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Role of the Committee

The Audit Committee shall provide assistance to the Board in fulfilling the Board’s oversight responsibility by appointing and retaining the independent auditor and monitoring (1) the auditing and integrity of the financial statements of the Company with the auditors, (2) the independent auditor’s qualifications and independence, (3) the compliance by the Company with legal and regulatory requirements pertaining to the financial statements, and (4) the performance of the Company’s internal audit function and independent auditors.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of Management and the independent auditor.

In carrying out its responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent auditor’s work or auditing standards. In addition to being entitled to rely on the honesty and integrity of the Company’s senior executives and outside advisors and auditors as provided in the Company’s Corporate Governance Guidelines, the Committee is also entitled to rely on the accuracy of the financial and other information provided to it by such persons.

Composition of the Committee

The Committee shall consist of no fewer than three (3) members, each of whom shall meet the independence and experience requirements of any applicable laws and regulations. Each member will be able to read and understand the Company’s basic financial statements (or will become able within a reasonable time after his or her appointment to the Audit Committee). As determined by the Board in its business judgment, at least one member of the Committee shall be an audit committee financial expert in accordance with the rules and regulations of the Securities and Exchange Commission and at least one member (who may also serve as the audit committee financial expert) shall have accounting or related financial management expertise in accordance with New York Stock Exchange listing standards.

The Board shall appoint and replace the Audit Committee members and designate a committee chairman upon recommendation of the Nominating and Governance Committee.

No director may serve as a member of the Audit Committee if such director serves on the audit committees of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the Audit Committee.

No member of the Audit Committee may receive any compensation from the Company other than: (i) director’s fees (including an equity based component, if any), and (ii) a pension or other deferred compensation for prior service that is not contingent on future service.

Procedures and Administration

The Committee shall meet at least quarterly and more frequently as it believes is necessary or appropriate to fulfill its duties and responsibilities. The Committee shall meet periodically with Management, the internal auditors and the independent auditors in separate executive sessions.

In carrying out its duties and responsibilities, the Committee shall have that power and authority granted to committees of the Board in the Company’s Corporate Governance Guidelines, By-laws and Charter. In addition to its responsibilities regarding the outside auditors, the Committee shall have sole authority to engage and terminate any outside consultants and advisors the Committee deems necessary to carry out its duties. The Company shall provide sufficient funding for these consultants and advisors, as well as for those administrative expenses that are necessary or appropriate for the Committee to perform its duties.

The Audit Committee shall have full access to all Company books, records, facilities, personnel and outside advisors, and may request any officer or employee of the Company, or the Company’s outside counsel or independent auditor, to attend a meeting of the Committee, or to meet with any member of or consultants to the Committee.

Following each meeting, the chairman shall provide a summary report to the Board.

The Committee may form and delegate authority to subcommittees when appropriate.

Committee Duties and Responsibilities

The Audit Committee shall make regular reports to the Board. The Committee shall review and assess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Committee shall annually review its own performance.

The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the outside auditors, which outside auditors shall report directly to the Committee. The Audit Committee may consult with Management, but shall not delegate these responsibilities.

The Committee shall prepare an Audit Committee Report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.

The Committee shall have direct responsibility to review and approve waivers of the Company’s Code of Business Conduct and Ethics for directors, officers, and “affiliates” of the Company (as that term is defined in Rule 144 of the Securities Act of 1933).

The Committee shall review the coordination of the audit efforts between the independent auditors, internal auditors and Management to ensure completeness of coverage, reduction of redundant efforts and the effective use of audit resources.

In addition to the foregoing responsibilities, the Audit Committee will:

Financial Statement and Disclosure Matters

1. Review and discuss annual audited financial statements and quarterly financial statements, prior to filing, with Management and the independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” With respect to the annual audited financial statements, the Committee shall also recommend whether such audited financial statements should be included in the Company’s Form 10-K.
2. Review with Management: (i) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, (ii) any major issues as to the adequacy of the Company’s internal controls and any special audit steps which should be adopted in light of material control deficiencies, and (iii) analyses prepared by Management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the Company’s financial statements.
3. Discuss, generally, the Company’s earnings press releases, as well as financial information provided to analysts and rating agencies. The Committee need not discuss each earnings release in advance of release. The Committee shall discuss the type of information to be disclosed and the type of presentation to be made in the Company’s earnings press releases (determine the advisability of the use of “pro forma” or “adjusted” non-GAAP information).
4. Discuss with the independent auditor the effect of regulatory and accounting initiatives, as well as the advisability of the use of off-balance sheet structures, on the Company’s financial statements.
5. Discuss with Management the Company’s major financial risk exposures and the steps Management has taken to monitor and control such exposures, including the Company’s internal controls and risk assessment and risk management policies.
6. Review with the independent auditor those matters required to be discussed by Statement on Auditing Standards No. 114 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or on access to requested information, and any material disagreements with Management.
7. Review disclosure made to the Audit Committee and independent auditor by the Company’s CEO and CFO during their certification process on Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving Management or other employees who have a significant role in the Company’s internal controls.
8. Review the Company’s policies and procedures for approval and disclosure of those related-party transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.

Oversight of the Company’s Relationship with the Independent Auditor

1. Evaluate the independent auditor’s qualifications, performance and independence, including a review of the lead audit partner. In making its evaluation, the Audit Committee will take into account opinions of Management and the Company’s internal auditors. The Committee should present its conclusions with respect to the independent auditor to the full board.
2. Obtain and review a report from the independent auditor at least annually describing: the auditing firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review of the auditing 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 auditing firm, and any steps taken to deal with any such issues; and all relationships between the independent auditor and the Company consistent with Independence Standards Board Standard No. 1 (to assess the auditor’s independence).
3. Assure that any required rotation of the lead audit partner is implemented and consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm itself on a regular basis. Conclusions concerning such rotation will be presented to the full board.
4. Recommend to the Board policies for the Company’s hiring of employees or former employees of the independent auditor who were engaged on the Company’s account.
5. Pre-approve all audit and non-audit services performed by the independent auditors. For purposes of disclosure in the Company’s annual report and proxy statement, the Committee will communicate its pre-approval policies and procedures and any pre-approved services to Management

Oversight of the Company’s Internal Audit Function

• Review and evaluate the performance of the Company’s internal auditors, recommending replacement when appropriate. The internal auditors shall have unrestricted access to the Committee.
• Ascertain that the internal audit function is carried out effectively. In doing so, the Committee shall provide oversight to internal audit activities, including reviewing reports to Management prepared by the internal auditors and Management’s responses.
• Discuss with the internal auditors and independent auditor the internal audit function, including the responsibilities, budget and staffing of the Company’s internal audit function.

Compliance Oversight Responsibilities

• Establish 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 concerns regarding questionable accounting or auditing matters.
• Discuss with Management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies.
• Discuss with the Company’s legal counsel any legal or regulatory matters that may have a material impact on the financial statements or the Company’s compliance policies, and any reports received from regulators.