PURPOSE AND SCOPE

• the financial reports and other financial information provided by the Company to any governmental or regulatory body, the public, or any other user of such financial statements;

• the Company's systems of internal accounting and financial controls;

• the independence and performance of the Company's outside auditors; and

• compliance by the Company with any legal compliance and ethics programs as may be established by the Board and the Company's management from time-to-time.

In fulfilling its obligations, the Committee shall maintain free and open communications between the Committee and the Company's:

• independent auditors,

• internal accounting staff, and

• management.

In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company. The Committee is authorized to retain outside or special counsel, auditors, accounting or other consultants, experts, and professionals (collectively, "Advisors") for this purpose. The Company shall provide funding, as determined by the Committee, for payment of (i) compensation to the independent auditors, (ii) compensation to any Advisors employed by the Committee and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

The Committee may request any officer or employee of the Company or the Company's outside counsel or independent auditors to attend a meeting of the Committee or to meet with any members of, or consultants or advisors to, the Committee.

The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. This Charter shall be published as an appendix to the Company's Proxy Statement for the Company's annual meeting of shareholders to the extent required by the rules and regulations of the Securities and Exchange Commission (the "SEC").

>MEMBERS OF THE COMMITTEE

The Audit Committee shall be composed of at least three directors each of whom must:

• meet all "independence" and qualification requirements of the rules and regulations of the Nasdaq Stock Market, as such rules and regulations may be amended or supplemented from time-to-time, or the rules and regulations of such other exchange or inter-dealer quotation system on which the Company's common stock is then traded;
• meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act");
• not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years; and
• be able to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement.

In addition, at least one member of the Committee must have past employment experience in finance or accounting, professional certification in accounting, or other comparable experience or background that results in such individual's financial sophistication including, but not limited to, being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities, or who otherwise qualifies as an "audit committee financial expert" under SEC rules and regulations. No member of the Committee may accept any consulting, advisory, or other compensatory fee from the Company other than for board service, and no member of the Committee may be an affiliated person (as defined in SEC rules) of the Company.

Under exceptional and limited circumstances, however, one director who (i) is not independent as defined in the rules and regulations of the Nasdaq Stock Market, (ii) meets the criteria set forth under Section 10A(m)(3) of the Exchange Act, and (iii) is not a current officer or employee or a family member of an officer or employee of the Company may serve as a member of the Committee for no longer than two years (but may not chair the Committee), provided that:

• the Board determines that membership by the individual on the Committee is required by the best interests of the Company and its shareholders; and

• the Board discloses, in the annual proxy statement after such determination, the nature of the relationship and the reasons for the determination.

KEY RESPONSIBILITIES AND PROCESSES

The primary responsibility of the Committee is to oversee the accounting and financial reporting process of the Company and the audits of the financial statements of the Company on behalf of the Board and to report the results of the Committee's activities to the Board. The Committee recognizes that management shall be responsible for preparing the Company's financial statements and the independent certified public accountants shall be responsible for auditing those financial statements. The functions set forth below shall be the principal recurring activities of the Committee in carrying out its oversight function. In carrying out its responsibilities, however, the Committee shall remain flexible in order to best react to changing conditions and circumstances.

The following functions are set forth as a guide with the understanding that the Committee may deviate from this guide and supplement these functions, as the Committee deems appropriate under the circumstances.

1. The Committee shall have a clear understanding with management and the independent certified public accountants that the independent certified public accountants are ultimately accountable to the Committee, as representatives of the Company's shareholders. The Committee shall appoint, compensate, retain and oversee the work of the independent auditors. The independent auditors shall report directly to the Audit Committee, and the Audit Committee shall resolve any disagreements between management and the independent auditors regarding financial reporting.

The Committee shall approve, in advance, all auditing services, internal control-related services and permitted non-audit services (including the terms thereof) to be performed for the Company by its independent auditors, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion of the audit. The Committee may form and delegate authority to a subcommittee consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that the decision of such subcommittee to grant pre-approvals shall be presented to the full Committee at its next scheduled meeting.

The Committee shall discuss with management and the independent auditors the overall scope and plans for the audit, including the adequacy of staffing and the compensation to be paid to the independent auditors. The Committee also shall discuss with management and theindependent auditors the adequacy and effectiveness of the Company's internal accounting and financial controls, including the Company's system to monitor and manage business risk, as well as legal and ethical compliance programs. To the extent the Committee deems it to be necessary, the Committee shall meet separately with the internal accounting staff and the independent auditors, with or without management present, as well as the Company's Chief Financial Officer and other management personnel, to discuss the results of the Committee's examinations.

The Committee shall:

• ensure that the independent auditors submit annually a formal written statement delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard No. 1, as such standard may be amended or supplemented from time to time;

• discuss with the independent auditors any such relationships or services provided by the independent auditors and their impact on the objectivity and independence of the independent auditors; and

• take, or recommend that the Board take, appropriate action to oversee the independence of the independent auditors.

The Committee shall review with management and the independent auditors (i) the financial statements to be included in the Company's Annual Report on Form 10-K (or the Annual Report to Shareholders if distributed prior to the filing of the Form 10-K), including the auditors' judgment about the quality, not just acceptability, of the Company's accounting principles, the consistency of the Company's accounting policies and their application, and the clarity and completeness of the Company's financial statements and related disclosures, including the disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Critical Accounting Policies" and "Controls and Procedures." The Committee also shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, including SAS No. 61, as such might be amended or supplemented. The Committee shall recommend to the Board whether the audited financial statements should be included in the Form 10-K.

Once the Company is subject to Section 404 of the Sarbanes-Oxley Act of 2002, the Committee shall review and discuss with management and the independent auditor the Company's internal controls report and the independent auditor's attestation of the report prior to filing of the Company's Annual Report on Form 10-K.

Prior to the filing of the Company's Quarterly Report on Form 10-Q the Committee (as a whole or acting through the Committee chair) shall:

• review the interim financial statements and the related disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Critical Accounting Policies" and "Controls and Procedures" to be included in the Form 10-Q with management and the independent auditors; and

• discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards, including Statement of Auditing Standards ("SAS") No. 71, as such may be amended or supplemented from time to time.

Review and discuss quarterly reports from the independent auditor on:

       all critical accounting policies and practices to be used;

       all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and

• other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences;

The Committee shall prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company's Proxy Statement to be delivered to shareholders in connection with the Company's annual meeting of shareholders.

The Committee shall review with the independent auditors any problems or difficulties the auditors may have encountered and any management letter provided by the independent auditors and the Company's response to that letter. Such review should include:

• any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information; and

• any changes required in the planned scope of the audit.

The Committee shall meet periodically with management to review the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures.

The Committee shall review with the Company's general counsel any legal matters that may have a material impact on the financial statements, the Company's compliance policies, and any material reports or inquiries received from regulators or governmental agencies.

The Committee shall review and discuss with management and the independent auditor any major issues as to the adequacy of the Company's internal controls, any special steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting.

The Committee shall establish procedures for: (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

The Committee shall pre-approve all related party transactions as required by applicable law and regulations.

With respect to the foregoing responsibilities and processes, the Committee recognizes that the Company's financial management, including its internal audit staff, if any, as well as the independent auditors, have more time, knowledge, and more detailed information regarding the Company than do Committee members. Consequently, in discharging its oversight responsibilities, the Committee will not provide or be deemed to provide any expertise or special assurance as to the Company's financial statements or any professional certification as to the independent auditors' work. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent

Nor is it the duty of the Committee to assure compliance with laws and regulations and the Company's internal policies and procedures.