Audit
Charter Committee
FOAMEX INTERNATIONAL
INC.
AMENDED AND RESTATED
CHARTER OF THE AUDIT COMMITTEE
I. Purpose and Power
The Audit Committee (the “Committee”)
of Foamex International Inc. (the “Company”) has been
established by the Board of Directors (the “Board”)
to assist the Board in discharging and performing its duties and
responsibilities with respect to the financial affairs of the
Company and its subsidiaries, affiliates and related parties (collectively,
the “Group”), including the exercise of oversight
with respect to:
-
The identification, assessment
and management of financial risks and uncertainties
-
The continuous improvement
in financial systems.
-
The integrity of financial
statements and financial disclosures.
-
The compliance with legal
and regulatory requirements.
-
The qualifications, independence
and performance of the independent accountants.
-
The capabilities, resources
and performance of the internal audit department.
-
The full and open communication
with and among the independent accountants, management, counsel,
employees, the Committee and the Board.
The Committee has the right
to exercise any and all power and authority of the Board with
respect to matters within the scope of this Charter, subject to
the ultimate power and authority of the Board.
The Committee has the authority
to conduct any and all investigations necessary or appropriate,
to contact directly the independent accountants and other employees
and advisors and require them to provide any and all information
and advice it deems necessary or appropriate, and to retain legal,
accounting or other advisors it deems necessary or appropriate.
The Committee has the authority
to set aside for payment, pay and direct the payment of the independent
accountants for their reviews and audits of financial statements
and all other services as well as such legal, accounting and other
advisors.
The independent accountants
shall report directly to the Committee, and shall be accountable
to the Committee and the Board, for their reviews and audits of
financial statements and all other services.
II. Composition
The Committee shall be comprised
of that number of directors (but not less than three) as may be
determined from time to time by the Board. Each member of the
Committee shall satisfy the independence, financial literacy and
experience requirements of Section 10A of the Securities Exchange
Act of 1934 and the rules promulgated thereunder, NASDAQ and any
other applicable regulatory requirements, including, but not limited
to, the requirements that a member of the Committee may not, other
than in his or her capacity as a member of the Committee, the
Board or any other committee of the Board, (i) accept any consulting,
advisory or other compensatory fee from the Group or (ii) be affiliated
with the Group.
III. Meetings
The Committee shall meet in
regular sessions at least four times annually, and may meet more
frequently as circumstances warrant. Committee members are expected
to attend meetings and to spend the time needed to properly discharge
their responsibilities.
The Committee shall meet periodically,
but not less than annually, with management, the General Counsel
and the independent accountants in separate executive sessions
to discuss any matters that the Committee or any of them believe
should be discussed privately.
A majority of the members
of the Committee shall constitute a quorum for the transaction
of business. The act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the Committee.
IV. Procedures
The Committee shall determine
its meeting schedule, the agenda for each meeting, the information
to be provided to it before or at each meeting and all other matters
relating to the conduct of its meetings and other activities.
Prior to each meeting, an
agenda for the meeting shall be distributed to each Committee
member. Each Committee member is free to raise at any meetings
subjects that are not on the agenda for that meeting.
Information that is important
to understanding the business to be conducted at a meeting should
generally be distributed to the Committee members three days (or,
if that is not feasible, as soon as practicable) before the meeting,
and Committee members should review these materials before the
meeting.
It is the opinion of the Board
that, subject to Section V below, the activities and procedures
of the Committee should remain flexible so that it may appropriately
respond to changing circumstances.
V. Primary Activities
Without limiting the scope
of the preceding provisions of this Charter, the Committee shall:
A. Corporate Governance
-
Report on its meetings,
proceedings and other activities at each regularly scheduled
meeting of the Board, to the extent appropriate.
-
Review and reassess the
adequacy of this Charter at least annually. Submit changes to
this Charter to the Board for approval.
-
Review and approve any
proposed related party agreement that has not been otherwise
approved by the Compensation Committee of the Board of Directors.
A related party transaction is either (i) any transaction which
must be disclosed in the Company’s period filings with
the U.S. Securities and Exchange Commission (the “SEC”)
under Item 404 of Regulation S-K, (ii) any transaction between
or among the Company and any member of the Group’s affiliates,
directors, officers or family members or affiliates of such
directors and officers, or (iii) any transaction between any
member of the Group and any entity from which an affiliate,
director or officer of a member of the Group, or a family member
or affiliate of such director or officer, receives a payment,
provide that, each such transaction involves an aggregate payment
or consideration in excess of $5,000.
-
Review the procedures
for the receipt and retention of, and the response to, complaints
received regarding accounting, internal control or auditing
matters.
-
Review the procedures
for the confidential and anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
-
Review, prior to filing,
all annual reports on Form 10-K and all quarterly reports on
Form 10-Q, to be filed with the SEC. Discuss with management
and the independent accountants, where practicable, prior to
filing, the financial statements (including the notes thereto)
and the disclosures under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”.
-
Review the Company’s
regular and special earnings releases and consider whether they
are clear and understandable and fully disclose all information
that is relevant to investors in forming a full and accurate
picture of the Company’s financial condition and prospects.
-
Prepare the report required
by the SEC to be included in the Company’s annual proxy
statement and any other reports of the Committee required by
applicable securities laws or stock exchange listing requirements
or rules.
C. Independent Accountants
-
Select, retain, evaluate,
compensate and, as appropriate, terminate and replace the independent
accountants (and, notwithstanding the second paragraph in Section
I, the Committee shall have the sole authority to take any such
action).
