PURPOSE

The Audit Committee is to serve as a focal point for communication between the Board of Directors, the Director of Internal Audit, the independent auditors, and the Company's management as their duties relate to financial accounting, reporting, organizational governance, and controls. The Audit Committee is to assist the Board of Directors in fulfilling its fiduciary responsibilities as to accounting policies and reporting practices of the Company and the sufficiency of auditing relative thereto. It is to be the Board's principal agent for evaluating the quality of Internal Audit, the independence and qualifications of the Company's independent auditors, the integrity of management, the Company's compliance with legal and regulatory requirements, and the adequacy of disclosures to shareholders. The Committee shall be directly responsible for the appointment, compensation, retention, and oversight of the work of the independent auditors.


COMPOSITION

The Audit Committee shall be comprised of three or more Directors who are appointed annually by the Board and are independent as defined under the applicable regulatory requirements of the Securities and Exchange Commission and the New York Stock Exchange. Director's fees are the only compensation an Audit Committee member may receive from the company. 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, as the Board interprets such qualifications in conformance with the applicable regulatory requirements of the Securities and Exchange Commission and the New York Stock Exchange. One of the members shall be appointed Committee Chairperson by the Board of Directors. A quorum of the Committee shall consist of at least fifty percent of the members.


AUTHORITY

The Audit Committee is granted the authority to investigate any activity of the Company, and all employees and Directors are directed to cooperate as requested by members of the Committee. The Committee is empowered to retain outside counsel or persons having special competence as necessary to assist the Committee in fulfilling its responsibility.


MEETINGS

The Audit Committee is to meet at least four times each year. As necessary or desirable, the Chairperson may request that members of management, the Director of Internal Audit, and representatives of the independent auditors be present at meetings of the Committee.


MINUTES

The minutes of each meeting are to be prepared and sent to Committee members for approval.


RESPONSIBILITIES AND DUTIES

Independent Auditor

1.
Retain and terminate the company's independent auditors (subject to shareholder ratification) for the ensuing year.

2. Obtain from the independent auditors a formal written statement delineating all relationships between the auditor and the Company. The Committee shall also actively engage in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor, and shall recommend that the Board of Directors take appropriate action to ensure the independence of the auditors.

3. Set clear hiring policies for employees or former employees of the independent auditors.

4. At least annually, obtain and review a report by the independent auditor describing: the firm's internal quality-control procedures; 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.

5. Review and approve, prior to the annual audit, the scope, general extent, and fees related to the independent auditors' audit examination. Review the extent of non-audit services provided by the independent auditors in relation to the objectivity and independence needed in the audit. Pre-approve all non-audit services performed by the independent auditor (this responsibility may be delegated to the Chairperson when appropriate). Review the degree of coordination with Internal Audit coverage and assess overall audit coverage.

6. Discuss with the independent auditors, the results of their review of the quarterly financial results and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards prior to the filing of the Company's Quarterly Report on Form 10-Q.

7. Review with the independent auditors any audit problems or difficulties and management's response.

Internal Auditor

8.
Review with the Director of Internal Audit the scope, staffing, independence, and audit schedule. The Committee shall review and approve any significant subsequent changes in the audit plan. Review the significant findings, current status, and management's corrective action as a result of internal audits.

Financial Reporting

9.
Review the Company's annual financial statements with management and the independent auditors, and recommend to the Board that the statements be included in the Annual Report on Form 10-K. The review is to encompass:

         The Company's annual report to shareholders and Form 10-K, and certain other filings made with the Securities and Exchange Commission;

         Significant transactions that are not a normal part of the Company's operations;

         The accounting and reporting policies and practices applied by the Company in preparing its annual and quarterly financial statements, along with the significant changes, if any, during the year. The Committee shall discuss with the independent auditor, the auditor's judgments about the quality and acceptability of accounting principles applied in the Company's financial reporting;

         The process that management uses in formulating sensitive accounting estimates;

         Any significant adjustments proposed by the independent auditors;

         Any deficiencies noted by the independent auditors in the internal control structure; and

         The Report of Independent Auditors.

10. Report each year, in the Company's proxy statement, the extent and results of the Audit Committee's review of the annual financial statements.

11. Discuss the quarterly financial statements with management and the independent auditor, including the company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

12. Discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.

Internal Control

13.
Review with the Company's management, the Director of Internal Audit, and the independent auditors, the Company's general policies and procedures to reasonably assure the adequacy of internal accounting and financial reporting controls. Discuss policies with respect to risk assessment and risk management. Review any recommendations of Internal Audit and the independent auditors with respect to accounting policies, internal controls, or other matters.

14. Require disclosure by the Company's CEO and CFO of (1) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial information; and (2) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.


15. Confirm with the Company's management, the Director of Internal Audit, and the independent auditors that tests of compliance with significant Company policies including the Company's process of assessing the risk of fraudulent financial reporting and the program established to monitor compliance with conflict of interest and other Code of Conduct guidelines.

16. Establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing, as well as the confidential, anonymous submission by company employees of concerns regarding questionable accounting or auditing matters.

17. When warranted in the judgment of the Committee, initiate any special investigations of compliance with federal, state, and local laws and regulations.

Other

18.
Meet privately and separately with the Director of Internal Audit, with other company executives, and with the independent auditors at each regularly scheduled meeting. Committee members shall also hold executive sessions (Committee members only) at each regularly scheduled meeting.

19. Conduct an annual performance evaluation of the Audit Committee.

20. Review the Audit Committee Charter annually and request Board approval of proposed revisions to the Charter as needed. A copy of the Charter shall be included in the Company's proxy statement at least once every three years.

21. Determine that the Company has provided appropriate funding for the payment of compensation to any advisors employed by the Audit Committee and ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.

22. Report to the Board of Directors on the results of performing the foregoing duties and submit to the Board any recommendations the Audit Committee may have.

23. Review any other relevant matters at the discretion of the Board of Directors or the Committee.