The purpose of the Audit Committee (the "Audit Committee") of the Board of Directors (the "Board") of Exide Technologies (the "Company") is to assist the Board in overseeing the accounting and financial reporting processes and the audits of the Company's financial statements.
The Audit Committee has the authority to conduct investigations appropriate to fulfilling its responsibilities, and it has direct access to the independent auditors, management and Company employees. The Audit Committee has the ability to retain, at the Company's expense, special legal, accounting or other consultants or experts it deems necessary in the performance of its duties.
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate, are in accordance with generally accepted accounting principles, and fairly present the financial condition and financial results of the Company. This is the responsibility of management and the independent auditors. The Audit Committee shall have the power to resolve disagreements between management and the independent auditors regarding financial reporting.
II. Composition
The Audit Committee shall have at least three members, comprised solely of independent directors meeting the independence requirements of the Nasdaq Stock Market, LLC. Marketplace Rules and Rule 10A-3(b)(1) under the Securities Act of 1934.. Each member of the Audit Committee shall not have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years; all members of the Audit Committee shall have a working familiarity with basic finance and accounting practices, and shall be able to read and understand fundamental financial statements, including a company's balance sheet, income statement and cash flow statement. Additionally, the Audit Committee shall have at least one member that has past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background that results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. At least one member of the Committee should be an "Audit Committee Financial Expert," as such term is defined in the rules and regulations promulgated by the SEC. The name of the person(s) designated as "Audit Committee Financial Expert" (or, if no member of the Committee is an "Audit Committee Financial Expert", the reasons why the Committee does not have a member who is an "Audit Committee Financial Expert"), and whether such "Audit Committee Financial Expert(s)" are independent of management shall be disclosed in the Company's public filings and as otherwise required under Applicable Listing Rules and applicable law.
The members of the Audit Committee shall be appointed by a majority vote of the Board. Committee members shall hold their offices for one year and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Members may be removed, with or without cause, by a majority vote of the Board. No person may be made a member of the Audit Committee if his or her service on the Audit Committee would violate any restriction on service imposed by any rule or regulation of the SEC or any securities exchange or market on which shares of the common stock of the Company are traded. Unless a Chairperson is elected by the full Board, the members of the Audit Committee may designate a Chairperson by majority vote of the full Audit Committee membership. The designation of the Audit Committee Financial Expert shall be made by the Board at least annually. No member of the Audit Committee shall serve simultaneously on the audit committees of more than two other public companies without the prior approval of the Board.
If a member of the Audit Committee ceases to be independent for reasons outside the member's reasonable control, his or her membership on the Audit Committee may continue until the earlier of the Company's next annual meeting of shareholders or one year from the occurrence of the event that caused the failure to qualify as independent; Also, if the Company is not already relying on this provision, and the Company fails to comply with the Nasdaq requirement regarding audit committee composition due to a single vacancy on the Audit Committee, then the Company will have until the earlier of one year from the occurrence of the event that caused the failure or the next annual meeting of shareholders to comply; provided that if the annual meeting of shareholders occurs within 180 days following the event that caused such failure to comply, the Company will instead have 180 days from the event to regain compliance with such Nasdaq requirement. If the Company intends to rely on either of these cure periods, the Company shall provide notice to Nasdaq immediately upon learning of the event or circumstance that caused the non-compliance.
III. Meetings
The Audit Committee shall meet at least quarterly, or more frequently as circumstances dictate, including at the request of the independent auditors. Audit Committee members are expected to attend each meeting. The Audit Committee shall invite members of management, employees, outside counsel, the independent auditors, internal auditors and others to attend or others whose advice and counsel are relevant to the issues then being considered by the Audit Committee, to attend any meetings and to provide such pertinent information as the Audit Committee may request. The Audit Committee should meet periodically with management, the internal auditor, and the independent auditor in separate sessions to discuss matters that the Audit Committee or either of these groups believe should be discussed privately. In addition, the Committee should meet with the independent auditors and management quarterly to review the Company's financial statements prior to their public release consistent with the provisions set forth below in Section IV.
When deemed appropriate, Audit Committee meetings may be held in person or by telephone, or the Audit Committee may act by unanimous written consent. The provisions of the Company's bylaws regarding meetings of and actions by the Board, including with respect to format, calling, notice and quorum, shall apply to the Audit Committee as if it were the Board. The Chairperson of the Audit Committee shall be responsible for leadership of the Audit Committee, including approving the agenda, presiding over Audit Committee meetings, making Audit Committee assignments and reporting the Audit Committee's actions to the Board from time to time (but at least once each year) as requested by the Board. Meeting agendas shall be prepared and provided in advance to members, along with appropriate background materials. Minutes or other records of meetings and activities of the Audit Committee shall be maintained and reported to the full Board.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties, the Audit Committee shall:
A. Review Procedures
Review and reassess the adequacy of the Charter at least annually. Submit any revisions to the Charter to the Board for approval.
