Audit Committee Charter

I.   

Purpose

   

a. The Board of Directors and the Audit Committee represent the Company’s shareholders. The Audit Committee reports regularly to the full Board. The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee management’s conduct of the Company’s financial reporting process. This includes oversight and review of:

   

  

i.

Financial reports, including financial information provided by the Company to any governmental or regulatory body, the public, or other persons who may use this financial information.

 

 

ii.

The Company’s systems of internal accounting and financial controls.

   

 

iii.

The annual independent audit of the Company’s financial statements.

   

b.   The Company’s independent auditor is directly responsible to the Board and the Audit Committee. The Audit Committee shall determine the independent auditor’s qualifications and independence and shall be responsible for the appointment, compensation and oversight work of the independent auditor in preparing or issuing an audit report or related work.

   

c.   The Company’s Director of Internal Audit reports to the Chair of the Audit Committee, is ultimately responsible directly to the Board and the Audit Committee, and reports on an administrative basis to the Company’s Chief Financial Officer.

   

d.   The Audit Committee recognizes that management is responsible for preparing the Company’s financial statements and that the independent auditors are responsible for auditing the Company’s financial statements.

II.   

Powers

   

a.   The Audit Committee has the power to investigate any matter brought to its attention. The Audit Committee:

   

  

i.

Has full access to all books, records, facilities and personnel of the Company.

   

  

ii.

May retain outside counsel, auditors or other independent experts to assist the Committee in performing its responsibilities.

III.   

Responsibilities of the Audit Committee and Management

   

a.   General guidelines and areas of responsibility of the Audit Committee are listed below. However, circumstances may require a flexible approach, and the Audit Committee has full authority to diverge from the guidelines below under appropriate circumstances. The Audit Committee shall:

   

  

i.

Subject to any action that may be taken by the full Board, on an annual basis, have the ultimate authority and responsibility to determine the independent auditor’s qualifications and independence, select (or nominate for shareholder ratification), evaluate, and where appropriate, consider the rotation or replacement of the independent auditors.

   

  

ii.

Review and discuss with management and the independent auditors and approve the audited financial statements of the Company and make a recommendation regarding inclusion of those financial statements in any public filing including the Company’s Annual Report on Form 10-K (or the Annual Report to Shareholders if distributed prior to the filing of Form 10-K), including discussion of the Company’s disclosures under Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

   

  

iii.

Review and consider with the independent auditors the matters required to be discussed by Statement of Auditing Standards (“SAS”) No. 61.

   

  

iv.

Review with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements. Such review shall include discussion of any material changes in accounting policies.

   

  

v.

As a whole, or through the Committee chair, review and discuss with the independent auditors the Company’s interim financial results to be included in the Company’s quarterly reports to be filed with the Securities and Exchange Commission (“SEC”) including discussion of the Company’s disclosures under Management’s Discussion and Analysis of Financial Conditions and Results of Operations. This review will occur prior to release of the Company’s earnings report or the filing of its Form 10-Q with the SEC.

   

  

vi.

Review and discuss with management the types of information to be disclosed and the types of presentations to be made with respect to the Company’s earnings press release and financial information and earnings guidance provided to analysts and rating agencies.

   

  

vii.

Monitor and discuss with management and the independent auditors the quality and adequacy of the Company’s internal controls and their effectiveness and meet regularly and privately with the Director of Internal Audit.

   

  

viii.

Annually request from the independent auditors a formal written statement delineating all relationships between the auditor and the Company consistent with Independence Standards Board Standard No. 1. With respect to such relationships, the Audit Committee shall:

 

1.

Discuss with the independent auditors any disclosed relationships and the impact of the relationship on the independent auditor’s independence.

 

2.

Assess and recommend appropriate action in response to the independent auditor’s report to satisfy itself of the auditor’s independence.

   

  

ix.

Approve the retention of the independent auditor for non-audit services, other than tax compliance incidental to the normal auditing function, and due diligence and accounting support related to mergers, acquisitions and divestitures. Other tax related consulting and special projects and fees for any other services to be provided by the independent auditor or outsourced internal auditor must be submitted to the Audit Committee consistent with the Company’s Non-Audit Services Policy.

   

  

x.

Confirm and approve the scope of audits to be performed by the independent and internal auditors, monitor progress and review results and review fees and expenses charged by the independent auditors and any party retained to provide internal audit services.

   

  

xi.

On an annual basis, discuss with the independent auditor the independent auditor’s internal quality control procedures, any material issues raised in quality control or peer review and any investigation or inquiries by governmental or professional authorities within the preceding five years (and any steps to deal with issues raised) regarding the firms’ independent audits of other clients.

   

  

xii.

Review significant findings or unsatisfactory internal audit reports, or audit problems or difficulties encountered by the independent auditor and monitor management’s response to such findings.

   

  

xiii.

Provide oversight review and discuss with management, internal auditors and independent auditors the adequacy and effectiveness of the Company’s overall risk assessment and risk management process.

   

  

xiv.

Review its Charter at least annually and make recommendations to the Board for approval and adoption of the Charter, including any additions, deletions or modifications, as may be deemed appropriate.

   

  

xv.

Review pension plan investment performance.

   

  

xvi.

Review expense accounts of senior executives.

   

  

xvii.

