Document:

exv10w2

 

Trench Electric BV

Remuneration Committee Charter

Purpose

The Remuneration Committee is appointed by the Board of Directors to discharge
the Board’s responsibilities relating to compensation of the Company’s
executives.

Committee Membership

The Committee will be composed of at least 2 directors. All Committee members
shall be “non-employee directors”. The Committee members will be appointed by
the Board and may be removed by the Board in its discretion. The Committee
shall have the authority to delegate any of its responsibilities to
sub-committees as the Committee may deem appropriate.

Meetings

The Committee shall meet as often as its members deem necessary to perform the
Committee’s responsibilities.

Committee Authority and Responsibilities

The Committee will have the authority, to the extent it deems necessary or
appropriate, to retain a compensation consultant to assist in the evaluation of
director, Chief Executive Officer (CEO) or senior executive compensation. The
Committee shall have sole authority to retain and terminate any such consulting
firm, including sole authority to approve the firm’s fees and other retention
terms. The Committee shall also have authority, to the extent it deems
necessary or appropriate, to retain other advisors. The Company will provide
for appropriate funding, as determined by the Committee, for payment of
compensation to any consulting firm or other advisors employed by the
Committee.

The Committee will propose any necessary action to the Board. The Committee
will review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval.

The Committee, to the extent it deems necessary or appropriate, will:

	•	 	Review and approve the Company’s goals and objectives relevant to CEO compensation,
evaluate the CEO’s performance in light of those goals and objectives, and have sole
authority to determine the CEO’s compensation level based on this evaluation.

	•	 	Consider the Company’s performance and relative shareholder return, the value of similar
incentive awards to CEOs at comparable companies, and the awards given to the Company’s CEO
in past years when determining the long-term component of the CEO’s compensation.

	•	 	Make recommendations to the Board with respect to non-CEO compensation,
incentive-compensation plans and equity-based plans.

	•	 	Produce an annual report on executive compensation.

23 March 2004exv10w3

 

TRENCH ELECTRIC B.V.

CHARTER OF THE AUDIT COMMITTEE

Organisation

     The Audit Committee shall have at least two but no more than five members.
In addition, the Audit Committee shall contain at least one member considered
to be an “audit committee financial expert” in accordance with the rules issues
by the SEC further to section 407 of the Sarbanes-Oxley Act of 2002.

     The members of the Audit Committee shall be recommended and appointed by
the board. Members shall serve for one-year terms unless reappointed.

     The Audit Committee shall meet at least four times each year, or more
frequently as circumstances dictate. In order to foster open communication,
the Audit Committee should meet at least annually with management and the
independent auditor in separate sessions to discuss any matters that the Audit
Committee or either of these groups believe should be discussed privately.
Meetings may be held in person or by telephone.

     The Audit Committee shall keep a separate book of minutes of its
proceedings and actions. The Audit Committee shall meet periodically, as
deemed necessary by the Chairman of the Audit Committee. All meetings shall be
at the call of the Chairman of the Audit Committee. The Audit Committee shall
elect a Secretary who shall give notice personally or by mail, telephone,
facsimile or electronically to each member of the Audit Committee of all
meetings, not later than 12 noon of the day before the meeting, unless all
members of the Audit Committee waive notice thereof in writing at or before the
meeting, in which case the meeting may be held without the aforesaid advance
notice. A majority of the members of the Audit Committee shall constitute a
quorum for the transaction of business.

Purpose

     The Audit Committee’s primary duties and responsibilities shall be:

	 	•	 	To monitor the integrity of the Company’s financial
reporting process and systems of internal controls regarding
finance, accounting and legal compliance.

	 	•	 	To monitor the independence and performance of the
Company’s independent auditors.

	 	•	 	To hire and fire the Company’s auditor and approve any
non-audit work performed by the Company’s Auditors.

	 	•	 	To provide an avenue of communication among the
independent auditors, management and the board.

	 	•	 	To establish procedures for receiving complaints
regarding accounting and auditing matters.

 

 

     The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit
Committee has the authority and ability to retain, at the Company’s expense,
special legal, accounting or other consultants or experts it deems necessary to
perform 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 and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is
it the duty of the Audit Committee to conduct general investigations, to
resolve disagreements, if any, between management and the independent auditor
or to assure compliance with laws and regulations and the Company’s compliance
policies.

Responsibilities And Duties

     To fulfill its responsibilities and duties, the Audit Committee shall:

Review Procedures

	(i)	 	Review and reassess the adequacy of this Charter at least
annually. Submit the Charter to the board for approval.
	 