Review the regular internal reports to management prepared by the internal auditors and management's response. Review activities of the internal audit group, its objectives, organization and staffing, audit plans and procedures, and its coordination with the independent auditors and financial reporting function.
Review the Company's annual audited financial statements prior to filing with the SEC or distribution to shareholders and the public. Review should include discussion with management and independent auditors of significant issues regarding accounting principles, practices and judgments. Based on review and discussions, make recommendations to the Board whether the Company's annual audited financial statements should be included in the Company's Annual Report on Form 10-K.
Review with financial management and the independent auditors the Company's quarterly financial statements prior to the release of earnings and/or filing with the SEC or distribution to shareholders or the public. Discuss significant changes to the Company's accounting principles and any items required to be communicated by the independent auditors in accordance with applicable standards.
Review and discuss with management and the independent auditors, as appropriate, earnings press releases and other financial information to be disseminated to the public and earnings guidance provided to analysts and to rating agencies in advance of their release to the public.
Review reports from management and the internal auditors on the Company's subsidiaries and affiliates compliance with the Company's code(s) of conduct, applicable law and insider transactions.
In accordance with the Board's Policy Statement Regarding Related Party Transactions, review and approve Related Party Transactions (as defined in such Policy Statement), which includes any related party transactions that the Company would be required to disclose pursuant to Item 404 of SEC Regulations S-K.
Review with management and the independent auditors correspondence with regulators or government agencies and employee complaints or published reports that raise material issues regarding the Company's financial statements or accounting policies.
Prepare the report required by the rules of the SEC to be included in the Company's annual proxy statement.
Review restatements of financial statements that have occurred or were recommended.
Annually review with management, and separately with the independent auditors, major issues regarding the Company's auditing and accounting principles and practices and its presentation of financial statements, including the adequacy of internal controls and special audit steps adopted in light of material internal control deficiencies and audit problems or difficulties.
B. Independent Auditors
Have direct responsibility for the appointment, compensation, retention and oversight of the work of the Company's independent auditors (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, with such independent auditors reporting directly to the Audit Committee.
The independent auditors are ultimately accountable to the Audit Committee. The Audit Committee shall review the independence and evaluate the performance of the auditors, the provision of audit and non-audit services, and discharge of auditors when circumstances warrant. In performing this review, the Audit Committee shall:
Obtain and review on at least an annual basis a formal written statement from the independent auditors delineating all relationships between the independent auditors and the Company consistent with Independence Standards Board Standard No. 1;
Actively engage in a dialogue with the independent auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors;
Review and evaluate the lead partner of the independent auditors, and
Present its conclusions with respect to the independent auditors to the Board, taking or recommending that the full Board take appropriate action to oversee the independence of the independent auditors.
Pre-approve non-audit services to be provided to the Company by the independent auditors.
Ensure the rotation of the lead audit partner every five years and other audit partners every seven years, and consider whether there should be a regular rotation of the independent auditor itself.
Review the independent auditors' audit plan. Discuss scope, staffing, locations, reliance upon management and general audit approach.
Review with the independent auditors their evaluation of the quality of the Company's accounting principles and such matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.
Review the performance of the independent auditors and terminate the independent auditors if circumstances warrant.
Set and periodically review management's hiring policies for employees or former employees of the independent auditors.
Receive from the independent auditors communications regarding (a) alternative treatments of financial information within the parameters of GAAP, (b) critical accounting policies and practices to be used in preparing the audit report and (c) such other matters as the SEC and the Nasdaq Global Market may direct by rule or regulation.
Periodically consult with the independent auditors out of the presence of management about internal controls and the fullness and accuracy of the organization's financial statements.
Oversee the relationship with the independent auditors by discussing with the independent auditors the nature and rigor of the audit process, receiving and reviewing audit reports and ensuring that the independent auditors have full access to the Audit Committee (and the Board) to report on appropriate matters.
Obtain a representation from the independent auditors that Section 10A of the Securities Exchange Act of 1934 has been followed.
Pre-approve audit services and permissible non-audit services as set forth in Section 10A(i) of the Securities Exchange Act of 1934.
C. Financial Reporting Process
Prior to releasing year-end earnings, discuss the results of the audit with the independent auditors. Discuss certain matters required to be communicated to audit committees in accordance with SAS No. 61, including such things as management judgments and accounting estimates, significant audit adjustments, disagreements with management and difficulties encountered in performing the audit. Review significant accounting and reporting issues of complex or unusual transactions and the effect of off-balance sheet structures on the financial statement of the Company.
Meet to discuss the annual audited financial statements and quarterly financial statements with management and the independent auditors and legal counsel, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as disclosures regarding internal controls.
Consider the independent auditors' judgments about the quality (not just the acceptability) and appropriateness of the Company's accounting principles as applied in financial accounting. Inquire as to the independent auditors' views about whether management's choices of accounting principles appear reasonable from the perspective of income, asset and liability recognition, and whether those principles are common practices or are minority practices. Consider alternative accounting principles and estimates.
