**Exhibit 3.4**

 

**FORM OF CHARTER OF THE AUDIT COMMITTEE**

**OF THE BOARD OF DIRECTORS**

**OF METALS USA, INC.**

 

ThisCharter identifies the purpose, composition, meeting requirements, committeeresponsibilities, annual evaluation procedures and investigations and studiesof the Audit Committee (the “***Committee***”)of the Board of Directors (the “***Board***”) ofMetals USA, Inc., a Delaware corporation (the “***Company***”).

 

**I.**                                         PURPOSE

 

The Committee has beenestablished to: (a) assist the Board in its oversight responsibilities regarding(1) the integrity of the Company’s financial statements, (2) the Company’scompliance with legal and regulatory requirements, (3) the independentaccountant’s qualifications and independence and (4) the performance of theCompany’s internal audit function; (b) prepare the report required by theUnited States Securities and Exchange Commission (the “***SEC***”)for inclusion in the Company’s annual proxy statement; (c) retain and terminatethe Company’s independent accountant; (d) approve audit and non-audit servicesto be performed by the independent accountant; and (e) perform such otherfunctions as the Board may from time to time assign to the Committee.  In performing its duties, the Committee shallseek to maintain an effective working relationship with the Board, the independent accountant, theinternal auditors and management of the Company.

 

**II.**                                     COMPOSITION

 

The Committee shall becomposed of at least three, but not more than five, members (including aChairperson), all of whom shall be “independent directors,” as such term isdefined in the rules and regulations of the SEC and the Nasdaq.  The members of the Committee and theChairperson shall be selected annually by the Board and serve at the pleasureof the Board.  A Committee member(including the Chairperson) may be removed at any time, with or without cause,by the Board.  The Board may designateone or more independent directors as alternate members of the Committee, whomay replace any absent or disqualified member or members at any meetings of theCommittee.  No person may be made amember of the Committee if his or her service on the Committee would violateany restriction on service imposed by any rule or regulation of the SEC or anysecurities exchange or market on which shares of the common stock of theCompany are traded.  Each member of theCommittee shall be able to read and understand fundamental financialstatements, including the Company’s balance sheet, income statement, and cashflow statement.  At least one (1) memberof the Committee must have past employment experience in finance or accounting,requisite professional certification in accounting or any other comparableexperience or background that results in the member’s financial sophistication,including being or having been a chief executive officer, chief financialofficer or other senior officer with financial oversight responsibilities. Noperson that shall have participated in the preparation of the financialstatements of the Company or any current subsidiary of the Company at any timeduring the past three years may be a member of the Committee. Committee members

 

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mayenhance their familiarity with finance and accounting by participating ineducational programs conducted by the Company or an outside consultant.  The Chairperson shall maintain regularcommunication with the chief executive officer, chief financial officer, thelead partner of the independent accountant and the manager of the internalaudit.  Except for Board and Committeefees, a member of the Committee shall not be permitted to accept any fees paiddirectly or indirectly for services as a consultant, legal advisor or financialadvisor or any other fees prohibited by the rules of the SEC and the**Nasdaq.  In addition,no member of the Committee may be an affiliated person(1) of the Company or anyof its subsidiaries.  Members of theCommittee may receive their Board and Committee fees in cash, Company stock oroptions or other in-kind consideration as determined by the Board or the CompensationCommittee, as applicable, in addition to all other benefits that otherdirectors of the Company receive.  Nodirector may serve on the Committee, without the approval of the Board, if suchdirector simultaneously serves on the audit committee of more than three publiccompanies.

