<SEC-DOCUMENT>0001104659-01-502356.txt : 20011030
<SEC-HEADER>0001104659-01-502356.hdr.sgml : 20011030
ACCESSION NUMBER:		0001104659-01-502356
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20010326
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20011025

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELECTRO SENSORS INC
		CENTRAL INDEX KEY:			0000351789
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823]
		IRS NUMBER:				410943459
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09587
		FILM NUMBER:		1766270

	BUSINESS ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343-9108
		BUSINESS PHONE:		9529300100

	MAIL ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>j1826_8k.htm
<DESCRIPTION>8-K
<TEXT>
<html>



<head>



<title>Prepared by MERRILL CORPORATION</title>



</head>



<body>



<div class="Section1">



<div style="border:none;border-top:double windowtext 9.0pt;padding:0in 0in 0in 0in">



<p align="center" style="border:none;font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;padding:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&nbsp;</font></font></p>



</div>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;

font-weight:bold">SECURITIES AND EXCHANGE COMMISSION</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Washington, D.C.&#160;

20549</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;

font-weight:bold">FORM 8-K</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">CURRENT REPORT</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="3" face="Times New Roman"><font style="font-size:12.0pt;

font-weight:bold">Pursuant to Section 13 or 15(d) of the</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="3" face="Times New Roman"><font style="font-size:12.0pt;

font-weight:bold">Securities Exchange Act of 1934</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Date of Report (Date of earliest event reported):&#160; March 26, 2001</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;

font-weight:bold">Electro-Sensors, Inc.</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(Exact

name of Registrant as Specified in its Charter)</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Minnesota</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(State

or Other Jurisdiction of Incorporation)</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<div align="center">



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

  font-weight:bold">0-9587</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

  font-weight:bold">41-0943459</font></font></b></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(Commission

  File Number)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(IRS

  Employer</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="49%" valign="top" style="width:49.1%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Identification

  No.)</font></font></p>

  </td>

 </tr>

</table>



</div>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">6111 Blue Circle Drive</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Minnetonka, Minnesota&#160;

55343</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(Address

of Principal Executive Offices and Zip Code)</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">(952) 930-0100</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(Registrant&#146;s

telephone number, including area code)</font></font></p>



<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in">



<p align="center" style="border:none;font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;padding:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



</div>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Item

5.&#160;&#160;&#160; Other Events.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; On or about March 26, 2001,

Electro-Sensors, Inc. (the &#147;Company&#148;) mailed to shareholders a Notice of Annual

Meeting and Proxy Statement relating to the Annual Meeting of Shareholders held

April 25, 2001.&#160; The following

information was inadvertently omitted from the Company&#146;s Proxy Statement:</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">AUDIT COMMITTEE REPORT</font></font></b></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Board of Directors maintains

an Audit Committee comprised of three of the Company&#146;s outside directors.&#160; The Board of Directors and the Audit

Committee believe that the Audit Committee&#146;s current member composition

satisfies the rule of the National Association of Securities Dealers, Inc.

(&#147;NASD&#148;) that governs audit committee composition, Rule 4310(c)(26)(B)(iii),

including the requirement that audit committee members all be &#147;independent

directors&#148; as that term is defined by NASD Rule 4200(a)(14).</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In accordance with its written

charter adopted by the Board of Directors (set forth in Exhibit 99 to this Form

8-K), the Audit Committee assists the Board of Directors with fulfilling its

oversight responsibility regarding the quality and integrity of the accounting,

auditing and financial reporting practices of the Company.&#160; In discharging its oversight

responsibilities regarding the audit process, the Audit Committee:</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="7%" valign="top" style="width:7.78%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(1)</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.82%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="89%" valign="top" style="width:89.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">reviewed

  and discussed the audited financial statements with management;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="7%" valign="top" style="width:7.78%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.82%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="89%" valign="top" style="width:89.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="7%" valign="top" style="width:7.78%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(2)</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.82%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="89%" valign="top" style="width:89.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">discussed

  with the independent auditors the material required to be discussed by

  Statement on Auditing Standards No. 61; and</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="7%" valign="top" style="width:7.78%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.82%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="89%" valign="top" style="width:89.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="7%" valign="top" style="width:7.78%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(3)</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.82%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="89%" valign="top" style="width:89.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">reviewed

  the written disclosures and the letter from the independent auditors required

  by the Independence Standards Board&#146;s Standard No. 1, and discussed with the

  independent auditors any relationships that may impact their objectivity and

  independence.</font></font></p>

  </td>

 </tr>

</table>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:1.0in;margin-right:0in;margin-top:0in;text-align:left;text-indent:-.5in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Based upon the review and discussions referred to above, the Audit

