Exhibit
10.22


 


EARLE M. JORGENSEN COMPANY


AUDIT COMMITTEE CHARTER


 


A.                                    Purpose


 


The Audit
Committee (the “Committee”) shall provide assistance to the members of
the Board of Directors (the “Board of Directors” or the “Board”)
of Earle M. Jorgensen Company (the “Company”) in fulfilling their
oversight functions. In so doing, it shall be the goal of the Committee to
maintain free and open means of communication between the members of the Board,
the Company’s internal auditors, the Company’s independent public accountants
who audit the Company’s financial statements (the “Auditors”), and the
Company’s financial management.


 


The functions of the Committee are enumerated in
section C of this Charter.


 


While the Committee has the functions set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company’s financial statements are complete and accurate
or are in accordance with generally accepted accounting principles.  The responsibility to plan and conduct audits
is that of the Auditors.  The Company’s
management has the responsibility to determine that the Company’s financial
statements are complete and accurate and in accordance with generally accepted
accounting principles.  It is also not
the duty of the Committee to assure the Company’s compliance with laws and
regulations.  The primary responsibility
for these matters rests with the Company’s management.


 


In its oversight capacity, the Committee is neither
intended nor equipped to guarantee with certainty to the full Board and
stockholders the accuracy and quality of the Company’s financial statements and
accounting practices.  The Committee can
do no more than rely upon information it receives, questions and assesses in
fulfilling its functions.


 


B.                                    Composition


 


The Committee shall have at least three (3)
members.  The Committee shall be
composed solely of directors who are independent of the management of the
Company and are free of any relationship that, in the opinion of the Board, may
interfere with their exercise of independent judgment as a Committee
member.  Committee members and the
Committee Chairman shall be designated by the full Board of Directors upon the
recommendation of the Chairman of the Board.


 


All members of the Committee must be financially
literate and at least one member must satisfy the requirements of a “financial
expert” under the Sarbanes-Oxley Act, in each case in the judgment of the
Board.


 


Other directors may attend and participate as
nonvoting members at any meeting of the Committee, subject to exclusion at the
request of the Chairman if matters sensitive to conflicts of interest or
independence are to be discussed.


 


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C.                                    Functions


 


The Committee’s oversight functions may be divided
into the following general categories: 
(1) assessing internal controls system established by management, (2)
overseeing financial reporting and (3) evaluating independent audit processes.
The Committee shall:


 


1.                                      Internal Controls
Processes


 


a.                                       Assist
the Board of Directors of the Company in fulfilling its oversight functions
with respect to the quality, integrity and annual independent audit of the
Company’s annual financial statements.


 


b.                                      Review
periodically the Company’s procedures for assuring compliance with laws and
regulations throughout the Company.


 


c.                                       Review
this Charter at least annually or as conditions dictate.


 


d.                                      Perform
such other functions as assigned by law, the Company’s certificate of
incorporation or bylaws, or the Board of Directors.


 


e.                                       Review
periodically with management the status of pending litigation, taxation matters
and other areas of oversight of compliance with applicable laws and regulations
as may be appropriate.


 


f.                                         Review
periodically policies and procedures covering officers’ expense accounts,
perquisites and the use of corporate assets and discuss the results of such
review with the Auditors.


 


g.                                      The
Committee shall have the authority to investigate any matter brought to its
attention and to retain outside counsel for this purpose if it believes it to
be appropriate.


 


h.                                      Review
with the Auditors and the internal auditors the adequacy of the Company’s
system of internal controls and disclosure controls and procedures, including
computerized information system controls and security, and any related
significant findings and recommendations of the Auditors and the internal
auditors, together with management’s responses thereto.


 


i.                                          Approve
and periodically review the Company’s compliance with its Code of Ethics for
Senior Financial Officers and Chief Executive Officer and monitor compliance
with the Code of Ethics.


 


j.                                          Establish
procedures for (a) the receipt, retention, and treatment of complaints received
by the Company regarding accounting, internal accounting controls, or auditing
matters, and (b) the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing matters.


 


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2.                                      Reporting Process


 


a.                                       Review
with management and the Auditors the Company’s annual financial statements to
be included in the Company’s Annual Report on Form 10-K prior to filing with
the Securities and Exchange Commission (“SEC”).


 


b.                                      Review
with management and the Auditors the Company’s interim financial statements to
be included in the Company’s Quarterly Reports on Form 10-Q prior to filing
with the SEC. The Chairman of the Committee may represent the entire Committee
for the purposes of this review.


 


c.                                       Review
the earnings releases with management and the Auditors prior to release.  The Chairman of the Committee may represent
the entire Committee for purposes of this review.


 


d.                                      Discuss
with the Auditors their judgments about the quality, not just the
acceptability, of the Company’s accounting principles and financial disclosure
practices used or proposed and the appropriateness of significant management
judgments.


 


e.                                       Discuss
with management and the Auditors the effect of regulatory and accounting
initiatives as well as off-balance sheet structures on the Company’s financial
statements.


 


f.                                         Review
periodically with management and approve transactions involving management
and/or members of the Board, which would require disclosure under SEC rules.


