Document:

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                                                                    EXHIBIT 4.38

June 30, 2004

Leonard Pucker II
12572 17a Avenue
Surrey BC V4A 9H9

Dear Lee:

RE: YOUR APPOINTMENT TO EXECUTIVE

Congratulations to your appointment. I am very much looking forward to working
with you and welcome you as member of the executive team.

In line with your appointment, your terms of employments are being adjusted:

PAY

<TABLE>
<S>                                             <C>
Your pay rate will be ......................... $160,000 p.a.
The effective date will be.....................  July 1, 2004
Your pay period will be .......................  Semi-monthly
</TABLE>

ANNUAL BONUS

In addition to your salary, you are eligible to earn a discretionary annual
performance bonus of up to $60,000 in cash, restricted shares or alternative
instruments. The senior management bonus plan is currently being developed
together with the Board's compensation committee. As soon as it has been
finalized, your personal plan will be determined and documented in an amendment
to this agreement. The annual performance objectives will be established between
you and the President and CEO in January of each year.

STOCK OPTIONS

Spectrum offers its senior employees stock options in the form of an initial
grant plus an annual performance-based option allotment at their annual
performance review date. Option awards will be considered by the Board's
compensation committee at mid-year 2004. Future annual option grants will be
determined at the time of your annual performance evaluation and compensation
review. The strike price of all options will be set at the closing market price
the day prior to the granting by the Board of Directors, in accordance with the
regulations of the Toronto Stock Exchange. Your stock options will be governed
by the terms of Spectrum's Stock Option Plan.

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RRSP, GROUP BENEFITS AND VACATION

RRSP, Group Benefits and Vacation Entitlement continue as in your current
position based on your employment continuance with Spectrum and will not change
except for being adjusted to your increased compensation where applicable.

OTHER IMPORTANT INFORMATION

DOCUMENTATION

Changes in condition of employment, which alter the terms of this Agreement will
be documented in writing. Unless specifically changed in writing by Spectrum,
each individual term of this Agreement is binding for the full term of your
tenure at Spectrum.

TERMINATION

By signing this Agreement, you agree that any one of the following actions on
your part constitute just cause for dismissal, enabling Spectrum to terminate
your employment immediately without further notice to you:

      -     Repeated failure to show up for work without informing your direct
            supervisor or without justification;

      -     Theft from Spectrum or any of its employees;

      -     Breach of the Assignment of Rights & Non-Disclosure Agreement;

      -     Misrepresentation of your credentials in any manner; or

      -     Breach of Spectrum's Insider Trading Policy (attached for reference)

It is acknowledged that this term of the Agreement is not intended to limit
Spectrum with regard to any other reasons, which may be available to it for just
cause dismissal, including any action that would be considered cause under the
common law of British Columbia. Any dismissal for cause will be without notice
or any payment in lieu of notice.

NOTICE-SPECTRUM

Spectrum may terminate your employment without cause upon 9 months notice. With
every completed year of employment as an executive, the notice period will be
increased by an additional month up to a maximum 12 month notice period. The
effective date for the notice period calculation is March 1, 2004.

Notwithstanding existing stock option agreements, all or your stock options,
which have vested at the date of termination will expire on the earlier of their
expiry date and 90 days after the date that notice is given to you. Where
Spectrum chooses payment in lieu of working notice, your salary plus your
average annual non-discretionary bonus in the previous three years of Spectrum
employment will be paid on a month to month basis. This salary continuance is
subject to the following mitigation clause: Should you earn Cdn$ 2,000 or more
in any given month (including equity compensation and bonuses, excluding
options) in connection with an employment or self employment activity then you
must advise Spectrum's Payroll Manager of the total alternate income amount
earned. In such case your Spectrum salary continuance payments will be reduced
by the total amount of alternate income earned for the following salary
continuance pay period. At

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the end of the salary continuance period, Spectrum will pay you a lump sum
amount equal to 50% of the total alternate income amount you earned.

