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Compensation Committee Purposes and Structure

The purpose of the Compensation Committee is to discharge those responsibilities delegated by the Board of Directors relating to executive compensation. The Compensation Committee shall consist of not less than three Directors, appointed by the Board of Directors, and who shall serve until such member's successor is duly appointed or until such member's earlier resignation, replacement or removal. At all times during their tenure on the Compensation Committee, each member of the Compensation Committee shall be an independent director in accordance with the rules of the NASDAQ and applicable Securities and Exchange Commission ("SEC") rules and regulations, as in effect from time to time.

The Board of Directors shall annually appoint one of the Compensation Committee members as Chairman of the Compensation Committee. The Board of Directors shall have the authority to remove members of the Compensation Committee with or without cause. The Compensation Committee shall be entitled to form sub-committees to the extent permitted by the By-laws of the Corporation and the applicable governing laws.

Compensation Committee Responsibilities and Authority

In furtherance of this purpose, the Compensation Committee shall have the following authority:

     1. To review and recommend to the full Board of Directors the CEO's annual compensation, including salary, bonus, and equity compensation. The Compensation Committee will review and evaluate the CEO's performance based on a number of factors, including but not limited to:

• The Company's achievement of annual goals and objectives set by the full Board,
• Short term and long term performance of the Company, and
• Executive compensation level at comparable companies.

     2. To review, approve, and recommend to the full Board on an annual basis the evaluation process and compensation structure for the Corporation's other officers. The Compensation Committee shall evaluate the performance of the Company's other officers and shall approve the annual compensation, including salary, bonus and equity compensation, for such other officers based on such factors as the Compensation Committee may deem relevant. These factors may include, for example:

• Short term and long term performance of the Company,
• Performance of the executive officers in light of relevant goals and objectives approved by the Compensation Committee,
• Executive compensation level at comparable companies, and
• The recommendations of the CEO.

     3. To review the Company's incentive compensation and other stock-based plans and recommend changes in such plans to the Board of Directors as needed and to review and submit to the Board of Directors recommendations concerning new executive compensation or stock-based plans.

     4. To review and discuss with management the annual Compensation Discussion and Analysis ("CD&A"), and, based on this review and discussion, make a recommendation to the Board as to whether such CD&A should be included in the Company's annual report on Form 10-K and the Company's proxy statement in accordance with the applicable SEC rules and regulations.

     5. To prepare, approve and publish an annual executive compensation report in the Company's annual report on Form 10-K or proxy statement in accordance with the applicable SEC rules and regulations.

     6. Administer any other officer compensation plans and programs in addition to those described above (except as otherwise determined by the Board of Directors).

     7. The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used by it to assist in the evaluation of Director, CEO or other officer compensation and shall have authority to approve the consultant's fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.

     8. The Compensation Committee may form and delegate authority to one or more subcommittees when appropriate.
     9. Perform such other duties with regard to the compensation of the officers and other key executives of the Company as the Board of Directors may request.

Meetings, Reports and Procedures

The Compensation Committee shall hold regular meetings each year, and specifically in advance of the February Board of Directors meeting. The Compensation Committee may also hold special meetings which shall be called by telephone or written notice by the Chairman of the Compensation Committee or any two members acting without a meeting. The Compensation Committee shall keep a written record of its proceedings. The CEO may not be present during voting or deliberations of the Compensation Committee with regard to his or her own compensation.

In advance of every regular meeting, the Chairman of the Compensation Committee, with the assistance of the Secretary of the Company, shall prepare and distribute to the Compensation Committee members and others as deemed appropriate by the Chairman, an agenda of matters to be addressed at the meeting. The Compensation Committee may require officers and employees of the Corporation to produce such information and reports, including reports to be provided annually or on other regular bases, as the Compensation Committee may deem appropriate.

The Chairman of the Compensation Committee shall report to the Board of Directors on any Compensation Committee activity since the last Board of Directors meeting

The Compensation Committee shall have the authority to cause investigations to be made of such matters within the scope of the Compensation Committee's purposes and responsibilities as the Compensation Committee may deem appropriate. Such investigations may be made by the Corporation's employees or such other persons or firms as the Compensation Committee may direct.

The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board of Directors for approval. The Compensation Committee shall annually review its own performance.

The Compensation Committee may adopt such additional procedures, consistent with this Charter, as the Compensation Committee deems appropriate.

Compensation Policies and Objectives

The Compensation Committee will exercise its judgement within the following general policies:

     1. The Company believes that compensation of the Company's key executives should be sufficient to attract and retain highly qualified and productive personnel, as well as to enhance productivity and encourage and reward superior performance.

     2. It is the policy of the Company that the three primary components of the Company's total compensation package (salary, bonus, and equity grants) will be considered in the aggregate in determining the amount of any one component.

     3. The Company seeks to reward achievement of specific long and short-term individual and corporate performance goals by authorizing annual cash bonuses.

     4. The Company believes that it should make both initial equity grants to key executive officers upon their commencement of employment, and that it should, subject to achievement of certain financial, operational, and individual objectives, make additional annual equity grants in order to retain, motivate, and align the interests of those key executive officers with stockholders.

     5. The criteria used for assessing executive performance in any year is first based on the Company meeting certain financial targets and other performance criteria set by the Board within criteria approved by the shareholders. The Compensation Committee then exercises its judgment regarding the performance of executive officers against individual performance goals approved by the Board within criteria approved by the shareholders.

     6. The Company's guiding principles are focused on encouraging officers and directors to think like owners. To this end, the Company recommends:

• Senior officers purchase outright in the market and hold during their term of employment a meaningful number of common shares;
• Senior officers hold at least 75% of any granted stock options without exercise during the term of the stock options; and

     7. The Company believes that modest annual grants of restricted stock are generally preferable as an equity compensation vehicle and more suited to our long-term business model than larger sporadic grants of stock options. This is so because shares of restricted stock have an intrinsic value when granted (as opposed to options) and therefore, the employee holding restricted stock shares a downside risk to such value with other owners of the Company's common stock.

     8. Although the Compensation Committee should review publicly available industry data when reviewing annual compensation, the Committee should not specifically use companies in the same industry as the basis for establishing the compensation of the Company's executive officers; nor should the Committee automatically peg salary levels to any given quartile in our industry or other industries. Instead, the Compensation Committee should make reasoned judgments of compensation levels for executives as influenced by all relevant market forces.