Directors.

• Establish procedures to receive and respond to employees’ and others’ complaints and concerns

regarding the Corporation’s accounting and auditing matters.

The Audit Committee should fulfill these responsibilities primarily by carrying out the activities

enumerated in Section IV of this Charter.


The Audit Committee shall be comprised of three or more directors as determined by the Board, each of

whom shall be independent directors (as such term is now or hereafter defined by securities laws and SEC

and NASDAQ rules and regulations), and free from any relationship that, in the opinion of the Board,

would interfere with the exercise of his or her independent judgment as a member of the Committee. All

members of the Committee shall have a working familiarity with basic finance and accounting practices,

and at least one member of the Committee shall have accounting or related financial management expertise

(including, without limitation, at least one member who meets the definition of “audit committee financial

expert” as such term is defined by the SEC as required by the Sarbanes-Oxley Act of 2002). The Board

shall determine whether a director meets the definition of “audit committee financial expert,” and the

Corporation shall disclose the basis for the Board’s determination in accordance with applicable securities

laws and SEC and NASDAQ rules and regulations. No member of the Audit Committee may receive any

consulting, advisory or other compensatory fees from the Corporation (other than directors fees, which may

include a higher fee for serving on the Audit Committee). Committee members may enhance their

familiarity with finance and accounting by participating in educational programs conducted by the

Corporation or an outside consultant, including director education programs developed or required by

NASDAQ. The members of the Committee (and its chairperson) shall be elected by the Board at its annual

organizational meeting or at such other time as the Board may determine. Committee members shall serve

until their successors shall be duly elected and qualified.


The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As

part of its responsibility to foster open communication, the Committee shall meet at least quarterly with

management, the director of the internal audit department and the Corporation’s independent auditors in

separate executive sessions to discuss any matters that the Committee or any of these groups believe should

be discussed privately. In addition, the Committee or its Chair shall meet and consult with the independent

auditors and management quarterly to review the Corporation’s financial statements and other matters

consistent with IV below.


The Audit Committee’s policies and procedures should remain flexible in order to best react to changing

conditions and to ensure to the Board of Directors and shareholders that the accounting and reporting

practices of the Corporation are in accordance with all requirements and are of the highest quality.

In carrying out these responsibilities, the Audit Committee will:

Documents/Reports Review

1. Review and, if necessary, update this Charter periodically, at least annually, as conditions dictate.

2. Review the Corporation’s annual financial statements. Determine, based on review and discussion

of the audited financial statements with management and the independent auditors, whether the

Committee should recommend to the Board that the audited financial statements and any internal

control report be included in the Company’s Annual Report on Form 10-K.

3. Review the regular internal audit reports to management prepared by the internal audit department

and management’s response.

4. Review with financial management and the independent auditors the financial results for each

quarterly fiscal period prior to the release of quarterly earnings. The Chair of the Committee may

represent the entire Committee for purposes of this review.

Independent Accountants

5. Appoint the Corporation’s independent auditors, considering independence and effectiveness, and

approve the fees and other compensation to be paid to the independent auditors. On an annual

basis, the Committee shall review and discuss with the auditors all significant relationships the

auditors have with the Corporation to determine the auditors’ independence. The Committee shall

also ensure that the auditors meet all requirements for audit partner rotation under applicable

securities laws and SEC and NASDAQ rules and regulations, and shall monitor any hiring by the

Corporation of persons who were employed by the Corporation’s auditors to ensure that such

hiring does not adversely affect the auditors’ independence. When such rules become effective,

the Committee shall also ensure that the Corporation’s auditors are a “registered public accounting

firm” registered with the Public Company Accounting Oversight Board.

6. Pre-approve all auditing and permitted non-audit services to be provided by the independent

auditors (including determining whether any proposed non-audit services fall within the categories

of non-audit services prohibited under the Sarbanes-Oxley Act of 2002) with the exception of de

minimus non-audit services (as such term is defined in the Sarbanes-Oxley Act) which are

approved by the Committee prior to completion of the audit. The Committee may delegate preapproval

authority to one or more of its members, with the proviso that any decision taken by the

delegated members be presented to the Committee at its regular meetings. The Committee may

also adopt policies and procedures with respect to pre-approval of permitted non-audit services,

provided that such policies and procedures conform to the requirements set forth in applicable

laws, rules and regulations (including publication of the pre-approval policy).