NOTICE-EMPLOYEE

Should you choose to leave Spectrum, you will provide a minimum of three months
notice.

CHANGE IN CONTROL AGREEMENT

These terms have to be read in conjunction with the Change of Control Agreement
between you and Spectrum, dated July 1, 2004.

I hope that you will find the terms acceptable to you. Once you have read
through the documentation and if you are in agreement, please sign and date
below and initial each page of the attachment returning it to me at your
earliest convenience.

Again, congratulations and all the best for your executive position.

Yours sincerely

SPECTRUM SIGNAL PROCESSING, INC.

/s/ Pascal E. Spothelfer

Pascal E. Spothelfer
President & CEO

I acknowledge and accept the Offer and Terms of Employment.

/s/ Leonard Pucker II                             July 21, 2004
-------------------------                         -------------------
Leonard Pucker II                                 Date

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THIS AGREEMENT made the 1st day of July 2004.

BETWEEN:

            SPECTRUM SIGNAL PROCESSING INC., a corporation incorporated pursuant
            to the laws of the Province of British Columbia and having an
            address at One Spectrum Court, #200 - 2700 Production Way, Burnaby,
            British Columbia

            (herein called the "Company")

                                                               OF THE FIRST PART

AND:

            LEONARD PUCKER II, a businessman having an address at 12572 17a
            Avenue, Surrey, BC, Canada, V4A 9H9

            (herein called the "Employee")

                                                              OF THE SECOND PART

WHEREAS:

A.          The Employee is employed by the Company under a letter of employment
(hereafter the "Employment Contract");

B.          The Company and the Employee are desirous of having certain rights
and benefits in the event that the Employee's employment with the Company is
terminated in a manner set forth hereinafter;

C.          The Company wishes to retain the benefit of the Employee's services
and to ensure that the Employee is able to carry out his responsibilities with
the Company free from any distractions associated with any potential change in
the ownership or control of the Company or its assets;

D.          In consideration of the rights and benefits conferred on the
Employee by this Agreement, the Employee has agreed to provide certain
restrictive covenants in favour of the Company;

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                                      -2-

NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by each of the
Employee and the Company, it is agreed by and between the Employee and the
Company as follows:

1.          DEFINITIONS AND INTERPRETATION

1.1         Definitions

            In this Agreement, the following words and terms with the initial
letter or letters thereof capitalized shall have the meanings set forth below:

      (a)   "Accrued Compensation" means an amount equal to amounts earned or
            accrued up to and including the date on which the Employee's
            employment is terminated but not paid as of that date, including (i)
            base salary, (ii) vacation pay, and (iii) non-discretionary bonuses
            and incentive compensation;

      (b)   "Agreement" means this agreement as amended from time to time;

      (c)   "Average Bonus" means the average of the annual non-discretionary
            bonuses paid to the Employee during the three full fiscal years
            ended prior to the termination of the employment of the Employee as
            provided hereunder;

      (d)   "Change in Control" means a transaction or series of transactions
            whereby directly or indirectly:

            (i)   any person or combination of persons acting in concert
                  acquires a sufficient number of securities of the Company to
                  affect the control of the Company, whether by way of
                  acquisition of previously issued securities or as a result of
                  issuances from treasury, or a combination thereof, and for the
                  purposes of this Agreement, a person or combination of persons
                  acting in concert holding shares or other securities in excess
                  of the number which,

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                                      -3-

                  directly or following the conversion or exercise thereof,
                  would entitle the holders thereof to cast more than 40% of the
                  votes attached to all shares of the Company which may be cast
                  to elect directors of the Company, shall be deemed to be in a
                  position to affect the control of the Company;