-
Obtain and review, at
least once annually, a report by the independent accountants
describing (i) their internal quality control procedures, (ii)
any material issues raised by the most recent internal quality
control review or peer review or by any inquiry or investigation
by any governmental or professional authority within the preceding
five years, in each case with respect to one or more independent
audits carried out by them, (iii) all material steps taken to
deal with any such issues and (iv) all relationships between
them and the Group.
-
Review annually the independence
of the independent accountants by (i) receiving from the independent
accountants a formal written statement delineating all relationships
between the independent accountants and the Group in accordance
with ISB No. 1, (ii) discuss with the independent accountants
all disclosed relationships between the independent accountants
and the Group and all other disclosed relationships that may
impact the objectivity and independence of the independent accountants
and (iii) discussing with management its evaluation of the independence
of the independent accountants.
-
Obtain from the independent
accountants assurance that the lead audit partner and the audit
partner responsible for reviewing the audit have been and will
be rotated at least once every five years and each other audit
partner has been and will be rotated at least once every seven
years, in each case, in accordance with Section 10A of the Securities
Exchange Act of 1934 and the rules promulgated thereunder.
-
Review and approve, prior
to commencement, all audit, review or attest services (including
comfort letters in connection with securities underwritings
and tax services) and all non-audit services to be provided
by the independent accountants as permitted by Section 10A of
the Securities Exchange Act of 1934 and the rules promulgated
thereunder, and, in connection therewith, the terms of engagement.
The Committee may designate one member to approve such non-audit
services, but that member must inform the Committee of the approval
at the next meeting of the Committee. All such approvals and
procedures must be disclosed in periodic reports filed with
the SEC.
-
Review and approve all
compensation to the independent accountants for all audit and
non-audit services.
-
Review regularly with
the independent accountants any audit problems or difficulties
and management’s response, including restrictions on the
scope of activities of the independent accountants or access
by the independent accountants to requested information, and
significant disagreements between the independent accountants
and management.
-
Present conclusions with
respect to the independent accountants to the Board.
D. Internal Audit Function
and Internal Controls
-
Review, based upon the
recommendation of the independent auditors and the chief internal
auditor, the scope and plan of the work to be done by the internal
audit group and the responsibilities, budget and staffing needs
of the internal audit group.
-
Review and approve the
appointment, performance and replacement of the Company’s
chief internal auditor.
-
Review on an annual basis
the performance of the internal audit group.
-
In consultation with the
independent auditors and the internal audit group, review the
adequacy of the Company’s internal control structure and
procedures designed to insure compliance with laws and regulations,
and any special audit steps adopted in light of material deficiencies
and controls.
-
Review (i) the internal
control report prepared by management, including management’s
assessment of the effectiveness of the design and operation
of the Company’s internal control structure and procedures
for financial reporting, as well as the Company’s disclosure
controls and procedures, with respect to each annual and quarterly
report that the Company is required to file under the Securities
Exchange Act of 1934 and (ii) the independent auditors’
attestation, and report, on the assessment made by management.
-
Review with the independent
accountants annually the plan, scope, staffing and timing of
their audit.
-
After completion of the
audit of the financial statements, review with management and
the independent accountants the audit report, the management
letter relating to the audit report, all significant questions
(resolved or unresolved) that arose and all significant difficulties
that were encountered during the audit, the disposition of all
audit adjustments identified by the independent accountants,
all significant financial reporting issues encountered and judgments
made during the course of the audit (including the effect of
different assumptions and estimates on the financial statements)
and the cooperation afforded or limitations (including restrictions
on scope or access), if any, imposed by management on the conduct
of the audit.
-
Review with management
and the independent accountants, at least annually, (i) all
critical accounting policies and practices, (ii) all significant
accounting estimates, (iii) all significant off balance sheet
financing arrangements and their effect on the financial statements,
(iv) all significant valuation allowances and liability, restructuring
and other reserves, (v) the effect of regulatory and accounting
initiatives, and (vi) the adequacy of financial reporting.
-
Review with management
and the independent accountants all reports delivered by the
independent accountants in accordance with Section 10A(k) of
the Securities Exchange Act of 1934 with respect to critical
accounting policies and practices used, alternative treatments
of financial information available under GAAP and other written
communications (including letters under SAS No. 50) between
the independent accountants and management, together with their
ramifications and the preferred treatment by the independent
accountants.
-
Review all items required
to be communicated by the independent accountants in accordance
with SAS No. 61.
-
Review with management
and the independent accountants at least once annually all correspondence
with regulatory authorities and all employee complaints or published
reports that raise material issues regarding the financial statements
or accounting policies.
-
Review with management
and the independent accountants market, operational and financial
risk assessment and management policies and practices, including
related corporate approval requirements and internal auditing
systems and initiatives to minimize such risks.
-
Review with the General
Counsel all legal matters that may have a significant impact
on financial condition or performance.
-
Review contingencies which
could reasonably be expected to have significant impact on financial
performance or condition.
-
Review and approve (a)
any amendment or waiver in the Company’s code of ethics
for the chief executive officer or senior financial officers
and (b) any public disclosure made regarding such amendment
or waiver.
-
Review policies for hiring
of current or former partners, principals, shareholders or professional
employees of the independent accountants who were engaged on
the Company’s account.
-
Perform any other activities
consistent with this Charter as the Committee or the Board of
Directors deems necessary or appropriate.
VI. Limitations.
Although the Committee has
the powers and responsibilities set forth in this Charter, the
role of the Committee is oversight. The members of the Committee
are not full-time employees of the Company and may or may not
be accountants or auditors by profession or experts in the fields
of accounting or auditing and, in any event, do not serve in such
capacity. Consequently, it is not the duty of the Committee to
conduct audits or to determine that the Company’s financial
statements and disclosures are complete and accurate and are in
accordance with generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities of management
and the independent auditors.
Adopted: December 2, 2003
|
| |
|
|