Committee recommended to the Board of Directors that the audited financial

statements be included in the Company&#146;s Annual Report on Form 10-KSB for the

fiscal year ended December 31, 2000, as filed with the Securities and Exchange

Commission.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:.5in;margin-right:0in;margin-top:0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:.5in;margin-right:0in;margin-top:0in;text-align:left;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <b><font style="font-weight:bold">Members of

the Audit Committee:</font></b></font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Joseph

A. Marino</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Geoffrey

W. Miller</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; John

S. Strom</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">AUDIT FEES</font></font></b></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Schweitzer Karon &amp; Bremer

LLC acted as the Company&#146;s independent auditors for the fiscal year ended

December 31, 2000.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <b><font style="font-weight:bold">Audit Fees</font></b>.&#160; The aggregate fees billed by Schweitzer

Karon &amp; Bremer LLC for professional services rendered in connection with

the audit of the Company&#146;s annual financial statements for fiscal 2000 and

reviews of the financial statements included in the Company&#146;s Forms 10-QSB for

fiscal 2000 were $51,132.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <b><font style="font-weight:bold">Financial Information Systems Design and

Implementation Fees</font></b>.&#160;

Schweitzer Karon &amp; Bremer LLC did not bill any fees for financial

information systems design and implementation services rendered to the Company

during fiscal 2000.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <b><font style="font-weight:bold">All Other Fees</font></b>.&#160; The aggregate fees billed by Schweitzer for

all other non-audit services rendered to the Company during fiscal 2000,

including fees for tax-related services, were $34,659.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Company&#146;s Audit Committee

has considered whether provision of the above non-audit services is compatible

with maintaining Schweitzer Karon &amp; Bremer LLC independence and has determined that such services have

not adversely affected Schweitzer Karon &amp; Bremer LLC&#146;s independence.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Item

7.&#160;&#160;&#160; Financial Statements and Exhibits.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Financial statements of businesses acquired:</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; None</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Proforma financial information:</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; None</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Exhibits:</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; See

Exhibit Index on page following Signatures</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">SIGNATURES</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Pursuant to the requirements of

the Securities Exchange Act of 1934, the Registrant has duly caused this report

to be signed on its behalf by the undersigned hereunto duly authorized.</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="89%" style="width:89.94%;

 border-collapse:collapse;">

 <tr>

  <td width="8%" colspan="2" valign="top" style="width:8.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="19%" valign="top" style="width:19.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="28%" colspan="2" valign="top" style="width:28.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="30%" colspan="3" valign="top" style="width:30.62%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">ELECTRO-SENSORS,

  INC.</font></font></p>

  </td>

  <td width="6%" valign="top" style="width:6.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="7%" valign="top" style="width:7.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" colspan="2" valign="top" style="width:8.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="19%" valign="top" style="width:19.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="28%" colspan="2" valign="top" style="width:28.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="30%" colspan="3" valign="top" style="width:30.62%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="width:6.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="7%" valign="top" style="width:7.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" colspan="2" valign="top" style="width:8.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="19%" valign="top" style="width:19.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="28%" colspan="2" valign="top" style="width:28.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="30%" colspan="3" valign="top" style="width:30.62%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="width:6.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="7%" valign="top" style="width:7.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" colspan="2" valign="top" style="width:8.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="19%" valign="top" style="width:19.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="28%" colspan="2" valign="top" style="width:28.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.34%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">By</font></font></p>

  </td>

  <td width="9%" valign="top" style="width:9.04%;border:none;border-bottom:solid windowtext .5pt;

  padding:0in 0in 0in 0in">

  <p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">\S\</font></font></p>

  </td>

  <td width="31%" colspan="3" valign="top" style="width:31.64%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Bradley

