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Mauser Audit Committee Charter

Mauser Audit Committee Charter

FIFTH AMENDED AND RESTATED

AUDIT COMMITTEE CHARTER

OF

JOINT AUDIT COMMITTEE

OF

SCI PH PARENT INC.

SCI PH INC.

SCI PACKAGING INC.

MAUSER PACKAGING SOLUTIONS INTERMEDIATE COMPANY, INC.

MAUSER PACKAGING SOLUTIONS HOLDING COMPANY

BWAY CORPORATION

VULCAN CONTAINER SERVICES HOLDINGS INC.

AND

BOE HOLDING LLC

MAUSER PRIMARY HOLDING, LLC

MAUSER US CORPORATE, LLC

MAUSER USA, LLC

NATIONAL CONTAINER GROUP, LLC

SCI PH LLC

 

Effective September 20, 2018

 

I.          PURPOSE

 

        The purpose of the Joint Audit Committee (the “Committee”) of the Boards of Directors (collectively, the “Boards”) of SCI PH Parent Inc., SCI PH Inc., SCI PH LLC, BWAY Corporation, Mauser Packaging Solutions Holding Company, Mauser Packaging Solutions Intermediate Company, Inc., SCI Packaging Inc., BOE Holding LLC, National Container Group, LLC, Mauser Primary Holding, LLC, Mauser US Corporate, LLC, Mauser USA, LLC, and Vulcan Container Services Holdings, Inc., (collectively, the “Companies” and each a “Company”) shall be to represent and assist the Boards in fulfilling their respective legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Companies and their subsidiaries. This includes, without limitation, assisting the Boards’ oversight of:

 

  1. the accounting and financial reporting processes, including the audits of the Companies and their subsidiaries financial statements and the integrity of the financial statements;
  2. the adequacy of the Companies’ system of internal accounting and financial controls;
  3. the Companies’ compliance with ethics policies and legal and regulatory requirements;
  4. the Companies’ outside auditor’s qualifications, independence and performance; and
  5. the performance of the Companies’ internal audit function.

 

II.        MEMBERSHIP

 

        The Committee shall consist of at least one (1) member (or such other number as the Boards may determine from time to time); provided that the Committee shall, at all times, be composed as set forth in SCI PH Parent Inc.’s First Amended and Restated Securityholders Agreement, dated as of September 12, 2018, by and among SCI PH Parent Inc. and its stockholders, as may thereafter be amended in accordance with its terms. Members of the Committee must be able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement and at least one member must be an “audit committee financial expert” under Item 407(d)(5)(ii) of Regulation S-K.

 

        Each member of the Committee shall be selected and retained in compliance with all applicable rules, regulations and statutes. Committee members shall be appointed by the Boards and may be removed by the Boards at any time. Each Committee member shall serve until a successor to such member is duly elected and qualified or until such member's resignation or removal from the Boards or the Committee. The Boards shall designate the Chairman of the Committee.

 

III.       MEETINGS

 

        The Committee shall meet at least four times annually, or more frequently as circumstances dictate, either in person or telephonically, and at such times and places as the Committee determines. The Chairman of the Committee, in consultation with the other Committee members, shall determine the frequency and length of the Committee meetings and shall set meeting agendas consistent with this charter.

 

        The presence in person or by telephone of (a) a majority of the votes entitled to be cast by the authorized number of members of the Committee and (b) at least one SCI Director shall constitute a quorum for the transaction of business, and the vote of a majority of the votes entitled to be cast by the Committee members (including, if required by the organizational documents of the Companies, the affirmative vote of at least one SCI Director) present at any meeting at which there is a quorum shall be the act of the Committee, except as may be otherwise specifically provided by statute or by the Companies’ organizational documents. The term (i) “SCI Director” shall mean (x) any director who, at the time of his or her election or appointment to the Board or at any time thereafter, has been expressly designated as such by SCI in a written instrument delivered to the Companies and whose designation as such shall not have been revoked or withdrawn by SCI in a written instrument subsequently delivered to the Companies and (y) any person who is then serving as a director and is an employee or officer of SCI (and not a consultant or other independent contractor thereof); (ii) “Non-SCI Director” shall mean any director other than a SCI Director; and (iii) “SCI” means Stone Canyon Industries LLC and any successor thereto under common control.

 

        The Committee shall maintain and submit to the Board copies of minutes or reports summarizing such meetings of the Committee, and each written consent to action taken without a meeting, reflecting the actions so authorized or taken by the Committee at such meeting or by such written consent. A copy of the minutes of each meeting and each written consent shall be placed in the Companies’ minute books.