            (ii)  the Company shall consolidate or merge with or into,
                  amalgamate with, or enter into a statutory arrangement with
                  any other person, or any other person shall consolidate or
                  merge with or into, or amalgamate with or enter into a
                  statutory arrangement with the Company, and, in connection
                  therewith, all or part of the outstanding shares of the
                  Company which have voting rights attached thereto shall be
                  changed in any way, reclassified or converted into, exchanged
                  or otherwise acquired for shares or other securities of the
                  Company or any other person or for cash or any other property
                  (other than a transaction which has been approved by the
                  directors of the Company, a majority of whom are directors of
                  the Company holding office at the date of this Agreement); or

            (iii) the Company shall sell or otherwise transfer, including by way
                  of the grant of a leasehold interest (or one or more
                  subsidiaries of the Company shall sell or otherwise transfer,
                  including by way of the grant of a leasehold interest)
                  property or assets (A) aggregating more than 50% of the
                  consolidated assets (measured by either book value or fair
                  market value) of the Company and its subsidiaries as at the
                  end of the most recently completed financial year of the
                  Company or (B) which during the most recently completed
                  financial year of the Company generated, or during the then
                  current financial year of the Company are expected to
                  generate, more than 50% of the consolidated revenue or cash
                  flow of the Company and its subsidiaries, to any other person
                  or persons (other than the Company or one or more subsidiaries
                  of the Company); other than a transaction or series of
                  transactions which involves a sale of securities or assets of
                  the Company with which the Employee is involved as a purchaser
                  in any

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                                      -4-

                  manner, whether directly or indirectly, and whether by way of
                  participation in a corporation or partnership that is a
                  purchaser or by provision of debt, equity or
                  purchase-leaseback financing;

      (e)   "Company's Business" means the development and commercialization of
            signal processing boards, sub-systems, systems and related products
            and services;

      (f)   "Expiry Date" means the date which is 12 months after a Change in
            Control occurs;

      (g)   "Restricted Period" means the period of 18 months commencing upon
            the date of termination of the Employee's employment pursuant to
            Section 2.1 or Section 2.2;

      (h)   "Triggering Event" means any one of the following events which
            occurs following a Change of Control without the express agreement
            in writing of the Employee:

            (i)   an adverse change in any of the duties, powers, rights,
                  discretion, working conditions or compensation of the Employee
                  as they exist immediately prior to the Change of Control which
                  would constitute constructive dismissal at law; or

            (ii)  a change in the location of the Employee's place of employment
                  by more than 80 kilometres.

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                                      -5-

1.2         Plural and Gender

            Whenever used in this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing the masculine
gender shall include the feminine gender.

1.3         Binding Effect

            This Agreement shall be binding on the successors and assigns of the
Company and shall enure to the benefit of the heirs, executors, personal
representatives and permitted assigns of the Employee.

2.          RIGHTS OF EMPLOYEE

2.1         Right Upon Occurrence of Triggering Event

      (a)   Right: If a Change in Control occurs and if, in respect of the
            Employee, a Triggering Event occurs on or before the Expiry Date,
            the Employee shall be entitled, on at least 30 days written notice
            to the Company given within six months after the Triggering Event,
            to elect to terminate his employment with the Company and to receive
            from the Company in lieu of any amount he would have been entitled
            to receive on the termination of his employment pursuant to the
            provisions of the Employment Contract:

            (i)   all Accrued Compensation;

            (ii)  a sum equivalent to one and one-half (1.5) times the base
                  salary of the Employee for the period specified in the
                  Employment Contract upon Spectrum terminating the Employees
                  employment without cause;

            (iii) a sum equivalent to the Average Bonus multiplied by one and
                  one-half (1.5); and

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                                      -6-

            (iv)  all stock options provided for in the Employment Contract or
                  otherwise allotted to the Employee, save and except that such
                  options, if not already vested, shall vest forthwith, and all
                  options shall expire upon the earlier of their expiry date and
                  120 days after the election to terminate by the Employee.