  D. Slye</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="5%" valign="top" style="width:5.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Date</font></font></p>

  </td>

  <td width="22%" colspan="2" valign="top" style="width:22.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">October

  18, 2001</font></font></p>

  </td>

  <td width="24%" valign="top" style="width:24.58%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="34%" colspan="4" valign="top" style="width:34.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Bradley

  D. Slye, President</font></font></p>

  </td>

  <td width="6%" valign="top" style="width:6.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="7%" valign="top" style="width:7.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="8%" colspan="2" valign="top" style="width:8.02%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="19%" valign="top" style="width:19.8%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="28%" colspan="2" valign="top" style="width:28.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="30%" colspan="3" valign="top" style="width:30.62%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="6%" valign="top" style="width:6.22%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="7%" valign="top" style="width:7.18%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="33" style="border:none"></td>

  <td width="19" style="border:none"></td>

  <td width="128" style="border:none"></td>

  <td width="159" style="border:none"></td>

  <td width="23" style="border:none"></td>

  <td width="22" style="border:none"></td>

  <td width="59" style="border:none"></td>

  <td width="118" style="border:none"></td>

  <td width="40" style="border:none"></td>

  <td width="46" style="border:none"></td>

 </tr>

</table>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">EXHIBIT

INDEX</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">ELECTRO-SENSORS,

INC.</font></font></p>



<p align="center" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">FORM

8-K</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="12%" valign="top" style="width:12.28%;border:none;border-bottom:

  solid windowtext .5pt;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Exhibit

  Number</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.36%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="10%" valign="top" style="width:10.98%;border:none;border-bottom:

  solid windowtext .5pt;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Description</font></font></p>

  </td>

  <td width="74%" valign="top" style="width:74.38%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="12%" valign="top" style="width:12.28%;border:none;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.36%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="85%" colspan="2" valign="top" style="width:85.36%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="12%" valign="top" style="width:12.28%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">99</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.36%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;">&nbsp;</p>

  </td>

  <td width="85%" colspan="2" valign="top" style="width:85.36%;padding:0in 0in 0in 0in">

  <p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Audit

  Committee Charter</font></font></p>

  </td>

 </tr>

</table>



<p align="left" style="font-size:12.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:left;"><font size="3" face="Times New Roman"><font style="font-size:12.0pt">&nbsp;</font></font></p>



</div>



</body>



</html>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>j1826_ex99.htm
<DESCRIPTION>EX-99
<TEXT>
<html>



<head>



<title>Prepared by MERRILL CORPORATION</title>



</head>



<body>



<div class="Section1">



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Audit Committee Charter of Electro-Sensors, Inc.</font></font></b></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Committee Purpose</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Board of Directors (&#147;Board&#148;) is the ultimate

corporate governance body of Electro-Sensors, Inc. (&#147;Company&#148;).&#160; As such, the Board is charged with

overseeing all material aspects of the Company&#146;s operations.&#160; To assist the Board in performing its

oversight role, and to help the Board meet its fiduciary duties to the

shareholders of the Company, the Board has created an audit committee

(&#147;Committee&#148;).&#160; For its part, the

Committee is charged with the active and regular performance of the Board&#146;s

oversight of the Company&#146;s internal control systems, its external and internal

audit process, and its external and internal financial reporting process.&#160; This audit committee charter is intended to set

forth the roles, responsibilities, authority, and procedures of the Committee.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee&#146;s main role includes a particular focus

on the qualitative aspects of financial reporting.&#160; Accordingly, one of the Committee&#146;s main responsibilities will be

to coordinate and control the Company&#146;s internal control procedures, as well as

its procedures for periodically reviewing and assessing the effectiveness of

its internal control procedures.&#160; Such

internal control procedures include, but are not limited to, those designed to

identify, manage, monitor, and ultimately account for and report on the

business transactions and risks arising from the Company&#146;s operating and

non-operating activities.&#160; The

Committee&#146;s role will culminate with the annual preparation of the Company&#146;s

audited financial statements, which the Committee will recommend to the Board

as provided herein.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Committee Membership</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee shall consist of at least two (2) and no

more than three (3) independent directors.&#160;