In consultation with management, the internal auditors and the independent auditors, consider the integrity of the Company's financial reporting processes and controls, both external and internal. Discuss significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. Review significant findings prepared by the internal auditors and the independent auditors together with management's responses, including the status of previous recommendations.
Consider and approve, if appropriate, major changes to the Company's auditing and accounting principles and practices as suggested by the independent auditors, management, or the internal auditors.
Meet at least annually with the chief financial officer, the internal auditors and the independent auditors in separate executive sessions.
Review analyses prepared by management and the independent auditors of significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including any analysis of the effect of alternative generally accepted accounting principle ("GAAP") methods on the Company's financial statements and a description of transactions as to which management obtained Statement on Auditing Standards No. 50 letters.
D. Internal Controls and Legal Compliance
Review the budget, plan, changes in plan, activities, organizational structure and qualifications of the controller's office, as needed. Review significant reports prepared by the controller's office together with management's response and follow-up to these reports.
Review the appointment, performance and replacement of the controller and other senior personnel responsible for financial reporting.
Evaluate whether management is setting the appropriate tone at the top by communicating the importance of internal controls and ensuring that individuals possess an understanding of their roles and responsibilities.
Review and investigate matters relating to the integrity of management, potential conflicts of interest and adherence to the Company's policies.
Review disclosures made by the CEO and CFO in connection with the certification of the Company's annual and quarterly reports.
Consider and review with management, the internal auditors and the independent auditors the effectiveness of and any weakness in the Company's internal controls. Develop, in consultation with management, a timetable for implementing recommendations to correct identified weaknesses.
On at least an annual basis, review with the Company's counsel, legal matters that could have a significant impact on the organization's financial statements, the Company's compliance with applicable laws and regulations, and inquiries received from regulators or governmental agencies.
Review management's monitoring of the Company's compliance with laws and management's exercise of ethical practices and ensure that management has the proper review systems in place to ensure that the Company's financial statements, reports and other information disseminated to governmental organizations, and the public, satisfy legal requirements.
E. Reports of the Audit Committee
Report to the Board about Audit Committee activities and issues that arise with respect to the quality or integrity of the Company's financial statements, or internal controls over financial reporting.
Annually prepare, with the assistance of management, a report to shareholders as required by the SEC in the Company's annual proxy statement.
Report annually to the shareholders, describing the Audit Committee's composition, responsibilities and how they were discharged, and other information required by rule, including approval of non-audit services.
F. Evaluation of Internal Auditors
Review activities, organizational structure and qualifications of the internal auditors. Meet separately and periodically with the internal auditing department.
Review and concur in the appointment, replacement, reassignment or dismissal of the Vice President of internal auditing.
Review with management and the Vice President of Internal auditing:
(a) significant internal audit findings during the year and management's responses thereto;
(b) difficulties encountered in the course of internal audits, including restrictions on the scope of the internal auditors' work or access to required information;
(c) the annual internal auditors' audit plan and significant changes thereto;
(d) the internal auditors' budget and staffing; and
(e) The internal auditors' compliance with the appropriate standards of The Institute of Internal Auditors' Standards for the Professional Practice of Internal Auditing.
G. Miscellaneous
Review and pre-approve related-party transactions as required by the Nasdaq Global Market.
Retain such outside counsel, experts and other advisors as the Audit Committee may deem appropriate in its sole discretion.
Establish procedures for:
The receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and
The confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
Perform other activities consistent with this Charter, the Company's By-laws and governing law, as the Audit Committee or the Board deems necessary or appropriate.
The Audit Committee shall have sufficient funding to provide compensation to the independent auditors and to fund ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
V. Annual Evaluation Procedures
The Audit Committee shall perform an annual self-review and self-evaluation of its performance to confirm that it is meeting its responsibilities under this Charter. The Audit Committee shall annually review the adequacy of this Charter. The Committee may recommend to the Board such changes to this Charter as the Audit Committee deems appropriate.
VI. Investigations And Studies
The Audit Committee shall have the authority and sufficient funding to retain special legal, accounting or other consultants to advise and assist the Audit Committee. The Audit Committee may conduct or authorize investigations into or studies of matters within the Audit Committee's scope of responsibilities as described herein, and may retain, at the expense of the Company, independent counsel or other consultants necessary to assist the Audit Committee in any such investigations or studies. The Audit Committee shall have sole authority to negotiate and approve the fees and retention terms of such independent counsel or other consultants.
While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors.
VII. Miscellaneous
Nothing contained in this Charter is intended to expand applicable standards of liability under statutory or regulatory requirements for the directors of the Company or members of the Audit Committee. The purposes and responsibilities outlined in this Charter are meant to serve as guidelines rather than as inflexible rules and the Audit Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities. This Charter, and any amendments thereto, shall be displayed on the Company's web site and a printed copy of such shall be made available to any shareholder of the Company who requests it.
Revised by the Audit Committee and approved
by the Board of Directors on March 28, 2008.
Code of Ethics (French/France)