 

**III.**                                 MEETING REQUIREMENTS

 

The Committee shall meet as necessary, but at leastfour times each year, to enable it to fulfill its responsibilities.  The Committee shall meet at the call of itsChairperson, preferably in conjunction with regular Board meetings.  The Committee may meet by telephoneconference call or by any other means permitted by law or the Company’sBylaws.  A majority of the members of theCommittee shall constitute a quorum.  TheCommittee shall act on the affirmative vote of a majority of members present ata meeting at which a quorum is present. Without a meeting, the Committee may act by unanimous written consent ofall members.  The Committee shall determineits own rules and procedures, including designation of a chairperson protempore, in the absence of the Chairperson, and designation of asecretary.  The secretary need not be amember of the Committee and shall attend Committee meetings and prepareminutes.  The Committee shall keepwritten minutes of its meetings, which shall be recorded or filed with thebooks and records of the Company.  Anymember of the Board shall be provided with copies of such Committee minutes ifrequested.

 

The Committee may ask members of management,employees, outside counsel, the independent accountant or others whose adviceand counsel are relevant to the issues then being considered by the Committee,to attend any meetings and to provide such pertinent information as theCommittee may request.

 

The Chairperson of theCommittee shall be responsible for leadership of the Committee, includingpreparing the agenda, presiding over Committee meetings, making Committeeassignments and reporting the Committee’s actions to the Board from time totime (but at least once each year) as requested by the Board.

 

Aspart of its responsibility to foster free and open communication, the Committeeshould meet periodically with management, the internal auditors and theindependent accountant in

 

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(1)   The term “affiliated person” is not definedby the Sarbanes-Oxley Act or in the rules of the NYSE or Nasdaq.  As some guidance, Rule 12b-2 under theSecurities Exchange Act of 1934 defines an “affiliate” of, or a person “affiliated”with, a specified person as a person that “directly, or indirectly through oneor more intermediaries, controls, or is controlled by, or is under commoncontrol with, the person specified.”

 

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separateexecutive sessions to discuss any matters that the Committee or any of thesegroups believe should be discussed privately. In addition, the Committee should meet with the independent accountantand management quarterly to review the Company’s financial statements prior totheir public release consistent with the provisions set forth below in Section IV.  The Committee may also meet from time to timewith the Company’s investment bankers, investor relations professionals andfinancial analysts who follow the Company.

 

**IV.**                                COMMITTEE RESPONSIBILITIES

 

In carrying out itsresponsibilities, the Committee’s policies and procedures should remainflexible to enable the Committee to react to changes in circumstances andconditions so as to ensure the Company remains in compliance with applicablelegal and regulatory requirements.  Inaddition to such other duties as the Board may from time to time assign, theCommittee shall have the following responsibilities:

 

A.           Oversight of the Financial ReportingProcesses

 

1.                                       In consultation with the independentaccountant and the internal auditors, review the integrity of the organization’sfinancial reporting processes, both internal and external.

 

2.                                       Review and approve all related-partytransactions.

 

3.                                       Consider the independent accountant’sjudgments about the quality and appropriateness of the Company’s accountingprinciples as applied in its financial reporting.  Consider alternative accounting principlesand estimates.

 

4.                                       Annually review major issues regarding theCompany’s auditing and accounting principles and practices and its presentationof financial statements, including any significant changes in theCompany’s selection or application of accounting principles and the adequacy of internal controls andspecial audit steps adopted in light of material internal control deficiencies.

 

5.                                       Discuss with management and legal counsel thestatus of pending litigation, taxation matters, compliance policies and otherareas of oversight applicable to the legal and compliance area as may beappropriate.

 

6.                                       Meet at least annually with the chieffinancial officer, the internal auditors and the independent accountant inseparate executive sessions.

 

7.                                       Review all analyst reports and press articlesabout the Company’s accounting and disclosure practices and principles.

 

8.                                       Review all analyses prepared by managementand the independent accountant of significant financial reporting issues andjudgments made in connection with the preparation of the Company’s financialstatements, including any analysis of the

 

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effectof alternative generally accepted accounting principle (“GAAP”) methods on theCompany’s financial statements and a description of any transactions as towhich management obtained Statement on Auditing Standards No. 50 letters.(2)

 

9.                                       Review with management and the independentaccountant the effect of regulatory and accounting initiatives on the Company’sfinancial statements.