&#147;Independent director&#148; means a person other than an individual having a

relationship which, in the opinion of Company&#146;s Board, would interfere with the

exercise of independent, disinterested judgment in carrying out the

responsibilities of a Committee member.&#160;

Though not all-inclusive, the following categories of people shall <i><font style="font-style:italic">not</font></i>

be considered independent for audit committee purposes:</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">a director who is or was employed by the Company or

  any of its affiliates for the current or any of the past three years;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="bottom" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(2)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="bottom" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">a director who is an immediate family member</font></font><sup><font size="2" face="Times"><font style="font-size:10.0pt;font-family:Times">1</font></font></sup><font size="2"><font style="font-size:10.0pt"> of any management-level employee of

  the Company;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">a director who personally accepted any compensation

  from the corporation or any of its affiliates in excess of $60,000 during the

  previous fiscal year, other than compensation for Board service, benefits

  under a tax-qualified retirement plan, or non-discretionary compensation;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(4)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">a director who is a partner, controlling

  shareholder, or an executive officer of any for-profit business organization

  to which the Company made, or from which the Company received, payments

  (other than those arising solely from investments in the securities of the

  Company or organization) that exceed 5% of the Company&#146;s or organization&#146;s

  consolidated gross revenues for that year, or $200,000, whichever is more, in

  any of the past three years; and</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(5)</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">a director who is employed as an executive of

  another entity where any of the Company&#146;s executives serve on that entity&#146;s

  compensation committee.</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="6%" valign="top" style="width:6.28%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="4%" valign="top" style="width:4.8%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.76%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

  <td width="85%" valign="top" style="width:85.4%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="5" valign="top" style="width:100.0%;padding:0in 0in 0in 0in">

  <div style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">

  <hr size="1" width="25%" noshade="noshade" color="black" align="left">

  </font></font></div>

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="5" valign="top" style="width:100.0%;padding:0in 0in 0in 0in">

  <p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font style="vertical-align:super;"><sup><font size="2" face="Times New Roman"><font style="font-size:10.0pt">[1]</font></font></sup></font><font size="2"><font style="font-size:10.0pt">&#160;As used in this charter, the phrase &#147;immediate family member&#148;

  includes a person&#146;s spouse, parents, children, siblings, mother-in-law,

  father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law,

  and anyone who resides in such person&#146;s home.</font></font></p>

  </td>

 </tr>

</table>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.5in;">&nbsp;</p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Structure</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee members shall be appointed by the Board,

in accordance with the preceding independence requirements.&#160; Each appointment shall be for an indefinite

term, but the Board may remove Committee members at any time by Board

action.&#160; If a Committee member is

removed or resigns from the Committee, he or she shall serve until a successor

is appointed.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee shall elect a chairperson annually.&#160; The chairperson shall create the agenda for

Committee meetings and otherwise preside over Committee meetings.&#160; It is expected that the chairperson will ask

for management and key Committee advisors (e.g., director/manager of&#160; Company internal audit, Company legal

counsel, and Company external auditors) to participate in Committee meetings as

appropriate.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Meetings</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee shall meet at least four times annually

(ideally, once within 45 days from the end of each fiscal quarter).&#160; Additional meetings shall be scheduled as

considered necessary by the Committee chairperson.&#160; Minutes of all meetings shall be recorded and maintained by the

Committee.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Reporting to the Board </font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee chairperson shall formally report

(whether as required pursuant to specific requirements herein or otherwise) to

the Board at least semi-annually.&#160; In

addition, summaries of Committee minutes for all Committee meetings held

between each Board meeting, separately identifying all unusually significant

items, shall be made available to the Board at least one week prior to the

Board meeting to be held subsequent to such Committee meetings.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Quorum</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">A majority of the appointed Committee members shall

constitute a quorum and shall be able to conduct the Committee&#146;s business.</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;">&nbsp;</p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Committee Expectations and Information Needs</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Committee shall communicate Committee expectations

regarding the nature, timing, and extent of Committee information needs to

management, internal audit, and external parties including external

auditors.&#160; At a minimum, summary written

materials, including quarterly financial statements with variance analyses

(i.e., comparisons to both budget and prior period actual results) and&#160; key performance trends and indicators shall

be received from management and internal/external auditors at least one week

prior to scheduled meetings.&#160; Meeting

conduct will assume Board members have reviewed written materials in sufficient

depth to participate in Committee and/or Board dialogue.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Duties and Responsibilities</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">In accordance with the Committee&#146;s purpose, it shall

have the following duties and responsibilities:</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><i><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt;

font-style:italic">Audit &amp; Review Function</font></font></i></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall select, or nominate

for selection by the Board and/or shareholders, the Company's external

auditors.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall annually ensure

receipt of a formal written statement from the external auditors consistent

with Independence Standards Board Standard 1.&#160;