      (b)   Assistance: Should the Employee elect to terminate his employment
            with the Company as provided in Section 2.1(a), the Employee shall,
            at the request of the Company, provide the Company with all
            information and assistance relating to his or her employment with
            the Company as may be reasonably requested by the Company in order
            to transfer the Employee's duties and responsibilities to another
            employee.

2.2         Right Upon Termination

            The Employee shall be entitled to a payment from the Company in the
amount calculated in accordance with Section 2.1(a) hereof if his employment
with the Company is terminated by the Company within 12 months after a Change of
Control other than for cause.

2.3         Benefits

            If the Employee is entitled to a payment pursuant to Section 2.1 or
2.2 hereof, then regardless of the Employee's country of residence, the Company
shall also continue to pay the Employee's health insurance premiums and other
benefits as outlined in the Employment Contract and as permitted by the relevant
insurers for a period which is the lesser of eighteen months from termination or
until the Employee has otherwise secured comparable benefits.

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                                      -7-

3.          PAYMENTS AND REVIEW

3.1         Payments under this Agreement

            Subject to any arrangements made pursuant to Section 5.3 hereof, any
payment to be made by the Company pursuant to the terms of this Agreement shall
be paid by the Company, less all statutory deductions, as follows:

      (a)   the amounts payable under Sections 2.1(a)(i) (excluding bonuses),
            2.1(a)(ii) and 2.1(a)(iii) within five business days of the last day
            of the Employee's employment by the Company;

      (b)   the bonus component of the Accrued Compensation payable under
            Section 2.1(a)(i) within sixty business days of the end of the
            current fiscal year of the Company.

Any such payment shall be calculated, in the case of Section 2.1, at the date of
giving notice pursuant to Section 2.1, and in the case of Section 2.2 hereof, at
the date of termination of the Employee's employment.

The Company covenants and agrees to assist the Employee to receive all payments
made under this Agreement in a tax effective manner so long as such assistance
is not adverse to the interests of the Company.

4.          RESTRICTIVE COVENANTS

4.1         Non-Competition

            During the term of employment, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to or competitive with the Company's Business.

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                                      -8-

4.2         Post-employment Non-Competition

            During the period of 12 months commencing upon the date of
termination of the Employee's employment, whether the termination is pursuant to
Section 2.1 or Section 2.2 of this Agreement or termination is voluntary by
Employee of for cause by the Company, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to and competitive with the Company's Business.

4.3         Non-Solicitation of Customers

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation of any customers of the Company or
any prospective customers of the Company with whom the Employee had contact
during his employment.

4.4         Non-Solicitation of Employees

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation for employment any person who is,
at the time of such solicitation, employed by the Company and the Employee shall
not directly or indirectly induce any person to leave his or her employment with
the Company.

4.5         Remedies

            The Employee acknowledges and agrees that any breach of this
Agreement could cause irreparable damage to the Company and that in the event of
a breach by the Employee, the Company shall have in addition to any and all
other remedies at law or in equity, the right to an injunction, specific
performance or other equitable relief to prevent any violation by the Employee
of any of the provisions of this Agreement including without limitation, the
provisions of Sections 4.1, 4.2, 4.3 and 4.4. In the event of any dispute under
any of Sections 4.1 to 4.4, the Employee agrees that the Company shall be
entitled, without showing actual damages, to a

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                                      -9-

temporary or permanent injunction restraining the conduct of the Employee
pending a determination of such dispute and that no bond or other security shall
be required from the Company in connection therewith.

5.          MISCELLANEOUS

5.1         Agreement Supplemental

            This Agreement shall be supplemental to the Employment Contract
except insofar as the Employment Contract relates to the termination of the
Employee's employment after a Change in Control, in which case this Agreement
shall supersede the termination provisions of the Employee Contract. To the
extent that the terms of the Employment Contract are not inconsistent with this
Agreement, such terms shall continue to apply, and the Employment Agreement is
hereby ratified and confirmed.

