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EXHIBIT 10.1
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 oversight responsibilities by reviewing:
the financial reports and other financial information provided by the
Corporation to any governmental body or the public; the Corporation's systems of
internal controls regarding finance, accounting, legal compliance and ethics
that management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with these
functions, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal
control system.
o Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department.
o 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 primarily fulfill these responsibilities
by carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors
as determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the
Committee. 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. Committee
members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Corporation or an outside
consultant.
A director will not be considered "independent" if, among other
matters, he or she has:
o been employed by the Corporation or its affiliates in the
current or past three years;
o accepted any compensation from the Corporation or its
affiliates in excess of $60,000 during the previous fiscal
year (except for Board service, retirement plan benefits, or
non-discretionary compensation);
o an immediate family member who is, or has been in the past
three years, employed by the Corporation or its affiliates
as an executive officer;
o been a partner, controlling shareholder or an executive
officer of any for-profit business to which the Corporation
made, or from which it received, payments (other than those
which arise solely from investments in the Corporation's
securities) that exceed five percent of the organization's
consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
o been employed as an executive of another entity where any of
the Corporation's executives serve on that entity's
compensation committee.
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The members of the Committee shall be elected by the Board at the
annual meeting of the Board or until their successors shall be duly elected and
qualified. Unless a Chair is elected by the full Board, the members of the
Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least four times annually or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee shall meet at least annually with management, the
director of the internal auditing department and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately. In addition, the Committee
or at least its Chair should meet with the independent accountants and
management periodically to review the Corporation's financials consistent with
IV.4.below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee
shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter on an annual basis or as
conditions dictate.
2. Review the Corporation's annual financial statements and any
reports or other financial information submitted to any
governmental body or the public, including any certification,
report, opinion, or review rendered by the independent
accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's responses.
4. Review with financial management and the independent accountants
the Form's 10-Q and 10-K prior to their filing or prior to the
release of earnings. The Chair of the Committee may represent the
entire Committee for purposes of this review.
INDEPENDENT ACCOUNTANTS
5. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and
effectiveness and approve the fees and other compensation to be
paid to the independent accountants. On an annual basis, the
Committee should review and discuss with the accountants all
significant relationships the accountants have with the
Corporation to determine the accountants' independence.
6. Review the performance of the independent accountants and approve
any proposed discharge of the independent accountants when
circumstances warrant.
7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness
and accuracy of the Corporation's financial statements.
FINANCIAL REPORTING PROCESSES
8. In consultation with the independent accountants and the internal
auditors, review the scope of the audit and the integrity of the
Corporation's financial reporting processes, both internal and
external.
9. Consider the independent accountants' judgments about the quality
and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management or the
internal auditing department.
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PROCESS IMPROVEMENT
11. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and
the internal auditors regarding any significant judgments made in
management's preparation of the financial statements and the view
of each as to appropriateness of such judgments.
12. Following completion of the annual audit, review separately with
each of management, the independent accountants and the internal
auditing department any significant difficulties encountered
during the course of the audit, including any restrictions on the
scope of work or access to required information.
13. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
14. Review with the independent accountants, the internal auditing
department and management the extent to which changes or
improvements to financial or accounting practices, as approved by
the Audit Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
15. Establish, review and update periodically a Code of Ethical
Conduct and ensure that management has established a system to
enforce this Code.
16. Review management's monitoring of the Corporation's compliance
with the organization's Ethical Code, and ensure that management
has the proper review system in place to ensure that the
Corporation's financial statements, reports and other financial
information disseminated to governmental organizations and the
public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications
of the internal audit department.
18. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
19. Review, with the organization's counsel, any legal matters that
could have a significant impact on the organization's financial
statements.
20. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the
Board deem necessary or appropriate.
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