Exception handeling at different layer!

Hello All,
My apps design has the following layer: JSF(front-end) -> Business Delegates (POJO) -> EJB3 (Session Facade) -> POJO (DAO) -> Hibernate --> DB. Now i am little confused for exception handeling. I have following approaches in mind.
1- Propogate my exceptions from Hibernate all the way to business delegates and handel all of them there. I am not sure this will be a good approach. But it will allow my to have one place to handel all exception.
2- Handel exception at differnet levels. DB related expceptions IN Daos, Logic and EJB related exceptions in Bussiness Delegates.
Please suggest me better of these or purpose a new suggestion.
Thanks

generally when something blows in a DAO, you want your application to know about it. Otherwise you can get into a situation like this:
1) business logic calls DAO
2) DAO throws and handles its own exception
3) business logic goes on to work on data in an unknown state
That doesn't work. At 3) you want to catch the exception, log it and possibly roll back an entire transaction, effectively ending the business logic and possibly going on to some error handling routine, like showing an error page.

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