5.2         Assignment and Assumption

            This Agreement shall be assigned by the Company to any successor
corporation of the Company and shall be binding upon such successor corporation.
For the purposes of this Section 5.2, "successor corporation" shall include any
person referred to in paragraphs 1.1(d)(ii) or (iii) hereof. The Company shall
use its best efforts to ensure that the successor corporation shall continue the
provisions of this Agreement as if it were the original party in place of the
Company; provided however that the Company shall not thereby be relieved of any
obligation to the Employee pursuant to this Agreement.

5.3         Further Assurances

            Each of the Company and the Employee agrees to make, do and execute
or cause to be made, done and executed, all such further and other things, acts,
deeds, documents, assignments and assurances as may be necessary or reasonably
required to carry out the intent and purpose of this Agreement fully and
effectually. Without limiting the generality of the foregoing, the Company shall
take all reasonable steps in order to structure the payment or

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                                      -10-

payments provided for in this Agreement in the manner most advantageous to the
Employee with respect to the provisions of the Income Tax Act (Canada).

5.4         Notice

      (a)   Any notice required or permitted to be given under this Agreement
            will be in writing and may be given by delivering, sending by
            telecopier, or sending by prepaid registered mail the notice to the
            following address or telecopier number:

            If to the Company:

            Spectrum Signal Processing Inc.
            One Spectrum Court
            #200 - 2700 Production Way
            Burnaby, British Columbia V5A 4X1

            Attention: Chief Executive Officer and Chair of the Board of
            Directors

            Telecopier No.: (604) 421-1764

            If to the Employee:

            as set out in the Employment Contract.

            (or to such other address or telecopier number as any party may
            specify by notice in writing to another party).

      (b)   Any notice delivered or sent by telecopier on a business day will be
            deemed conclusively to have been effectively given on the day the
            notice was delivered, or the telecopy transmission was sent
            successfully to the telecopier number set out above, as the case may
            be.

      (c)   Any notice sent by prepaid registered mail will be deemed
            conclusively to have been effectively given on the third business
            day after posting; but if at the time of posting or between the time
            of posting and the third business day thereafter there

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                                      -11-

            is a strike, lockout, or other labour disturbance affecting postal
            service, then the notice will not be effectively given until
            actually delivered.

5.5         Independent Legal Advice

            The Employee acknowledges having been advised to obtain independent
legal advice with respect to this Agreement.

5.6         Governing Law

            This Agreement shall be governed by and be construed in accordance
with the laws of British Columbia.

5.7         Severability

            Any provision of this Agreement which contravenes any applicable law
or which is found to be unenforceable shall, to the extent of such contravention
or unenforceability, be deemed severable and shall not cause this Agreement to
be held invalid or unenforceable or affect any other provision or provisions of
this Agreement.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the date first above written.

SPECTRUM SIGNAL PROCESSING INC.

By: /s/ Pascal E. Spothelfer
PASCAL E. SPOTHELFER, PRESIDENT & CEO

By: /s/ Leonard Pucker II
LEONARD PUCKER II, CTO<PAGE>

                                                                    EXHIBIT 4.39

[SPECTRUM LOGO]

AUDIT AND GOVERNANCE COMMITTEE CHARTER

DATE ORIGINALLY ISSUED: March 6, 2001
DATE LAST UPDATED:      March 4, 2004

GENERAL RESPONSIBILITIES AND FUNCTIONS

      The general responsibilities of the Audit and Governance Committee (the
"Committee") are as follows:

Frequency of Meetings

   -  Meet as often as may be deemed necessary or appropriate in its judgment
      but not less than once a year, either in person or via telephone, with its
      Chairperson to set and circulate an agenda prior to meeting.

Reporting Responsibilities

   -  Report Committee actions to the Board of Directors with such
      recommendations as the Committee may deem appropriate.

Legal Responsibilities

   -  Perform such functions as may be assigned by law, by the Company's
      certificate of incorporation, memorandum, articles or similar documents,
      or by the Board of Directors.

