<PAGE>
EXHIBIT 2.1
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its financial oversight responsibilities. Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the Company's policies, procedures and
practices at all levels. The Audit Committee's primary duties are to:
- Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will fulfill these responsibilities by carrying out the
activities enumerated in this Charter.
II. COMPOSITION
1. The Board shall designate the members of the Audit Committee, who
shall also be members of the Board. The Audit Committee shall be
comprised of no less than the minimum number of members required by the
Exchange or Market where the Company's Stock is traded. Unless a
Chairman is elected by the full Board of Directors, the members of the
Audit Committee may designate a Chairman by majority vote of the full
Audit Committee membership.
2. Except as provided below, all Audit Committee Members shall be
independent directors, as defined by the Exchange or Market where the
Company's stock is traded. The current definition of an "independent
director" is a director who is not, nor has been within the last three
years, an employee of the Company, an immediate family member of an
employee of the Company or an individual who has a business
relationship (in addition to the director's relationship to the Company
as an outside director) with the Company, unless any such business
relationship does not interfere with the director's exercise of
independent judgment, in the business judgment of the Board of
Directors. In addition, a director is not independent if such director
is employed as an executive of another corporation where any of the
Company's executives serves on that corporation's compensation
committee. Nevertheless, one former
1
<PAGE>
employee or immediate family member of a former executive officer of
the Company or its affiliates who is not considered independent due
solely to the three-year restriction period may be appointed to the
Audit Committee, under exceptional and limited circumstances, if the
company's Board determines in its business judgment that membership on
the Audit Committee is required by the best interests of the company
and its shareholders, and the company discloses, in the next annual
proxy statement subsequent to such determination, the nature of the
relationship and the reasons for the determination.
III. QUALIFICATIONS
1. All members of the Audit Committee shall have a working familiarity
with basic finance and accounting practices, and
2. At least one member of the Audit Committee shall have
A. Past employment experience in finance or accounting; or
B. Requisite professional certification in accounting; or
C. Other comparable experience or background, including a current
or past position as a chief executive or financial officer or
other senior officer with financial oversight responsibilities
in accounting or related financial management expertise.
IV. MEETINGS
The Audit Committee shall meet at least four times annually, or more
frequently if circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with management
and the independent accountants in separate executive sessions to discuss any
matters that the Audit Committee or each of these groups believe should be
discussed privately.
V. RESPONSIBILITIES AND DUTIES
To fulfill its duties the Audit Committee shall:
1. REPORTING OVERSIGHT/OBLIGATIONS
A. Review and update this Charter at least annually.
B. Before each earnings release, discuss with the independent accountants, the
quality and acceptability of the Company's accounting principles.
C. Verify that the independent accountants reviewed the 10-Q prior to its filing
with the Securities and Exchange Commission.
D. Review with financial management and the independent accountants the
financial statements included in the 10-Q prior to its filing with the
Securities and Exchange Commission if changes have occurred since the press
release.
2
<PAGE>
The Chairman of the Audit Committee may perform this function in lieu of the
full Committee.
E. Review the Company's annual financial statements and any reports or other
financial information submitted to the Securities and Exchange Commission, that
includes any certification, report, opinion, or review rendered by the
independent accountants.
F. Review the annual Proxy Statements and include in the Proxy Statement a
report:
(i) On discussions regarding audit matters with management and the
auditors and
NOTE: The Company must state in its proxy statement whether (1)
the Audit Committee has reviewed and discussed the audited
financial statements with management; (2) the Committee has
discussed with the independent accountants the matters required
to be discussed by SAS61(See below), as may be modified or
supplemented; (3) the Committee has received the written
disclosures and the letter from the Auditors required by ISB
Standard No. 1 (See below), as may be modified or supplemented,
and has discussed with the independent accountants their
independence.
SAS 61 requires independent accountants to communicate certain
matters related to the conduct of an audit to those who have
responsibility for oversight of the financial reporting process,
specifically the Audit Committee. These matters include: (1)
methods used to account for unusual transactions; (2) the effect
of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus; (3) the process used by management in formulating
particularly sensitive accounting estimates and the basis for the
independent accountants conclusions regarding the reasonableness
of those estimates; and (4) disagreements with management over
the application of accounting principles, the basis for
management's accounting estimates, and the disclosures in the
financial statements.
ISB 1 mandates that the independent accountants disclose in
writing to the Audit Committee all relationships with the Company
that could affect the independent accountant's independence,
confirm its view that it is independent of the Company, and
discuss such matters with the Audit Committee.
(ii) Whether the Audit Committee recommended to the Board that the
awaited financial statements be included in the Company's Annual
Report filed with the Securities and Exchange Commission on
Form10-K.
(iii) Stating that the Company has disclosed in its Proxy Statement that
the Board of Directors has adopted a written Charter for the Audit
Committee and filed a copy of the Charter as an appendix to the
Proxy at least once every three years.
(iv) Indicating whether each Audit Committee Member is independent as
defined in the listing standards for the Exchange or Market where
the Company's stock trades.
2. INTERACTION WITH THE INDEPENDENT ACCOUNTANTS
A. Review the terms of the engagement of the independent accountants, including
the scope of their audit, proposed fees and personnel qualifications.
3
<PAGE>
B. Periodically discuss with the independent accountants matters pertaining to
their independence and receive the independent accountant's letter confirming
their independence.
C. In consultation with the Board of Directors, review the performance of the
independent accountants and approve any proposed selection or discharge of the
independent accountants when circumstances warrant.
D. Periodically consult with the independent accountants out of the presence of
management about internal controls and completeness and accuracy of the
Company's financial statements.
E. In consultation with the independent accountants, review the integrity of the
Company's financial reporting processes, both internal and external.
F. Consider and approve, if appropriate, major changes to the Company's
accounting principles and practices as suggested by the independent accountants
or management.
G. Establish regular and separate systems of reporting to the Audit Committee by
management and the independent accountants regarding any significant judgments
made in management's preparation of the financial statements and the view of
each as to the quality and appropriateness of such judgments.
H. Following completion of the annual audit, review separately with management
and the independent accountants any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of work or
access to required information.
I. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
J. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved by the
Audit Committee, have been implemented. (This review should be conducted at an
appropriate time subsequent to implementation of changes or improvements, as
decided by the Audit Committee.)
3. LEGAL COMPLIANCE
A. Evaluate the need for an internal audit department and the activities,
organizational structure, and qualifications of the department.
B. Review, with the Company's counsel, legal compliance matters including
corporate securities trading policies.
4
<PAGE>
C. Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
4. OTHER
A. Perform any other activities consistent with this Charter, the Company's
Bylaws and governing law, as the Audit Committee or the Board of Directors deems
necessary or appropriate.
Adopted by the Board of Directors of Metro Information Services, Inc. on
June 12, 2000.
/s/ Robert J. Eveleigh
-----------------------------
Robert J. Eveleigh
Secretary
5
