2003 Committee Charter : RSYS

RADISYS CORPORATION

AUDIT COMMITTEE CHARTER

July 15, 2002
The Audit Committee is a committee of the Board of Directors. Its primary function is to assist the board in fulfilling its oversight responsibilities relating to:


A. Corporate accounting, reporting practices of the Company, and the quality and integrity of the Company's financial reports;

B. Compliance with law and the maintenance of ethical standards by the Company; and

C. The maintenance by the Company of effective internal controls.


In meeting its responsibilities, the Audit Committee is expected to:


1. Provide an open avenue of communication between the independent accountant and the Board of Directors.

2. Recommend to the Board of Directors the independent accountants to be selected, approve the compensation of the independent accountant, and review and approve any change in the independent accountants.

3. Review and approve the appointment of internal auditors, if any.

4. Review the independence, objectivity, effectiveness and relevant quality controls of the independent accountant, including (a) receipt of periodic reports from the independent accountant regarding such auditor's independence consistent with Independence Standards Board Standard 1, discussion of such reports with the auditor, and if so determined by the Audit Committee, taking or recommending that the full Board of Directors take appropriate action to oversee the independence of the auditor, which firm is ultimately accountable to the Audit Committee and the Board of Directors, and (b) a review of management consulting services provided by and related fees paid to the independent accountant.

5. Inquire of management and the independent accountant about significant risks or exposures and review the steps management has taken to minimize such risk to the Company.

6. Review, in consultation with management and the independent accountant, the audit scope, plan and areas of audit focus.

7. Review periodically with the independent accountant:



a. The adequacy of the Company's internal financial controls including computerized information systems controls and security.

b. Any related significant findings and recommendations of the independent accountant together with management's responses thereto.

c. Any significant changes in the Company's accounting principles or the methods of applying the Company's accounting principles.

d. The independent accountant's judgements about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting, including a comparison of the Company's critical accounting policies with industry norms.


A-1

--------------------------------------------------------------------------------



8. Review with management and the independent accountant at the completion of the annual examination:



a. The Company's annual financial statements and related footnotes.

b. The independent accountant's audit of the financial statements and its report thereon.

c. Any significant changes required in the independent accountant's audit plan.

d. Any significant difficulties or disputes with management encountered during the course of the audit.

e. Other matters related to the conduct of the audit which are to be communicated to the committee under generally accepted auditing standards.



9. Review with management:



a. Significant findings during the year and management's responses thereto.

b. Any difficulties encountered in the course of their audits, including any restrictions on the scope of their work or access to required information.

c. Any changes required in the planned scope of their audit plan.



10. Review the procedures employed by the Company in preparing published financial statements and related management commentaries and review filings with the SEC containing the Company's financial statements.

11. Review with financial management and the independent accountants the Company's quarterly earnings release, and approve the release, prior to its public disclosure. The Chair (or the Chair's designee) of the committee may represent the entire committee for purposes of this review and approval.

12. Periodically review the Company's major financial risk exposures and insurance coverages.

13. Periodically review policies and procedures with respect to the CEO's expense accounts and perquisites, and consider the results of any review of these areas by the independent accountant.

14. Review periodically the Company's code of conduct and recommend changes to the Board of Directors. Review with the independent accountant the results of their review of the Company's monitoring of compliance with the code of conduct.

15. Review legal and regulatory matters that may have a material impact on the financial statements, related company compliance policies and significant reports received from regulators.

16. Meet periodically with the independent accountant and management in separate executive sessions to discuss any matters that the committee or these groups believe should be discussed privately with the Audit Committee.

17. Maintain minutes or other records of meetings and activities of the Audit Committee and report committee actions to the Board of Directors with such recommendations as the committee may deem appropriate.

18. Prepare a letter for inclusion in the annual report that describes the committee's composition and general responsibilities.

19. Periodically review and update the committee's charter.

20. The Audit Committee shall have the power to conduct or authorize investigations into any matters within the committee's scope of responsibilities. The committee shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation.


A-2

--------------------------------------------------------------------------------



21. The committee shall meet at least four times per year or more frequently as circumstances require. The committee may ask members of management or others to attend the meeting and provide pertinent information as necessary.

22. The committee will perform such other functions as assigned by law, the Company's charter or bylaws, or the Board of Directors.


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 are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditor. Nor is it the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditor or to assure compliance with laws and regulations and the Company's business conduct guidelines.

The membership of the Audit Committee shall consist of at least three (3) "financially literate" independent* members of the Board of Directors who shall serve at the pleasure of the Board of Directors. At least one member of the Audit Committee will have 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. No inside directors will serve on the Audit Committee. Audit Committee members and the committee chairman shall be designated by the full board of directors.

The duties and responsibilities of a member of the Audit Committee are in addition to those duties set out for a member of the Board of Directors.

--------------------------------------------------------------------------------

* "independent", for purposes of serving as a member of the Audit Committee, includes, among other things:

  • The member has not been employed by RadiSys or its affiliates in the current or past three years;
  • The member has not accepted any compensation from RadiSys or its affiliates in excess of $60,000 during the previous fiscal year (except for board service, tax-qualified retirement plan benefits, or non-discretionary compensation);
  • The member is not an immediate family member of an individual who is, or has been in the past three years, employed by RadiSys or its affiliates as an executive officer;
  • The member has not been a partner, controlling shareholder or an executive officer of any for-profit business organization to which RadiSys made, or from which it received, payments (other than those which arise solely from investments in RadiSys' securities) that exceed five percent of RadiSys' or the business organization's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the past three years; or
  • The member has not been employed as an executive of another entity where any of RadiSys' executives serve on that entity's compensation committee.

    A-3

    --------------------------------------------------------------------------------