Amendments to Charter

   -  Annually review this charter and as deemed necessary, recommend amendments
      to be ratified by a simple majority of the Board of Directors.

MEMBERSHIP

      The Committee shall consist of at least three directors. Members of the
Committee and the Chairperson shall be appointed by the Board and may be removed
by the Board in its discretion. The Committee shall consist of a minimum of
three members of the Board of Directors, appointed annually, each of whom is
affirmatively confirmed as independent by the Board of Directors, with such
affirmation disclosed in the Company's annual Information Circular. The
membership of the Committee shall meet all independence requirements of the
Toronto Stock Exchange and of NASDAQ. The Committee Members shall have
sufficient

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financial literacy, which means the ability to read and understand a balance
sheet, income statement, cash flow statement and the notes attached thereto, to
enable them to discharge their responsibilities in accordance with applicable
laws and/or listing requirements of the various stock exchanges on which the
company's securities trade. At least one member of the Committee shall have
accounting or related financial management expertise that allows that member to
read and understand financial statements and the related notes attached thereto
in accordance with generally accepted accounting principles ("GAAP").

AUDIT FUNCTIONS

      The Committee has the mandate to provide an open avenue of communication
between management, the independent auditor and the Board and to assist the
Board in its oversight of the:

      -     integrity, adequacy and timeliness of the company's financial
            reporting and disclosure practices;

      -     processes for identifying the principal financial risks of the
            company and the control systems in place to monitor them;

      -     company's compliance with legal and regulatory requirements related
            to financial reporting;

      -     independence and performance of the company's independent auditor.

      The Committee also prepares its report required to be included in the
Corporation's annual proxy statement in accordance with the Securities Exchange
Act of 1934, as amended. The Committee shall also perform any other activities
consistent with this Charter, the company's by-laws and governing laws, as the
Committee or Board deems necessary or appropriate.

      The Committee's role is one of oversight. Management is responsible for
preparing the company's financial statements and other financial information and
for the fair presentation of the information set forth in the financial
statements in accordance with GAAP. Management is also responsible for
establishing internal controls and procedures and for maintaining the
appropriate accounting and financial reporting principles and policies designed
to assure compliance with accounting standards and all applicable laws and
regulations.

      The Committee, without the necessity of seeking Board approval, shall have
the authority to retain special legal, accounting, or other consultants to
advise the Committee. The Committee may request any officer or employee of the
Corporation or the Corporation's outside counsel or independent auditors to
attend a meeting of the Committee or to meet with any members of, or consultants
to, the Committee.

      The independent auditor's responsibility is to audit the company's
financial statements and provide its opinion, based on its audit conducted in
accordance with generally accepted auditing standards, that the financial
statements present fairly, in all material respects, the

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financial position, results of operations and cash flows of the company in
accordance with GAAP.

      The Committee is directly responsible for the appointment, compensation,
evaluation, termination and oversight of the work of the independent auditor.
The independent auditor shall report directly to the Committee, as they are
accountable to the Board and the Committee as representatives of the company's
shareholders. As such, it is not the duty or responsibility of the Committee or
any of its members to plan or conduct any type of audit or accounting review or
procedure or set auditor independence standards.

AUDIT AUTHORITY AND RESPONSIBILITIES

In performing its oversight responsibilities, the Committee shall:

1.    Review the appointments of the company's Chief Financial Officer and any
      other key financial executives involved in the financial reporting
      process;

2.    Review with management and the independent auditor the adequacy and
      effectiveness of the company's accounting and financial controls and the
      adequacy and timeliness of its financial reporting processes;

3.    Advise management and the independent auditors that they are expected to
      provide to the Committee a timely analysis of significant financial
      reporting issues and practices (and, in that regard, the Committee
      directs, and shall be entitled to rely upon, management and the
      independent auditors to identify financial reporting issues and practices,
      if any, of significance requiring Committee oversight);