7. Review the performance of the independent auditors and make any change of the independent

auditors when circumstances warrant.

8. Periodically (but not less frequently than annually) consult with the independent auditors out of

the presence of management about internal controls and the fullness and accuracy of the

Corporation’s financial statements.

9. Instruct the independent auditors that they report to the Audit Committee.

Financial Reporting Processes

10. In consultation with the independent auditors and the internal audit department, review the

integrity of the Corporation’s financial reporting processes and controls, both internal and


11. Review reports by the independent auditors concerning critical accounting policies and practices

used, alternative treatments of financial information and their ramifications that have been

discussed with management, and other written communications between the independent auditors

and management, and resolve any disputes between the independent auditors and management

regarding financial reporting matters.

12. Consider and recommend to the Board, if appropriate, major changes to the Corporation’s auditing

and accounting principles and practices as suggested by the independent auditors, management, or

the internal audit department.

Process Improvement

13. Establish regular and separate systems of reporting to the Audit Committee by each of

management, the independent auditors and the internal audit department regarding any significant

judgments made in management’s preparation of the financial statements and the view of each as

to appropriateness of such judgments.

14. Following completion of the annual audit, review separately with each of management, the

independent auditors and the internal audit department any significant difficulties encountered

during the course of the audit, including any restrictions on the scope of work or access to required


15. Review any significant disagreement among management and the independent auditors or the

internal audit department in connection with the preparation of the financial statements and

resolve such disagreements.

16. Review with the independent auditors, the internal audit department and management the extent to

which changes or improvements in financial or accounting practices, as approved by the Audit

Committee or the Board, have been implemented.

Ethical and Legal Compliance

17. Review periodically and, if necessary, recommend to the Board revision of a Code of Ethics

(including without limitation provisions applicable to senior financial officers and to the

Corporation’s CEO, CFO, principal accounting officer, controller and persons performing similar

functions) and ensure that management has established a system to enforce the Code of Ethics and

report any changes in, or waivers of, the Code, all in accordance with applicable securities laws

and SEC and NASDAQ rules and regulations.

18. Review management’s monitoring of the Corporation’s compliance with the Code of Ethics, and

ensure that management has the proper review system in place to ensure that the Corporation’s

financial statements, reports, and other financial information disseminated to governmental

organizations and the public satisfy legal requirements and comply with applicable laws, rules and


19. Review activities, organizational structure, and qualifications of the internal audit department.

Review and concur in the appointment, replacement, reassignment, or dismissal of the director of

the internal audit department.

20. Review, with the Corporation’s counsel, legal compliance matters including corporate securities

trading, reporting and disclosure policies.

21. Review, with the Corporation’s counsel, any legal matter that could have a significant impact on

the Corporation’s financial statements.

22. Engage independent counsel or other advisers as deemed advisable by the Committee and

determine the fees to be paid to such counsel or advisers.

23. Establish procedures for the receipt, retention and treatment of complaints received by the

Corporation regarding accounting, internal accounting controls and auditing matters.

24. Establish procedures for confidential, anonymous submission by employees of concerns regarding

questionable accounting or auditing matters.

25. Review and approve any “related party transaction” between the Corporation and any of its

directors, executive officers and other insiders (as defined in applicable securities laws, rules and

regulations) in accordance with the Company’s “New Related Party Transaction Approval

Requirements” policy, dated February 12, 2004.

26. Prepare reports required to be included in the Corporation’s annual report or proxy statement

pursuant to applicable laws, rules and regulations.

Other Duties

27. Perform any other activities consistent with this Charter, the Corporation’s By-laws and applicable

law, rules and regulation, as the Committee or the Board deems necessary or appropriate.