Update the Board on a regular basis with respect to matters coming to its attention which may have a significant impact on the financial condition or affairs of the Company, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors and performance of the internal audit function.

   

 

xviii.

Review major issues regarding accounting principles and financial statement presentations, significant changes to the Company’s selection or application of accounting principles and major issues relating to the Company’s internal controls including any specifically required audit steps to correct identified major internal control issues. The Audit Committee shall also review management or independent auditor analyses regarding significant financial reporting issues and judgments made in preparing financial statements including analyses of alternative GAAP methods as well as the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements.

 

 

xix.

Review all material related party transactions prior to initiation of the transaction and make recommendations to the Board of Directors for approval or disapproval.

   

  

xx.

In conjunction with the Board of Directors, evaluate the qualifications of its members and its own performance on an annual basis.

   

  

xxi.

Meet separately and privately, on a regular basis, with the independent auditors, internal auditors, and with members of management as needed.

   

  

xxii.

Establish policies regarding the employment and retention of current or former employees of the Company’s independent auditor or outsourced internal auditor.

   

  

xxiii.

With respect to complaints concerning accounting, internal accounting controls or auditing matters:

 

Review and approve procedures for receipt, retention and treatment of complaints received by the Company, and

 

Establish procedures for the confidential, anonymous submission of complaints to the Audit Committee.

   

  

xxiv.

Establish levels for payment by the Company of fees of the independent auditors and any advisors retained by the Audit Committee.

   

  

xxv.

Receive regular reports from the Chief Executive Officer, Chief Financial Officer and the Company’s Disclosure Control Committee representative on the status of the Company’s disclosure controls and related certifications, including disclosure of any significant deficiencies in the design or operation of internal controls and any fraud that involves management or other employees with a significant role in internal controls. Prepare the Report of the Audit Committee to be included in the Company’s Proxy Statement.

   

  

xxvi.

Prepare the Report of the Audit Committee for the Company’s Proxy.

   

b.    The Company’s financial management, including the internal audit staff as well as the independent auditors, have more time, knowledge, and more detailed information regarding the Company than do Audit Committee members. Therefore, the Audit Committee is not expected to provide any expert or special assurance as to the Company’s financial statements or any professional certification as to the work of the internal or independent auditors.

   

c.   The Company shall provide appropriate funds for the Audit Committee to perform its responsibilities and shall pay the compensation for any accounting firm engaged to issue an audit report or perform other audit, review or attest services, any independent counsel and any other advisor retained by the Audit Committee.

IV.   

Membership and Organization

   

a.   Members of the Audit Committee and its Chairperson shall be designated from time to time by the Board and shall serve for such period of time as may be determined by the Board. However, the Chairperson of the Audit Committee shall not serve in that capacity for a term longer than four consecutive years.

   

b.   The Audit Committee shall be composed of no fewer than three members, each of whom must be independent directors as provided in the Director Independence Appendix.

   

c.  One-third of the members of the Committee, but not fewer than three persons, shall constitute a quorum

   

d.   Action taken by the majority of the members present at a meeting at which a quorum is present and action taken by the written consent of all members shall constitute action of the Committee.

   

e.   Each member of the Audit Committee shall meet the requirements of the Audit Committee Policy of the New York Stock Exchange in effect from time to time, and

   

  

i.

Shall have no relationship to the Company that may interfere with the exercise of their independence from management and the Company.

   

  

ii.

Shall be financially literate or become financially literate within a reasonable period of time after appointment to the Committee.

   

  

iii.

At least one member of the Audit Committee shall have accounting or related financial management expertise.

   

f.   The Audit Committee shall meet at least four times a year.

   

g.   The members of the Audit Committee shall be designated by the Board annually and shall serve until such member’s successor is duly designated or until such member’s earlier resignation or removal. Any member of the Audit Committee may be removed from the Audit Committee, with or without cause, by a majority vote of the Board.

   

h.   The Chairperson of the Audit Committee shall be designated by the Board. The Secretary of the Corporation shall be the Secretary of the Audit Committee unless the Audit Committee designates otherwise.

   

i.   The Chairperson of the Audit Committee in consultation with Audit Committee members, the chief executive officer and the management liason shall be responsible for scheduling all meetings of the Committee and providing the Audit Committee with a written agenda for each meeting. The Chairperson shall preside at meetings of the Audit Committee.

   

j.   The Audit Committee shall meet as often as may be deemed necessary or appropriate, but no fewer than four times annually. The Audit Committee may ask members of management or others to attend meetings or to provide relevant information. The Audit Committee shall periodically meet in executive session absent management.

   

k.    The Audit Committee may delegate authority to act upon specific matters within determined parameters to a subcommittee consistent with the delegation of such powers to the Audit Committee by the Board.

   

l.   The Chairperson of the Audit Committee shall not serve in that capacity for longer than a four year term.

V.   

Conclusion

   

The Audit Committee and the Board of Directors follow thoughtful business practices and exercise sound, independent business judgments in carrying out their responsibilities. This Charter is not intended to expand the liability exposure of the Audit Committee or the Board, or the members of either. The Audit Committee and the Board of Directors may amend, modify, or alter the Charter or the policies and procedures utilized by the Audit Committee in carrying out its oversight and review responsibilities as circumstances may warrant.