4.    Discuss with the independent auditors the matters required to be discussed
      by Statement on Auditing Standards No. 61 as from time to time in effect
      (including any Standard hereafter issued in replacement thereof) relating
      to the conduct of the audit of the Corporation;

5.    Review with representatives of the independent auditors, management, and
      the risk management group, the adequacy of the Corporation's internal
      controls which shall include a review of the disclosures required to be
      reported to the Committee by Section 302 of the Sarbanes-Oxley Act of 2002
      and any rules promulgated thereunder by the Securities and Exchange
      Commission;

6.    Review with management and the independent auditor the annual audited
      financial statements and unaudited quarterly financial statements and
      related documents, prior to filing or distribution, including matters
      required to be reviewed under applicable legal or regulatory requirements;

7.    Review with management and the independent auditor, as appropriate,
      earnings news releases, management's discussion and analysis and other
      financial news releases.

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8.    Where appropriate and prior to release, review with management any other
      news releases that contain significant financial information that has not
      previously been released to the public;

9.    Review with management and the independent auditors to discuss any report
      required of the independent auditors by Section 204 of the Sarbanes-Oxley
      Act and rules promulgated thereunder by the Securities and Exchange
      Commission including any report pertaining to critical accounting policies
      and practices to be used by the Corporation; all alternative treatments of
      financial information within generally accepted accounting principles that
      have been discussed with management, ramifications of the use of such
      alternative disclosures and treatments, and the treatment preferred by the
      independent auditors; and other material written communications between
      the independent auditors and management, such as any management letter or
      schedule of unadjusted differences;

10.   Review with management and the independent auditors to (a) discuss the
      scope of the annual audit, (b) discuss the annual audited financial
      statements including disclosures made in management's discussion and
      analysis, (c) discuss any significant matters arising from the audit or
      report as disclosed to the Committee by management or the independent
      auditors, (d) review the form of opinion the independent auditors propose
      to render with respect to the audited annual financial statements, (e)
      discuss significant changes to the Corporation's auditing and accounting
      principles, policies, or procedures proposed by management or the
      independent auditors, and (f) inquire of the independent auditors of
      significant risks or exposures, if any, that have come to the attention of
      the independent auditors and any difficulties encountered in conducting
      the audit, including any restrictions on the scope of activities or access
      to requested information, and any significant disagreements with
      management;

11.   Review the company's financial reporting and accounting standards and
      principles and significant changes in such standards or principles or in
      their application, including key accounting decisions affecting the
      financial statements, alternatives thereto and the rationale for decisions
      made;

12.   Review the quality and appropriateness, not just the acceptability, of the
      accounting policies and the clarity of financial information and
      disclosure practices adopted by the company, including consideration of
      the independent auditors' judgments about the quality and appropriateness
      of the company's accounting policies. This review shall include
      discussions with the independent auditor without the presence of
      management;

13.   Review with the Company's General Counsel legal matters that may have a
      material impact on the financial statements and any material reports or
      inquiries received from regulators or government agencies raising
      significant issues as to compliance with applicable laws;

14.   Supervise and direct any special projects or investigations the Committee
      considers necessary;

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15.   Review with management and the independent auditor significant related
      party transactions and potential conflicts of interest;

16.   Recommend to the Board and shareholders the independent auditor selected
      to examine the company's accounts and financial statements. The Committee
      has the authority to approve all audit engagement terms and fees. The
      Committee shall pre-approve non-audit and assurance services provided to
      the company by the independent auditor, but the Chairperson may be
      delegated the responsibility to approve these services where the fee is
      not significant;

17.   Review with management and the independent auditor the annual audit plan
      and results of and any problems or difficulties encountered during any
      external audits and management's responses thereto;

18.   Obtain from the independent auditor assurances that in the course of
      conducting an audit that no "illegal act" (as defined in Section 10A of
      the Securities Exchange Act of 1934, as amended) has been detected or
      otherwise come to the attention of the independent auditors that is
      required to be disclosed to the Committee under said Section 10A;

19.   Monitor the independence of the external auditors by reviewing all
      relationships between the independent auditor and the company and all
      non-audit and assurance work performed for the company by the independent
      auditor on at least an annual basis. The Committee shall request and
      receive a formal Statement of Independence from the independent auditor on
      an annual basis.