 

        Unless restricted by any applicable rule, regulation or statute, the Committee may form and delegate its authority to subcommittees or to the Chairman of the Committee when it deems appropriate and in the best interests of the Companies; provided that decisions of any such subcommittee to grant pre-approvals of audit and permitted non-audit services shall be presented to the full Committee at its next scheduled meeting.

 

        The Companies may request that any directors, officers or employees of the Companies, or other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such information as the Committee requests.

 

IV.       RESPONSIBILITIES, DUTIES AND AUTHORITY

 

To fulfill its responsibilities and duties the Committee shall, and has the authority to:

 

A.        Documents/Reports Review

 

    1. Review and reassess the adequacy of and update as needed this charter periodically, as conditions dictate. Any member of the Committee may submit proposed charter amendments to the Boards. The Boards shall circulate any proposed charter amendment(s) to members of the Committee immediately upon receipt.

       

    2. Review and discuss with management and the outside auditor, as applicable, for any of the Companies, the annual audited and quarterly unaudited financial statements and the disclosures under “Management's Discussion and Analysis of Financial Condition and Results of Operations” in any of the Companies’ periodic reports, registration statements and offering memoranda, and the independent auditor’s reports related to the financial statements.

       

    3. Review and discuss generally with management the Companies’ policies and procedures regarding public disclosure of financial information, including, but not limited to, earnings press releases and earnings guidance provided to noteholders, prospective investors, market makers affiliated with any initial purchasers, analysts and rating agencies, including, in general, the types of information to be disclosed and the types of presentations to be made.

       

    4. Review and discuss generally with management and the internal auditor the annual audit plan and the Companies’ process for establishing and maintaining adequate disclosure controls and procedures regarding compliance with reporting guidelines of the Securities and Exchange Commission, and the results of the internal audit program.

       

    5. Annually review and discuss the performance and effectiveness of the internal audit function.

       

    6. Review and discuss generally with management and the outside auditor any major issues as to the adequacy of the Companies’ internal controls, any special steps adopted in light of significant deficiencies and material weaknesses, if any, and the adequacy of disclosures about changes in internal control over financial reporting.

       

    7. Review and discuss generally with management and the outside auditor the Companies’ internal control report and outside auditor’s attestation, if any, of the report prior to the filing of the Companies’ Form 10-K.

 

B.        Outside Auditor

 

  1. Make the selection of the outside auditor, considering independence and effectiveness of the outside auditor. At least annually, consider the independence of the outside auditor, and, consistent with rules of the Public Company Accounting Oversight Board (“PCAOB”), obtain and review a report by the outside auditor describing any relationships between the outside auditor, and any of the Companies or individuals in financial reporting oversight roles at any of the Companies, that may reasonably be thought to bear on the outside auditor’s independence and discuss with the outside auditor the potential effects of any such relationships on independence.

     

  2. Be responsible for the compensation, retention, termination and oversight of the work of the outside auditor (including resolution of disagreements between management and the outside auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Companies. Such accounting firm must report directly to the Committee.

     

  3. Review the performance of the outside auditor and recommend or approve any proposed termination, replacement or other discharge of the outside auditor when circumstances warrant.

     

  4. Periodically consult with the outside auditor out of the presence of management about internal controls and procedures and the completeness and accuracy of the Companies’ financial statements.

     

  5. Review and pre-approve all auditing services, internal control-related services and permitted non-audit services (including the fees and terms thereof) to be performed for the Companies by its outside auditor, and establish policies and procedures for the pre-approval of audit and permitted non-audit services, subject to the de minimis exception for non-audit services that are approved by the Committee prior to completion of the audit.

     

  6. Review with the outside auditor for the Companies the audit report provided by the Companies’ outside auditor, which should include:

     

    1. all critical accounting policies and practices to be used;

       

    2. all alternative treatments within generally accepted accounting principles (“GAAP”) for policies and practices related to material items that have been discussed with management of the Companies, including the ramifications of using the alternative treatments and the treatment preferred by the outside auditor; and

       

    3. other material written communications between outside auditor and management such as any management letter or schedule of unadjusted differences.

     

  7. As private or public companies, Ensure that the lead (or concurring) audit partner serves in that capacity with respect to the Companies for no more than 10 or five consecutive years, respectively. For transitions of the Companies from private to public, consider the professional requirements regarding these transitions based upon the facts and circumstances at the time. Ensure that any partner other than the lead or concurring partner serves no more than seven years at the partner level on the Companies’ audits.

     

  8. Recommend to the Boards policies for the Companies’ hiring of employees or former employees of the outside auditor so as to avoid any conflict of interest under the rules and regulations set forth by the Securities and Exchange Commission or such national securities exchange or stock market on which any of the Companies’ securities may be listed.

