Audit Committee Charter

PURPOSE
The Audit Committee shall provide assistance to the directors in fulfilling their responsibility to the stockholders, potential stockholders and the investment community relating to the oversight of the accounting and financial reporting processes of the Company, the audits of the financial statements of the Company, compliance with all legal and regulatory requirements, the Company’s system of internal control over financial reporting, and the quality and integrity of the financial reports of the Company. In so doing, it is the responsibility of the Audit Committee to maintain free and open communication between the directors, the independent auditors, the internal auditor and the financial management of the Company.

THE AUDIT COMMITTEE IS RESPONSIBLE FOR THE DUTIES SET FORTH IN THIS CHARTER BUT IS NOT RESPONSIBLE FOR EITHER PREPARATION OF THE FINANCIAL STATEMENTS OR AUDITING OF THE FINANCIAL STATEMENTS. MANAGEMENT HAS THE RESPONSIBILITY FOR PREPARING THE FINANCIAL STATEMENTS AND IMPLEMENTING INTERNAL CONTROL OVER FINANCIAL REPORTING, AND THE INDEPENDENT AUDITORS HAVE THE RESPONSIBILITY FOR AUDITING THE FINANCIAL STATEMENTS AND THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING. THE REVIEW OF THE FINANCIAL STATEMENTS BY THE AUDIT COMMITTEE IS NOT OF THE SAME QUALITY AS THE AUDIT PERFORMED BY THE INDEPENDENT AUDITORS.

MEMBERSHIP
The Audit Committee shall consist of at least three members of the Board of Directors appointed from time to time by the Board of Directors. Each member of the Committee shall be “independent” (as such term is defined under the applicable federal securities laws, rules and regulations and the rules and regulations of any national securities exchange upon which the Company’s common stock is listed) of the management of the Company and free of any relationship that, in the opinion of the Board of Directors, would interfere with their exercise of independent judgment as Committee members. The Audit Committee members shall also meet all of the other qualifications required for Audit Committee members by applicable federal securities laws, rules and regulations and the rules and regulations of any national securities exchange upon which the Company’s common stock is listed, and at least one member of the Audit Committee shall be a “financial expert” as defined under the federal securities laws and related regulations and financially sophisticated as required under the rules and regulations of the national securities exchange upon with the Company’s common stock is listed.

RESPONSIBILITIES
The Audit Committee, in its capacity as a committee of the Board of Directors, shall be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and each such registered public accounting firm must report directly to the Audit Committee. The Audit Committee believes its policies and procedures should remain flexible in order to best react to changing conditions and to ensure to the directors and stockholders that the accounting and reporting practices of the Company are in accordance with all requirements and are of the highest quality.
In carrying out its responsibilities, the Audit Committee shall:

ENGAGEMENT AND REVIEW OF AUDITORS

• Review and evaluate the qualifications, performance and independence of the independent auditors, and annually appoint and retain the independent auditors to audit the Company’s financial statements. Have a clear understanding with the independent auditors that they are to report directly to the Audit Committee, who have ultimate authority to engage, evaluate and, if appropriate, terminate their services.
• Meet with the independent auditors and financial management of the Company to review the scope of the proposed audit for the current year and the audit procedures to be utilized.
• Pre-approve all audit, review or attest engagements and permissible non-audit services to be provided to the Company by the independent auditors and the fees and terms of the independent auditors for such services; provided, however, that in no event shall the Audit Committee have the authority to pre-approve any non-audit services which may not be performed by the independent auditors for the Company or its subsidiaries under applicable law.
• Review the nature and scope of non-audit services provided to the Company by the independent auditors and consider the potential effects of these other relationships on the auditors’ independence. Obtain annually from the independent auditors a formal written statement delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard 1, and actively engage in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and take, or recommending that the full board take, appropriate action to oversee the independence of the independent auditors.
• Determine (i) the compensation payable to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (ii) compensation payable to any advisers employed by the Audit Committee; and (iii) the ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
• Review the internal quality control procedures of the independent auditors and any reports, peer reviews or government investigations regarding issues with internal quality control.
• Monitor and require the rotation of audit partners of the independent auditors to ensure compliance with applicable federal securities laws, rules and regulations.
• Set clear policies regarding the employment by the Company of any employees or former employees of the independent auditors.
• Review the annual internal audit plan, including subsequent revisions and the results of internal audits.
• Evaluate the performance of the internal auditor, including discussions with financial management and the independent auditors with respect to such performance.

 

PRE-APPROVAL OF SERVICES

• Have the authority to delegate to one or more members of the Audit Committee the authority to grant pre-approvals of any audit, review or attest engagements and permissible non-audit services to be performed by the independent auditors. Any member to whom such pre-approval authority is delegated shall advise the Audit Committee at each of its scheduled meetings of any such pre-approvals by such member since the last meeting of the Audit Committee.
• Have the authority to establish pre-approval policies and procedures with respect to audit, review and attest engagements and permissible non-audit services provided the policies and procedures are detailed as to the particular service and the Audit Committee is informed of each service and such policies and procedures do not include delegation of the Audit Committees responsibilities under the Securities Exchange Act of 1934 to management.