20.   Set policies for the Company's hiring of employees or former employees of
      the independent auditors;

21.   Review with senior financial management, the independent auditor and such
      others as the Committee deem appropriate, the results of internal audits.

22.   Establish and review the company's procedures for the:

      -     receipt, retention and treatment of complaints regarding accounting,
            financial disclosure, internal controls or auditing matters; and

      -     receipt, retention, and treatment of complaints received by the
            Company regarding accounting, internal accounting controls, and
            auditing matters and the confidential, anonymous submission by
            employees of the Company of concerns regarding questionable
            accounting or auditing matters.

23.   Conduct or authorize investigations into any matters that the Committee
      believes is within the scope of its responsibilities. The Committee has
      the authority to retain independent counsel, accountants or other advisors
      to assist it in the conduct of any investigation, at the expense of the
      company.

                                       5
<PAGE>

24.   Review with management the Company's contingency plans and other emergency
      recovery plans;

25.   Prepare any report of the Committee required by the rules of the
      Securities and Exchange Commission to be included in the Corporation's
      annual proxy statement; and

26.   The Committee shall report its recommendations and findings to the Board
      after each meeting and shall conduct and present to the Board an annual
      performance evaluation of the effectiveness of the Committee.

      In fulfilling their responsibilities hereunder, it is recognized that
members of the Committee are not employees of the Company and are not, and do
not represent themselves to be, serving as accountants or auditors. As such, it
is not the responsibility of the Committee or its members to conduct "field
work" or other types of auditing or accounting procedures and each member of the
Committee shall be entitled to rely, in good faith, on the integrity of those
persons or organizations within and outside of the Corporation that it receives
information, opinions, reports, or statements from and the accuracy of the
financial and other information, opinions, reports, or statements provided to
the Committee by such persons or organizations.

GOVERNANCE AUTHORITY AND RESPONSIBILITIES

      The Committee is also responsible for assisting the Board of Directors to
review on an annual basis the corporate governance policies and procedures of
the Company. The Committees governance related responsibilities are as follows:

Committee Assessment

      -     Assess the Board's Committee structure on an ongoing basis and
            recommend changes where appropriate.

Corporate Governance Guidelines and Independence

      -     Cause to be prepared and recommend to the Board of Directors the
            adoption of corporate governance guidelines, and periodically review
            and recommend changes to the corporate governance guidelines as
            appropriate, including such recommendations as are desirable or
            necessary to permit the Board of Directors to function independently
            of management, including the appointment of a committee of
            independent Directors to allow for an opportunity to discuss the
            affairs of the Company in the absence of management.

      -     Cause to be prepared and recommend to the Board of Directors the
            adoption of a code of ethics and periodically review and recommend
            changes to the code of ethics as appropriate.

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Relationship Management

      -     Oversee the relationship between management and the Board of
            Directors and to recommend improvements in such relationship to the
            Board of Directors.

      -     Review periodically the compliance with and enforcement of the
            corporate governance guidelines and code of ethics by the Company's
            senior executives.

      -     Recommend to the Board as appropriate and oversee the conduct of any
            internal investigations of the conduct of senior executives of the
            Company.

Annual Reviews and Recommendations

      -     Review the directorships and other positions held by the Company's
            Directors and Officers in other organizations.

      -     Review the role and responsibilities of the Chair of the Board and
            the appropriateness of the duties and responsibilities of the Chair
            of the Board.

General

      -     Undertake such other initiatives as are needed to assist the Board
            of Directors in providing efficient and effective corporate
            governance for the benefit of shareholders.

                                       7

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