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AUDIT COMMITTEE CHARTER

I. GENERAL FUNCTIONS, AUTHORITY, AND ROLE
The audit committee is a committee of the board of directors. Its primary function shall be to assist the board in fulfilling its oversight responsibilities by overseeing the accounting, internal control and financial reporting processes of the company and the audits of the financial statements of the company, and reviewing the financial information to be provided to the company's shareholders through filings with the Securities and Exchange Commission and to the general public through press releases.

The audit committee shall have the power to conduct or authorize investigations into any matters within the committee's scope of responsibilities. In connection with such investigations or otherwise in the course of fulfilling its responsibilities under this charter, the audit committee shall have the authority to retain special legal, accounting, or other consultants or advisors to advise it, and to determine the funding for such consultants or advisors, and may request any officer or employee of the company, its outside legal counsel or independent registered public accounting firm (outside auditor) to attend a meeting of the audit committee or to meet with any members of, or consultants to, the audit committee. The audit committee shall also have the authority to determine the funding by the company of ordinary administrative expenses of the committee that are necessary and appropriate in carrying out its duties.

The company's outside auditor shall ultimately be accountable to the audit committee and the board of directors, as representatives of the shareholders, and the audit committee shall have the ultimate authority and responsibility to appoint, oversee, approve the compensation of, and, where appropriate, replace the outside auditor. In the course of fulfilling its specific responsibilities hereunder, the audit committee shall strive to maintain an open avenue of communication between the company's outside auditor and the board of directors.

The responsibilities of a member of the audit committee shall be in addition to such member's duties as a member of the board of directors.

While the audit committee shall have the responsibilities and powers set forth in this charter, it shall not be the duty of the audit committee to plan or conduct audits of the company’s financial statements or internal controls over financial reporting. These are the responsibilities of the outside auditor. Nor shall it be the duty of the audit committee to conduct investigations or to assure compliance with laws and regulations or the company's own policies.

II. MEMBERSHIP
The audit committee shall consist of at least three members of the board of directors who shall serve at the pleasure of the board of directors. The members of the audit committee shall meet the independence and financial literacy, experience, sophistication and expertise requirements of The Nasdaq Stock Market, Inc. (or similar requirements of such other securities exchange or quotation system as may from time to time apply to the company), and such requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Securities and Exchange Commission (the “SEC”).

Audit committee members and the committee chair shall be designated by the full board of directors.

III. RESPONSIBILITIES
The responsibilities of the audit committee shall be as follows:
  1. GENERAL
    1. Meet at least once per quarter or more frequently as circumstances or the obligations of the audit committee require.
    2. Report audit committee actions to the board of directors; make such recommendations as the committee may deem appropriate; and monitor compliance with recommendations.
    3. Annually review and reassess the adequacy of this charter and submit it to the board of directors for approval.
    4. Evaluate audit committee performance at least annually and report the findings to the board of directors.
    5. Perform such functions as may be assigned by law, the company's articles of incorporation or bylaws, or the board of directors.

  2. OUTSIDE AUDITOR
    1. As necessary, consider with management the rationale for employing audit firms other than the principal outside auditor.
    2. Select, appoint and oversee the outside auditor, resolve disagreements between management and the outside auditor regarding financial reporting, approve the compensation of the outside auditor, review the performance of the outside auditor and, as necessary, review and approve the discharge of the outside auditor. The outside auditor shall report directly to the audit committee.
    3. Take reasonable steps to confirm the independence of the outside auditor, which shall include (a) ensuring receipt from the outside auditor of a formal written statement delineating all relationships between the outside auditor and the company, consistent with Independence Standards Board Standard No. 1, (b) discussing with the outside auditor any disclosed relationships or services that may impact the objectivity and independence of the outside auditor, and (c) as necessary, taking, or recommending that the board of directors take, appropriate action to oversee the independence of the outside auditor.
    4. In performing Item 3 above, the audit committee shall consider whether the outside auditor's provision of any non-audit services is compatible with the independence of the outside auditor.
    5. Pre-approve all audit and permissible non-audit services provided by the outside auditor, and establish policies and procedures with respect to such pre-approvals. The audit committee may delegate this authority to one or more members of the committee. The pre-approval decisions of any audit committee member to whom pre-approval authority is delegated must be presented to the audit committee at its next scheduled meeting.