 

C.         Financial Reporting Processes

 

  1. Oversee the accounting and financial reporting processes of the Companies and the audits of the financial statements of the Companies.

     

  2. In consultation with the outside auditor, review the integrity of the Companies’ financial reporting processes, both internal and external.

     

  3. Consider and assess the outside auditor’s judgments about the quality and appropriateness of the Companies’ accounting principles as applied in its financial reporting.

     

  4. Consider and approve material changes to the Companies’ auditing and accounting principles and practices as suggested by the outside auditor and management.

     

  5. Review with management and the outside auditor any matters required to be discussed by the outside auditor under Auditing Standard No. 1301, as adopted by the PCAOB and amended from time to time, including any problems or difficulties the outside auditor encountered in the course of its audit work and management’s response.

 

D.        Process Improvement

 

    1. Meet periodically with the Companies’ management and outside auditor in separate sessions to review the Companies’ policies with respect to major risk exposures and the steps management has taken to monitor and control such exposures, and review and discuss risks related to matters including the Companies’ financial statements and financial reporting processes, compliance, and information technology and cybersecurity.

       

    2. Obtain and review, at least annually, a report by the outside auditor describing: (1) the outside auditor’s internal quality-control procedures; and (2) any material issues raised by the most recent internal quality-control review, or peer review, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the outside auditor, and any steps taken to deal with any such issues.

       

    3. Following completion of the annual audit, review separately with each of management and the outside auditor any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

 

  1. Review any significant disagreement among management and the outside auditor in connection with the preparation of the financial statements.

     

  2. Review with the outside auditor and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented.

     

  3. Review any failures of the Companies’ financial reporting controls.

 

E.         Complaints

 

  1. Establish procedures for the receipt, retention and treatment of complaints received by the Companies regarding accounting, internal accounting controls or auditing matters.

     

  2. Establish procedures for the confidential, anonymous submission by employees of the Companies of concerns regarding questionable accounting or auditing matters.

 

F.         Ethical and Legal Compliance

 

  1. Review, with the Companies’ counsel, any legal matter that could have a significant impact on the Companies’ financial statements.

     

  2. Oversee the Companies’ compliance program with respect to legal and regulatory requirements, including the Companies’ code(s) of conduct and the Companies’ policies and procedures for monitoring compliance; and at least annually, meet to review the implementation and effectiveness of the Companies’ compliance program with management, who shall have the authority to communicate directly to the Committee, promptly, about actual and alleged violations of law or the Companies’ code(s) of conduct, including any matters involving criminal or potential criminal conduct.

     

  3. Establish and oversee procedures for handling reports of potential misconduct, including: (1) violations of law or the Companies’ code(s) of conduct; (2) complaints regarding accounting, internal accounting controls, auditing and federal securities law matters; and (3) the confidential, anonymous submission of concerns by employees regarding accounting, internal accounting controls, auditing and federal securities law matters.

     

  4. Establish and periodically review policies and procedures for the review, approval and ratification of related person transactions, as defined in applicable Securities and Exchange Commission rules, review related person transactions, and oversee other related party transactions governed by applicable accounting standards.

 

G.        Engage Advisors

 

  1. Engage such independent counsel, accountants, experts and other advisors as the Committee deems appropriate to assist it in the performance of its functions and receive appropriate funding, as determined by the Committee, from the Companies for payment of compensation to any such advisors and for the payment of ordinary administrative expenses that are necessary or appropriate in carrying out the Committee’s duties.

 

H.        Funding

 

  1. Determine the appropriate funding needed by the Committee for payment of:

     

    1. compensation to any registered public accounting firm engaged for the purposes of preparing or issuing an audit report or performing other audit, review or attest services for any of the Companies;

       

    2. compensation to any independent counsel and other advisors employed by the Committee as it deems necessary to carry out its duties; and

       

    3. ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

 

I.          Other

 

  1. Do every other act incidental to, arising out of or in connection with, the authority granted to the Committee hereby or the carrying out of the Committee’s duties and responsibilities hereunder.

 

V.        LIMITATION OF COMMITTEE’S ROLE

 

        While the Committee has the authority, powers and responsibilities set forth in this charter, it is not the duty of the Committee to (i) plan or conduct audits, (ii) determine that any of the Companies’ financial statements and disclosures are complete and accurate and are in accordance with GAAP and applicable legal, accounting and other requirements and (iii) determine that the Companies’ disclosure controls and procedures and internal controls over financial reporting are effective. These are the responsibilities of the Companies’ management and the outside auditor.