2003 Committee Charter : ESV

Mission Statement
The Audit Committee ("Committee") will assist the Board of Directors in fulfilling its
oversight responsibilities, including those which relate to (i) the integrity of the
Company's financial statements, (ii) the Company's compliance with legal and
regulatory requirements, (iii) the auditor's (as defined below) qualifications and
independence and (iv) the performance of the Company's Internal Audit Department and
the auditor. In performing its duties, the Committee will maintain effective working
relationships with the Board of Directors, management, and the internal and external
auditors. As used herein, the term "auditor" means the independent public accounting
firm engaged to perform the Company's audit required by the Securities Exchange Act of
1934, as amended (the "Exchange Act").
The Committee shall be comprised of three or more Directors who are independent as
defined in the Company's Corporate Governance Policy and by applicable laws, rules
and regulations. Committee members shall not simultaneously serve on the audit
committees of more than two other public companies unless approved by the Board of
Committee members shall be appointed by the Board of Directors. The Committee shall
appoint one member Committee Chairman following each Annual Meeting of
Stockholders or whenever a vacancy occurs.
Each Committee member shall be financially literate, as such qualification is interpreted
by the Board of Directors in its business judgment in accordance with applicable laws,
rules and regulations.
At least one of the Committee members shall have financial management expertise, such
qualification to be determined by the Company's Board of Directors in accordance with
and as required by applicable laws, rules and regulations.
The Committee is granted the authority to:
  • Directly appoint, approve the compensation of, oversee and discharge the auditor,
    which direction includes the authority to directly approve the auditor's audit
    engagement fees and terms;
  • Pre-approve all audit services and permissible non-audit services to be performed for
    the Company and its subsidiaries by the auditor and its member firms, subject to the
    de minimis exceptions for non-audit services detailed in Section 10A(i)(1)(B) of the
    Exchange Act, and the rules and regulations promulgated thereunder.
  • Investigate any activity of the Company, with the full cooperation of all employees as
    requested by the members of the Committee; and
  • Retain persons, including professionals having special competence, as necessary to
    assist the Committee in fulfilling its responsibilities and engage independent legal
    counsel and other advisors regarding accounting or audit practices or other issues
    pertinent to the Committee.
    The Company shall provide for appropriate funding, as determined by the Committee, for
    payment of compensation to the auditor for the purpose of rendering or issuing an audit
    report and to any advisors employed by the Committee. The auditor shall report directly
    to the Committee.
    The Committee is to meet as many times as the Committee deems necessary. At a
    minimum, the Committee shall meet quarterly to discuss annual and quarterly financial
    statements with the auditor and management.
    A written agenda for each meeting should be prepared and distributed to the Committee
    members and Board members in advance, along with any other relevant information.
    As necessary or desirable, the Committee may request that members of management and
    representatives of the auditor be present at meetings of the Committee.
    Additional attendees and matters to be reviewed at Committee meetings shall include the
  • The Company's Manager - Internal Audit shall report, at least annually, on the results
    of audits and the current audit plan status.
  • The Company's General Counsel shall periodically report to the Committee on legal
    matters that may have a significant impact on the Company's financial statements.
    The General Counsel also shall annually advise the Committee of, and the Committee
    shall discuss, the guidelines and policies by which the Company undertakes risk
    assessment and risk management, including the availability and cost of insurance.
  • The Committee shall periodically meet with the auditor, the Chief Financial Officer,
    the General Counsel, the internal auditors and Company management in separate
    executive sessions.
    The Company's Director - Tax shall periodically report to the Committee on tax
    matters that may have a significant impact on the Company's financial statements.
    The Secretary or Assistant Secretary of the Company, or other such person as the
    Committee shall appoint, will prepare the minutes of each meeting and distribute a copy
    of the minutes to the Committee members and the other Directors.
    The Committee shall be empowered in accordance with its judgment to:
    Internal Controls
    1. Review with the Company's management and auditor the Company's policies and
    procedures to confirm Company management's opinion regarding the adequacy
    of internal accounting, financial reporting and disclosure controls and procedures.
    2. Inquire as to the extent to which internal and external auditors review computer
    systems and applications, the security of such systems and applications, and the
    contingency plan for processing financial information in the event of a system
    3. Gain an understanding of whether internal control recommendations made by
    internal and external auditors have been implemented by management.
    Financial and SEC Reporting
    4. Discuss the Company's annual audited financial statements and quarterly
    financial statements with Company management and the auditor, including the
    Company's disclosures under "Management's Discussion and Analysis of
    Financial Condition and Results of Operations" and other key content and
    disclosures to be included in the Company's annual and quarterly reports filed
    with the SEC.
    5. Discuss earnings press releases, as well as financial information and earnings
    guidance provided to analysts and rating agencies.
