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An understanding of Generally Accepted Accounting Principles (“GAAP”) and financial statements;

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Experience in reviewing, preparing, auditing, analyzing or evaluating financial statements of generally comparable companies, and applying such principles in connection with the accounting for estimates, accruals and reserves or experience actively supervising one or more persons engaged in such activities;

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Experience with internal accounting controls; and

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An understanding of audit committee functions.

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Hire and fire the independent auditors who audit the financial statements of the Company and its divisions and subsidiaries, based on the Audit Committee’s judgment of the independent auditors’ independence and effectiveness, as well as approving all fees and engagement terms;

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Resolve any disagreement between the auditors and management; and

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Approve all non-audit services performed by Kaiser’s auditors, subject to a de minimis exception for such non-audit services.  In doing so, the Audit Committee will consider whether the provision of non-audit services, if any, by the independent auditors is compatible with maintaining the independent auditors’ independence.  The Audit Committee will not approve any of the Prohibited Services listed on Appendix “A” to this document, and, in making a business judgment about particular non-audit services, the Audit Committee will consider the guidelines contained in Appendix A to this document.

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At least annually, obtain from the independent auditors a written communication delineating all their relationships and professional services, as required by Independence Standards Board Standard No. 1, Independence Discussion with Audit Committees, and an explanation of the independent auditor’s internal quality control procedures and material issues (if any) raised in their peer review.  In addition, review with the independent auditors the nature and scope of any disclosed relationships or professional services and take, or recommend that the Board of Managers take, appropriate action to ensure the continuing independence of the auditors.

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Have a clear understanding with the independent auditors that they are ultimately accountable to the Board of Managers and the Audit Committee, as the members’ representatives, and that the Audit Committee has the ultimate authority in deciding to engage, evaluate and, if appropriate, terminate their services.

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Meet with the independent auditors and financial management of the Company prior to any audit to review the scope of the proposed audit, including the timing of the audit, the procedures to be utilized and the adequacy of the independent auditors’ compensation.  At the conclusion of the audit process, review the findings in the audit with the independent auditors.

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Review the performance of the Company’s financial and accounting personnel with the independent auditors, as well as the adequacy and effectiveness of the accounting and financial controls, including computerized information system controls and security, of the Company.  Elicit any recommendations for the improvement of such internal controls or particular areas where new or more detailed controls or procedures are desirable.

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Review, alone or with legal counsel, communications received by the Company with

respect to legal and regulatory matters that may have a material effect on the Company’s financial statements or on the Company’s compliance policies, as provided by management of the Company.

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Require the independent auditors to timely report to the Audit Committee (i) any difficulties encountered in the course of audit work, including any restriction on the scope of activities or access to required information, (ii) all alternative treatments of financial information within GAAP discussed by the independent auditors and management, the ramifications of each such alternative treatment and the accounting firm’s preferred treatment, and (iii) other material written communications between the accounting firm and the Company’s management, such as any management letter or schedule of unadjusted differences.

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Inquire quarterly of management and the independent auditors about significant areas of risk or exposure and assess the steps management of the Company has taken to minimize such risks.

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Inquire quarterly of the independent auditors of their views about how the Company’s choices of accounting principles and disclosure practices may affect public views and attitudes about the Company.

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Review at least quarterly with financial management and the independent auditors (i) the financial statements contained in the quarterly and annual reports to members to determine that the independent auditors are satisfied with the disclosure and content of the financial statements to be presented to the members; (ii) critical financial reporting issues, policies and practices, including changes in or adoptions of accounting principles and disclosure practices, review significant period-end adjustments and any other matters required to be communicated to the Audit Committee by the auditors; and (iii) the quality, not just acceptability, of accounting principles and the clarity of the financial disclosure practices used or proposed to be used and particularly, the degree of aggressiveness or conservatism of the Company’s accounting principles and underlying estimates and other significant decisions made in preparing the financial statements.

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Review with financial management and the independent auditors quarterly and annual earnings releases and press releases containing historical or forward-looking financial information before the reports are filed with the Securities and Exchange Commission, or other regulators, or the releases are published.

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Review succession planning with respect to accounting and financial human resources within the Company.

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Report the results of the annual audit to the Board of Managers and, if requested by the Board, invite the independent auditors to attend the full Board of Managers’ meeting to assist in reporting the results of the annual audit or to answer the managers’ questions.

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Submit the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each Audit Committee meeting with, the Board of Managers.

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Investigate any matter brought to its attention within the scope of its duties, with the

power to retain outside counsel, accountants, or others for this purpose to assist it in its investigation or for any other reason deemed advisable by a majority of the Audit Committee or its Chair.

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Obtain the approval of the full Board of Managers of this Charter, and review and reassess this charter at least annually or as conditions dictate.

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Review and approve all “related party transactions” required to be disclosed pursuant to SEC Regulation S-K, Item 404, or any successor provision.

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Review and concur with the Company’s Board of Managers in the appointment, replacement, reassignment or dismissal of the Chief Financial Officer of the Company.

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Affirm in the Company’s Proxy Statement that the Committee has fulfilled its responsibilities during the year in compliance with the Charter.  The Audit Committee Charter will be included in the Proxy Statement every three years or when significant amendments are made to it.

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Consider such other matters in relation to the financial affairs of the Company and its accounts, and in relation to the external audit of the Company, as the Audit Committee may, in its discretion, determine to be advisable.

/s/ MARSHALL F. WALLACH

/s/ RICHARD E. STODDARD

Marshall F. Wallach

Richard E. Stoddard

Chairman, Audit Committee

Chairman of the Board of Managers

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Bookkeeping or other services related to the Company’s accounting records;

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Financial information systems design and implementation;

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Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;

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Actuarial services;

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Internal audit outsourcing services;

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Management functions or human resources;

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Broker, dealer, investment adviser, or investment banking services;

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Legal services and expert services unrelated to the audit; and

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Any other services the SEC or the NASDAQ determines, by regulations is not permitted.

1.

Whether the service facilitates the performance of the audit, improves the Company’s financial reporting process, or is otherwise in the interest of the Company and its members.

2.

Whether the service is being performed principally for the Audit Committee.

3.

The effects of the service, if any, on audit effectiveness or on the quality and timeliness of the Company’s financial reporting process.

4.

Whether the service would be performed by specialists who ordinarily also provide recurring audit support.

5.

Whether the service would be performed by audit personnel and, if so, whether it will enhance their knowledge of the Company’s business and operations.

6.

Whether the role of those performing the service would be inconsistent with the auditor’s role.

7.

Whether the audit firm’s personnel would be assuming a management role or creating a mutuality of interest with management.

8.

Whether the auditors, in effect, would be auditing their own numbers.

9.

Whether the project must be started and completed very quickly.

10.

The size of the fee(s) for the non-audit service(s).