	(ii)	 	Review the Company’s annual audited financial statements and
quarterly financial statements prior to submission to the SEC or
distribution to bondholders. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices and judgments, including the
Company’s disclosures under “Operating and Financial Review and
Prospects.” Discuss any significant changes to the Company’s
accounting principles and any items required to be communicated by
the independent auditors in accordance with Statement on Auditing
Standards No. 61 (“SAS No. 61”).

Independent Auditors

	(iii)	 	Appoint or replace the independent auditor, and approve all
audit engagement fees and terms (including providing comfort letters
in connection with securities underwritings) and all non-audit
engagements with the independent auditors. The Audit Committee may
consult with management but shall not delegate these
responsibilities. The Audit Committee must ensure the rotation of
the lead audit partner as required by law and consider whether to
rotate the audit firm itself.
	 
	(iv)	 	On an annual basis, review and discuss with the independent
auditors all significant relationships they have with the Company
that could impair the auditor’s independence. The Company’s
independent auditors may not perform the following services for the
Company:

	 	•	 	accounting or bookkeeping services;

 

 

	 	•	 	internal audit services related to accounting controls,
financial systems or financial statements;

	 	•	 	financial information systems design implementation;

	 	•	 	broker, dealer, investment banking or investment adviser services;

	 	•	 	appraisal or valuation services;

	 	•	 	actuarial services;

	 	•	 	management services or human resources; and

	 	•	 	legal or other expert services.

	(v)	 	Review the independent auditor’s audit plan. Discuss scope,
staffing, locations, reliance upon management and general audit
approach.

	1.	 	Recommend to the board policies for the Company’s hiring of employees or
former employees of the independent auditor who were engaged on the
Company’s audit (should the situation arise).
	 
	2.	 	Obtain and review a report by the independent auditor describing the
auditor’s internal quality-control procedures and all material issues
raised by the most recent internal quality-control review or by any
inquiry or investigation by governmental or professional authorities
within the preceding five years relating to an independent audit carried
out by the firm, and all steps to deal with such issues.
	 
	 	 	Financial Reporting Process

	(i)	 	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.
	 
	(ii)	 	Consider the independent auditor’s judgments about the
quality (not just the acceptability) and appropriateness of the
Company’s accounting principles as applied to the Company. Inquire
as to the independent auditor’s 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 minority practices.
	 
	(iii)	 	In consultation with management 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,
including the Company’s risk assessment and risk management
policies. Review significant findings prepared by the independent
auditors together with management’s responses, including the status
of previous recommendations.
	 
	(iv)	 	Review (a) the accounting treatment accorded significant
transactions, (b) any significant accounting issues, including any
second opinions sought by management on accounting issues, (c) the
development, selection and disclosure of critical accounting
estimates and analyses of the effects of alternative GAAP methods,
regulatory and accounting initiatives, and off-balance sheet
structures on the financial statements of the Company and (d) the
Company’s use of reserves and accruals, as reported by management
and the independent auditor.

Internal Controls and Legal Compliance

	(v)	 	Review the activities, organizational structure and
qualifications of the Group Finance Function (“the controller’s
office”) as needed. Review significant reports prepared by the
Group Finance Function (“the controller’s office”) together with
management’s response and follow-up to these reports.
	 
	(vi)	 	Review the appointment and replacement of the senior
personnel responsible for financial reporting.
	 
	(vii)	 	Evaluate whether management is setting the appropriate tone
at the top by communicating the importance of internal controls and
ensuring that all personnel possess an understanding of their roles
and responsibilities.
	 
	(viii)	 	Consider and review with management and the independent auditors
the effectiveness or weakness of the Company’s internal controls.
Develop in consultation with management a timetable for implementing
any recommendations to correct identified weaknesses.

	3.	 	Review management’s monitoring of the Company’s compliance with laws and
the Company’s Code of Ethics and ensure the management has 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.
	 
	4.	 	Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounts
controls and auditing matters and for the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
	 
	5.	 	Obtain from the independent auditor assurance that Section 10A (audit
requirements) of the Securities Exchange Act of 1934 has not been
implicated.
	 
	6.	 	Request and receive reports on the design and implementation of internal
controls. Monitor significant changes in internal controls and address
any weaknesses.

 

 

Miscellaneous

	(ix)	 	The Audit Committee shall perform any other activities
consistent with this Charter and governing law, as the Audit
Committee deems appropriate or necessary.

     Adopted 4th February 2003

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