    6. Review with management and the auditor, upon completion of their audit, the
    audited financial results for the year prior to their release to the public. This
    review is to encompass:
  • Significant transactions that are not a normal part of the Company's
  • Changes, if any, during the year in the Company's accounting principles or
    their application; and
  • Significant adjustments proposed by the auditor;
  • The effect of regulatory policies and developments, including those related to
    accounting and SEC reporting, on the Company's financial statements;
  • The effect of accounting initiatives, including any off-balance sheet structures,
    on the Company's financial statements; and
  • Make a recommendation to the Board of Directors that approval be granted to
    include the audited financial results in the Company's Annual Report on Form
    10-K filed with the SEC.
    7. Provide its independent perspective to management for consideration in the
    resolution of financial statement issues and for discussion of significant judgment
    8. Review and approve the Audit Committee Report that is required to be included
    in the Company's annual proxy statement under SEC rules.
    External Audit
    9. Discuss with the auditor any disclosed relationships or services that may impact
    the objectivity and independence of the auditor, discuss the auditor's
    independence and take such further action as may be appropriate to verify the
    auditor's independence.
    10. At least annually, obtain and review a report from the auditor regarding (i) the
    auditor's internal quality-control procedures; (ii) any material issues raised by the
    most recent internal quality-control review, or peer review, of the 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
    firm, and any steps taken to deal with any such issues; and (iii) all relationships
    between the auditor and the Company. The Committee shall present their
    conclusions with respect to the auditor to the full Board of Directors.
    11. Review, prior to the annual audit, the scope and general extent of the auditor's
    audit plan.
    12. Review the auditor's identification of issues and business and financial statement
    risks and exposures.
    13. Review and discuss reports from the auditor on the following:
  • all critical accounting policies and practices to be used;
  • all alternative treatments within generally accepted accounting principles for
    policies and practices related to material items that have been discussed with
    Company management, including the ramifications of the use of such
    alternative disclosures and treatments and the treatment preferred by the
    auditor; and
  • other material written communications between the auditor and Company
    management, such as any management letter or schedule of unadjusted
    14. Inform the auditor and management that the auditor and the Committee may
    communicate with each other at all times, and that the Committee Chairman may
    call a meeting whenever he deems it necessary.
    15. Instruct the auditor that the Committee expects to be advised if there are any areas
    that require its special attention.
    16. Evaluate the cooperation received from management by the auditor during their
    audit examination, including their access to all requested records, data and
    information. Also, elicit the comments of management regarding the
    responsiveness of the auditor to the Company's needs. Inquire of the auditor
    whether there have been any disagreements with management which if not
    satisfactorily resolved would have caused them to issue a nonstandard report on
    the Company's financial statements.
    17. Discuss with the auditor the quality of the Company's financial and accounting
    Internal Audit
    18. Review and approve the Internal Audit Department annual audit plan.
    19. Review significant findings and management's response to internal audit reports,
    including follow-up actions.
    Related Party Transactions and Compliance With Codes Of Ethical Conduct
    20. Review any proposed transaction between any Company officer or Director, or a
    relative or affiliate of any officer or Director, and the Company or any of its
    subsidiaries or affiliates to ensure that such "related-party" transactions are fair
    and in the overall best interest of the Company.
    21. Make, or cause to be made, all necessary inquiries of management and the auditor
    concerning established standards of corporate conduct and performance, and
    deviations therefrom.
    22. Review in-house policies and procedures for regular review of officers' expenses
    and perquisites, including any use of corporate assets. Inquire as to the results of
    the review and, if appropriate, review a summary of the expenses and perquisites
    of the period under review.
    23. Review the results of the Company's annual survey of compliance with the
    Company's Code of Business Conduct Policy.
    24. Establish procedures for the receipt, retention and treatment of complaints
    received by the Company or Board of Directors regarding accounting, internal
    accounting controls or auditing matters, and the confidential, anonymous
    submission by Company employees of concerns regarding questionable
    accounting, auditing or business conduct matters.
    25. Review and discuss disclosures made to the Committee by the Company's
    principal executive officer(s) and principal financial officer(s) during their
    certification process for the Company's Annual Report on Form 10-K and
    Quarterly Reports on Form 10-Q regarding (i) any significant deficiencies and
    material weaknesses in the design or operation of internal controls and procedures
    for financial reporting or material weaknesses therein, and (ii) any fraud involving
    Company management or other employees who have a significant role in the
    Company's internal controls and procedures for financial reporting.
    26. Apprise the Board of Directors, through routine Committee reports, distribution of
    minutes and special presentations as necessary, of significant developments in the
    course of performing the above duties.
    27. Review the annual Board performance evaluation as it relates to the Committee,
    and implement such measures as may be deemed appropriate to improve the
    performance and administration of the Committee.
    28. Annually review the Committee charter and recommend to the Board of Directors
    any appropriate extension or changes in the duties of the Committee or revisions
    of the Committee charter.
    29. Set policies for the Company's hiring of employees or former employees of the
    30. Require management to establish procedures for the receipt, retention and
    treatment of reports by the Company's internal and external attorneys regarding
    evidence of a material violation of an applicable United States federal or state
    securities law, material breach of fiduciary duty arising under United States
    federal or state law or similar material violation of any United States federal or
    state law by the Company or any officer, director, employee or agent of the