 


g.                                      Report
periodically on Committee activities to the full Board and based upon
discussions with, and reliance upon, management and the Auditors, issue annual
summary report (including appropriate oversight conclusions) suitable for
submission to the Company’s shareholders. 
In addition, the Committee will provide any other audit
committee-related disclosure, in filings with the Securities and Exchange
Commission (“SEC”) or otherwise required by applicable securities laws, rules
and regulations or by the rules of any securities exchange or market on which
securities of the Company are listed or quoted.


 


3.                                      Relationship with
Independent Auditors and Internal and Independent Audit Process


 


a.                                       The
Auditors are ultimately accountable to the Board and the Committee, as
representatives of the Company’s stockholders, but shall report directly to the
Committee.  The Committee shall be
directly responsible for the appointment, replacement or termination,
compensation and oversight of the work of the Auditors (including resolution of
disagreements between management of the Company and the Auditors regarding
financial reporting) for the purpose of preparing or issuing an audit report or
related


 


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work. All auditing
services and non-audit services provided to the Company by the Auditors shall
be preapproved by the Committee in accordance with such rules or limitations
the Committee adopts.  The Committee may
delegate, subject to any rules or limitations it may deem appropriate, to one
or more designated members of the Committee the authority to grant such
preapprovals; provided, however, that the decisions of any member to whom
authority is so delegated to preapprove an activity shall be presented to the
full Committee at its next scheduled meeting. 
The Committee has delegated to the Committee Chairman the authority to
preapprove accounting/auditing/tax services involving fees less than $50,000.


 


b.                                      The
Committee shall review and discuss with the Auditors all significant
relationships the Auditors have with the company to determine the Auditors’
independence and effectiveness, and obtain and review a report from the
Auditors concerning the Auditors’ internal quality control procedures; any
material issues raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five (5) years, respecting one
or more independent audits carried out by the firm, and any steps taken to deal
with any such issues.  The Committee
shall obtain a formal written statement from the Auditors not less than
annually delineating all relationships between the Company and the Auditors and
confirming their independence, and actively engage in dialogue regarding
disclosed relationships or services, which may impact the objectivity and
independence between the Auditors and the Company.  The Committee shall also take appropriate action to ensure the
independence of the Auditors.  In
considering the independence of the Auditors, the Committee will review the
nature of the services provided by the Auditor’s firm and the fees charged, and
such other matters as the Committee deems appropriate.


 


c.                                       Review
with the Auditors and management the audit plan of the Auditors for the current
year and the following year.  Review the
experience and qualifications of the senior members of the Auditor’s team.


 


d.                                      Review
with the Auditors and financial and accounting personnel the adequacy and
effectiveness of the accounting, financial and computerized information systems
controls of the Company.


 


e.                                       Review
the performance of the Auditors and discharge the Auditors when circumstances
warrant.


 


f.                                         Discuss
with the Auditors the matters required to be discussed by Statement on Auditing
Standards No. 61 relating to the conduct of the audit.


 


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g.                                      Review
any significant disagreements between management and the Auditors in connection
with the preparation of the Company’s financial statements.


 


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


 


i.                                          Arrange
for the Auditors to be available to the full Board of Directors at least annually
to help provide a basis for the Board’s approval of the Auditor’s appointment
and provide an open avenue of communication among the Auditors, management and
the Board of Directors.


 


j.                                          Review
and approve or reject the hiring of employees or former employees of the
Auditors who participated in any capacity in audit engagement team for the
Company.


 


k.                                       Obtain
and review a report from the Auditors at least annually as to (a) all critical
accounting policies to be used, (b) all alternative treatments of financial
information within generally accepted accounting principles that have been
discussed with management of the Company, the ramifications of the use of such
alternative disclosures and treatments and the treatment preferred by the
Auditors, and (c) other material written communications between the Auditors
and management of the Company, including management letters and schedules of
unadjusted differences.


 


D.                                    Meetings


 


The Committee shall meet at least four (4) times per
year, once to review the audit plan of the internal auditors, once to review
the audit plan of the Auditors, once to review the Company’s annual audited
financial statements prior to their issuance, and once to review the post-audit
findings of the Auditors and the internal auditors.  The Committee shall meet more frequently as circumstances require
and shall hold special meetings as may be called by the Chairman of the
Committee or at the request of the Auditors, the internal auditors or
management. Members of senior management, the Auditors, the internal auditors
or others may attend meetings of the Committee at the invitation of the
Committee and shall provide pertinent information as necessary.  The Committee shall meet with the Auditors,
the internal auditors and management in separate executive sessions as needed
to discuss any matters that the Committee or these groups believe should be
discussed privately with the Committee. 
Meetings may be by telephone.


 


The Chairman of the Committee shall set the agenda of
each meeting and arrange for the distribution of the agenda, together with
supporting material, to the Committee members prior to each meeting.  Matters to be covered at meetings will be as
provided in the Audit Committee Meeting Planner attached hereto as Schedule
1.  The Chairman will also cause minutes
of each meeting to be prepared and circulated to the Committee Members.


 


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E.                                      Communication
with the Board of Directors


 


The Committee shall, after each meeting, report its
activities, findings and conclusions to the full Board of Directors.


 


March, 2003


 


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