 

REVIEW FINANCIAL STATEMENTS AND AUDIT

• At the conclusion of the audit, review the findings, comments and recommendations of the independent auditors.
• Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 114 with respect to communications by the independent auditors with audit committees.
• Prior to any public disclosure thereof or filing with the Securities and Exchange Commission, review and discuss with management, the internal auditor and the independent auditors any quarterly and annual financial statements of the Company, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
• Prior to any public disclosure thereof or filing with the Securities and Exchange Commission, review and discuss with management, the internal auditor and the independent auditors (or otherwise have the opportunity to comment on) any other financial statements of the Company or any earnings release or guidance or other financial information relating thereto.
• Review any and all reports issued by the independent auditors with respect to the Company’s financial statements and accounting policies, and review any material written communications between the independent auditors and management.
• Review with financial management and the independent auditors the results of their timely analysis of significant financial reporting issues and practices. Also review with financial management, the internal auditor and the independent auditors their qualitative judgments about the appropriateness, not just acceptability, of accounting principles and financial disclosure practices used or proposed to be used, and particularly, the degree of aggressiveness or conservatism of the organization’s accounting principles and underlying estimates.
• Review any significant changes to the Company’s accounting principles and practices proposed by the independent auditors, the internal auditor or management.
• Provide sufficient opportunity for management, the independent auditors and the internal auditor to meet separately with the Audit Committee. Among the items to be discussed in the meetings with the independent auditors and the internal auditor are their respective evaluations of the Company’s financial and accounting personnel, the cooperation that the they each received during the course of their audits, any significant disagreements with management, the fullness and accuracy of the Company’s financial statements and any other areas that require special attention.
• Report the results of the annual audit to the Board of Directors and, based on all reviews and discussions, recommend to the Board of Directors whether or not the audited financial statements be included in the Company’s Annual Report on Form 10-K.
• Prepare or cause to be prepared the Audit Committee report required to be included in the Company’s annual proxy statement.

 

REVIEW CONTROLS AND PROCEDURES

• Review with the independent auditors, the internal auditor and financial management the adequacy and effectiveness of the accounting and financial controls and procedures of the Company, and elicit any recommendations for the improvement of such controls or procedures or particular areas where new or more detailed controls or procedures are desirable. Review management’s report on internal control over financial reporting prior to its inclusion in the Company’s annual report, which addresses the effectiveness of the Company’s internal controls and procedures for purposes of financial reporting.
• Inquire of management, the internal auditor and the independent auditors about significant risks or exposures and assess the steps management has taken to minimize such risks to the Company.
• Review and discuss the Company’s risk assessment and risk management process.
• Have such meetings with management, the independent auditors and the internal auditor as the Audit Committee deems appropriate to discuss the concept and design of the Company’s information and reporting systems and internal controls and procedures and the steps management has taken to address significant issues concerning those matters.
• Review accounting and financial personnel and succession planning within the Company.
  

 

COMPLIANCE, INVESTIGATIONS AND COMPLAINTS

• Review any legal or regulatory matters that may have a material effect on the financial statements of the Company or related Company compliance policies.
• Review and approve all related party transactions.
• Investigate any matter brought to its attention within the scope of its duties.
• Establish and annually review procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
• As appropriate, review and discuss with financial management complaints regarding accounting, internal accounting controls or auditing matters received pursuant to the above procedures.

QUALIFIED LEGAL COMPLIANCE COMMITTEE

The Audit Committee has been designated by the Board of Directors as the “qualified legal compliance committee” pursuant to Section 307 of the Sarbanes-Oxley Act and the rules promulgated thereunder by the Securities and Exchange Commission and, as such, shall have the authority and responsibility:

• (i) to inform the chief legal officer and chief executive officer (or the equivalents thereof) of the Company of any report of evidence of (a) a material violation of any federal or state securities laws, (b) a material breach of a fiduciary duty arising under any federal or state laws or (c) a similar material violation of any federal or state law by the Company or any of its officers, directors, employees or agents (a “material violation”);
• (ii) to determine whether an investigation is necessary regarding any report of evidence of a material violation by the Company, its officers, directors, employees or agents and, if it determines an investigation is necessary or appropriate, to:
• (A) Notify the Board of Directors;
• (B) Initiate an investigation, which may be conducted either by the chief legal officer (or the equivalent thereof) of the Company or by outside attorneys; and
• (C) Retain such additional expert personnel as the Audit Committee deems necessary; and
  
• (iii) At the conclusion of any such investigation, to:
  • (A) Recommend, by majority vote, that the Company implement an appropriate response to evidence of a material violation; and
  • (B) Inform the chief legal officer and the chief executive officer (or the equivalents thereof) and the Board of Directors of the Company of the results of any such investigation and the appropriate remedial measures to be adopted; and
• (iv) Acting by majority vote, to take all other appropriate action, including the authority to notify the Securities and Exchange Commission in the event that the Company fails in any material respect to implement an appropriate response that the Audit Committee, as the “qualified legal compliance committee,” has recommended the Company to take.
  

 

GENERAL

MEETINGS
The Audit Committee shall meet as often as may be deemed necessary or appropriate, generally at least four times annually, or more frequently as circumstances dictate. The Audit Committee may ask members of management, the internal auditor, the independent auditors or others to attend meetings and provide pertinent information as necessary or desirable. A majority of the members shall constitute a quorum. A majority of the members present shall decide any matter brought before the Committee.

RESOURCES AND AUTHORITY OF THE AUDIT COMMITTEE
The Audit Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including, without limitation, the authority to select, retain, terminate and approve the fees and other retention terms of auditors, counsel and other experts, advisors or consultants as it deems appropriate in its sole discretion.

REPORTING TO THE BOARD OF DIRECTORS
The Audit Committee shall submit the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each Committee meeting with, the Board of Directors and shall report the results of the annual audit to the Board of Directors.

REVIEW OF CHARTER
The Audit Committee shall review and assess the adequacy of this Charter annually and recommend any proposed changes to the Board of Directors.

REVIEW OF COMMITTEE PERFORMANCE
The Audit Committee shall annually conduct an evaluation of its performance.

As amended October 24, 2008