  3. FINANCIAL REPORTING, DISCLOSURE AND AUDIT PROCESS
    1. Consider, in consultation with the outside auditor and management, the audit plan and scope.
    2. Review with the outside auditor and management the coordination of the audit effort to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.
    3. Review reports from the outside auditor regarding:
      1. All critical accounting policies and practices to be used.
      2. Any significant alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the outside auditor.
      3. Other material written communications between the outside auditor and management, such as management letters or schedules of unadjusted differences.
    4. Consider and review with the outside auditor:
      1. Any significant matters regarding internal controls over financial reporting that have come to the attention of the auditors during the course of their audit.
      2. Any report or attestation issued by the outside auditor regarding the company's internal controls over financial reporting.
      3. Any related significant findings and recommendations of the outside auditor together with management's responses thereto.
      4. The matters required to be discussed by Statement on Auditing Standards No. 90 and 114, as the same may be modified, supplemented or superseded from time to time.
    5. Review and discuss with management and the outside auditor at the completion of the annual examination:
      1. The company's audited financial statements and related footnotes.
      2. Management’s assessment of the effectiveness of internal controls over financial reporting.
      3. The outside auditor's audit of the financial statements and the effectiveness of internal controls over financial reporting and their reports thereon.
      4. Any significant changes required in the outside auditor's audit plan.
      5. Any difficulties or disputes with management encountered during the course of the audit, including any restrictions on the scope of the auditors’ work or access to required information.
      6. Other matters related to the conduct of the audit which are to be communicated to the committee under generally accepted auditing standards.
    6. Review and discuss with management and the outside auditor the unaudited quarterly financial statements prior to release to the general public.
    7. Review and discuss with management and the outside auditor any recent accounting pronouncements potentially affecting the company’s financial statements.
    8. Consider and review with management any of the following of which the audit committee is made aware:
      1. Significant findings during the year and management's responses thereto.
      2. Any reports by management regarding the effectiveness of, or any significant deficiencies or material weaknesses in, internal controls over financial reporting.
      3. Any fraud or alleged fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal controls.
    9. Inquire of management about significant financial risks or exposures and assess the steps management has taken to minimize such risks to the company.
    10. Meet with the outside auditor and management in separate executive sessions to discuss any matters that the committee or these parties believe should be discussed privately with the audit committee.

  4. SECURITIES AND EXCHANGE COMMISSION FILINGS
    1. Prior to filing with the SEC, review with management and the outside auditor, as appropriate, filings containing the company's financial statements, including the disclosure contained in such filings under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations.”
    2. Prepare the report required by the rules of the Securities and Exchange Commission to be included in the company's annual proxy statement.

  5. LEGAL AND GOVERNANCE MATTERS
    1. Review legal and regulatory matters that may have a material impact on the financial statements and review related company compliance policies.
    2. To the extent delegated by the board of directors, review and approve all “related-person transactions,” as defined in Item 404 of Regulation S-K, as promulgated by the SEC.
    3. Establish procedures for the receipt, retention, and treatment of complaints received by the company regarding accounting and financial reporting, internal controls over financial reporting, auditing, and code of ethics matters, including the confidential, anonymous submission by employees, shareholders, venders and other third parties of concerns regarding accounting and financial reporting, internal controls over financial reporting, auditing, and the code of ethics as required under applicable SEC and Nasdaq rules. Review and investigate any submissions received through these procedures.
    4. Establish, monitor and enforce the code of ethics for the chief executive officer and other senior financial officers in compliance with applicable SEC and Nasdaq rules.
    5. Receive corporate attorneys’ reports of evidence of material violations of securities laws or breaches of fiduciary duty.
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