Additionally, the Committee shall discuss with the external auditor any

relationships or services that may affect the external auditor&#146;s objectivity or

independence.&#160; If the Committee is not

satisfied with the external auditor&#146;s assurances of independence, it shall take

or recommend to the Board appropriate action to ensure the independence of the

external auditor.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall make clear to

management and the external auditors that the external auditors must consider

the Committee to be its client and not management.&#160; Towards this end, the Committee shall meet annually with the

external auditors, without management or others present, in order to assess the

performance and ethical disposition (i.e., the &#147;tone-at-the-top&#148;) of the

financial and accounting management and the effectiveness and independence of

the internal auditors.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall annually review,

with or without management consultation, the performance (effectiveness, objectivity,

and independence) of the external auditors.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall annually consider

the scope of the annual audit, staffing of the annual audit, and accounting

fees for the annual audit to ensure that the economics support the scope and

staffing of the annual audit.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall review with the CFO

or principal internal auditor and external auditor the annual audit plans and

quarterly review plans of each, including the degree of coordination and

cooperation concerning the respective plans.</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;">&nbsp;</p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire as to, and

be satisfied with, the extent to which the planned audit scope can be relied

upon to detect fraud or weaknesses in internal controls.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><i><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt;

font-style:italic">Risk Management Function</font></font></i></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall ensure that the

director/manager of internal audit periodically reports (as deemed necessary)

directly to the Committee.&#160; The

Committee shall meet with the internal auditor director/manager and other key

internal audit staff members at least annually, without management or others present,

to discuss the adequacy of resources for the internal audit function and the

level of cooperation that internal audit receives from Company management.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire of

management, internal auditors, and external auditors about the adequacy of the

Company&#146;s internal control procedures as a complete system, as well as the

discovery of any individually material gaps and/or failures in the Company&#146;s

internal control procedures.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall meet periodically

with those members of management responsible for Company risk assessment and

risk management to understand and evaluate the Company's risk assessment and

risk management efforts.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall instruct the

internal and external auditors, Chief Executive Officer, and Chief Financial

Officer that the Committee expects to be advised if there are areas of Company

operation that, consistent with the Committee&#146;s purpose, require its special

attention.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><i><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt;

font-style:italic">Financial Reporting Function</font></font></i></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall obtain from management

explanations for all significant budget-to-actual variances in the financial

statements between relevant periods (e.g., year-to-year and

quarter-to-quarter), as well as trends and significant changes in actual

results between relevant periods.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire about the

existence and substance of any significant accounting accruals, reserves,

contingencies, and estimates made by management that have a material impact on

the financial statements and of the external auditor&#146;s opinions regarding the

quality (i.e., adequacy, including over-adequacy) of all such items.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire as to the

external auditor&#146;s views about whether management&#146;s choices of accounting

principles (and their application of those accounting principles) are

conservative, moderate, or aggressive from the perspective of income, asset,

and liability recognition, and whether those principles and practices are

common or are minority practices.<br clear="all" style="page-break-before:always">

</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire as to any

material changes in the selection and/or application of accounting principles

from the prior period and of the effect of such changes in the Company&#146;s

financial statements (e.g., on earnings per share).</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire of

management and the external auditors to ascertain whether there were any

significant financial reporting issues that arose during the accounting period

and if so how they were resolved.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall review the letter of

management representations given to the external auditors and inquire whether

they encountered any difficulties in obtaining the letter or any specific

representations therein.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall discuss with

management and the external auditors the substance of any significant issues

raised by in-house and outside legal counsel concerning litigation,

contingencies, claims, or assessments and understand how such matters are

reflected in the Company's financial statements.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall review with

management the MD&amp;A section of the annual report and ask the extent to

which the external auditors reviewed the MD&amp;A section and inquire of the

external auditors to ascertain whether the other sections of the annual report

to stockholders are consistent with the information reflected in the financial

statements.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall inquire of the

external auditors to determine whether footnote disclosures adequately clarify

and expand on the financial statements.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall, jointly with the

Board, consider whether the external auditors should meet with the&#160; Board to discuss any matters relative to the

financial statements and to answer any questions that other directors may have.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall prepare an annual

Audit Committee Report to be presented to the Board.&#160; The Audit Committee Report shall include, at a minimum, the

following representations:</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1) that the Committee has reviewed and discussed the

audited financial statements with management;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(2) that the Committee has discussed with the

independent auditors the matters required to be discussed by SAS 61, as may be

modified or supplemented;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3) that the Committee has received the written

disclosures and the letter from the independent accountants required by

Independence Standards Board Standard No. 1 (Independence Standards Board

Standard No. 1, <u>Independence Discussions with Audit Committees</u>), as may

be modified or supplemented, and has discussed with the independent accountant

the independent accountant's independence;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;">&nbsp;</p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(4) that, based on the review and discussions referred

to in paragraphs (1) through (3) of this item, the Committee recommends (or

declines to recommend) to the Board of Directors that the audited financial

statements be included in the company's Annual Report on Form 10-KSB for the

last fiscal year for filing with the Commission; and</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt">(5)

that the individual Committee members, and the Committee in the aggregate,

complies with the Committee independence requirements set forth in this

charter.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:

-.15pt">The Audit Committee Report may include other information that the

Committee deems</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:

-.15pt">appropriate.&#160; The Committee will

prepare the Audit Committee Report with the</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:

-.15pt">understanding that its representations will in used by the Board and

the Company to</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:

-.15pt">comply with Item 306 of Regulation S-B and Item 7(e)(3) of Schedule 14A

as those</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:

-.15pt">regulations affect the Company.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><i><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt;

font-style:italic">General</font></font></i></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall assess and report to

the Board on its compliance with this charter on an annual basis.&#160; This information may be included in the

Audit Committee Report referred to above.&#160;

The Board shall consider the Committee&#146;s report to the Board pursuant to

this requirement (and the Audit Committee Report if prepared separately) to

determine if changes to the Committee membership (e.g., composition and member

number) are appropriate.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall recommend to the

Board any necessary changes to this charter on an annual basis.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Committee shall conduct an

appropriate review of all proposed related party transactions that are

individually in excess of $100,000 in order to ensure that such transactions

are on terms that are materially similar to those that could be obtained in

arms-length transactions with independent third parties or are otherwise fair

to and in the best interests of the Company.&#160;

Documentation of each such review and the Committee&#146;s recommendation to

the Board regarding whether the Board should&#160;

approve or disapprove of the relevant related party transaction shall be

maintained by the Committee.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt;letter-spacing:-.15pt">Authority</font></font></u></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt;letter-spacing:-.15pt">The Committee has authority to:</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; Conduct such studies, analyses, and

evaluations necessary to perform the duties and fulfill the responsibilities

assigned to it by the Board.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; Have full and independent access to

Company personnel, after first notifying the Chief Executive Officer or the

Chief Financial Officer of the intention to interview personnel (excluding the

director/manager of internal audit who may be consulted without notice).</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;">&nbsp;</p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; Have full and independent access to

Company financial and other information.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; Seek and employ such outside consulting

assistance as it determines necessary to fulfill its responsibilities.&#160; To the extent the Committee determines to

expend in excess of $20,000 during any fiscal year on such consulting

assistance, it shall seek approval from the Board of such excess expenditures.</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:12.0pt;margin:0in;margin-bottom:.0001pt;margin-left:63.0pt;text-indent:-27.0pt;"><font size="2" face="Marlett"><font style="font-size:10.0pt;font-family:

Marlett;

letter-spacing:-.15pt;">8</font></font><font size="2"><font style="font-size:10.0pt;letter-spacing:-.15pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160; Take or cause to be taken all necessary

action in order to implement and carry out its responsibilities pursuant to

this charter.</font></font></p>



</div>



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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