 

10.                                 Review with management and the independentaccountant (a) all off-balance sheet transactions, obligations(including contingent obligations) and other relationships with unconsolidatedentities or other persons that may have a current or future effect on theCompany’s financial condition, results of operation, liquidity, capitalexpenditures or significant components of revenues or expenses; and (b) theCompany’s use of pro forma financial information, including any informationrequired to reconcile such information with financial information prepared inaccordance with GAAP.

 

B.             Review of Documents and Reports

 

1.                                       Review and discuss with management and theindependent accountant the Company’s annual audited financial statements andquarterly financial statements (including disclosures under the section entitled“Management’s Discussion and Analysis of Financial Condition and Results of Operation”)and any reports or other financial information submitted to any governmentalbody, or the public, including any certification, report, opinion or reviewrendered by the independent accountant, considering, as appropriate, whetherthe information contained in these documents is consistent with the informationcontained in the financial statements and whether the independent accountantand legal counsel are satisfied with the disclosure and content of suchdocuments.  These discussions shallinclude consideration of the quality of the Company’s accounting principles asapplied in its financial reporting, including review of audit adjustments(whether or not recorded) and any such other inquires as may beappropriate.  Based on the review, theCommittee shall make its recommendation to the Board as to the inclusion of theCompany’s audited consolidated financial statements in the Company’s annualreport on Form 10-K.

 

2.                                       Review and discuss with management and theindependent accountant earnings press releases, as well as financialinformation and earnings guidance provided to analysts and ratingagencies.  The Committee need not discussin advance each earnings release but should generally discuss the types of informationto be disclosed and the type of presentation to be made in any earnings releaseor guidance.

 

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(2)           SAS No. 50 providesperformance and reporting standards for written reports from accountants withrespect to the application of accounting principles to new transactions andfinancial products or regarding specific financial reporting issues.

 

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3.                                       Review the regular internal reports tomanagement prepared by the internal auditors and management’s response thereto.

 

4.                                       Review reports from management, the internalauditors and the independent accountant on the Company’s subsidiaries andaffiliates, compliance with the Company’s code(s) of conduct, applicable lawand insider and related party transactions.

 

5.                                       Review with management and the independentaccountant any correspondence with regulators or government agencies and anyemployee complaints or published reports that raise material issues regardingthe Company’s financial statements or accounting policies.

 

6.                                       Prepare the report required by the rules ofthe SEC to be included in the Company’s annual proxy statement.

 

7.                                       Submit the minutes of all meetings of theCommittee to, or discuss the matters discussed at each Committee meeting with,the Board.

 

8.                                       Review any restatements of financial statementsthat have occurred or were recommended. Review the restatements made by other clients of the independentaccountant.

 

C.             Independent Accountant Matters

 

1.                                       The Committee shall have soleresponsibility for the appointment, retention, oversight, termination andreplacement of the Company’s independent accountant and for the approval of the engagement fees and other compensation tobe paid to the independent accountant. No audit services or non-auditservices shall be provided to the Company by the Company’s independentaccountant unless first pre-approved by the Committee and unless permitted byapplicable securities laws and the rules and regulations of the SEC.

 

2.                                       On an annual basis, the Committee shallevaluate the independent accountant’s qualifications, performance andindependence.  To assist in thisundertaking, the Committee shall require the independent accountant to submit areport (which report shall be reviewed by the Committee) describing (a) the independentaccountant’s internal quality-control procedures, (b) any material issuesraised by the most recent internal quality-control review, or peer review, ofthe accounting firm or by any inquiry or investigations by governmental orprofessional authorities (within the preceding five years) respecting one ormore independent audits carried out by the independent accountant, and anysteps taken to deal with any such issues and (c) all relationships theindependent accountant has with the Company and relevant third parties todetermine the independent accountant’s independence.  In making its determination, the Committeeshall consider not only auditing and other traditional accounting functionsperformed by the

 

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independentaccountant, but also consulting, legal, information technology services andother professional services rendered by the independent accountant and itsaffiliates.  The Committee shall alsoconsider whether the provision of any of these non-audit services is compatiblewith the independence standards under the guidelines of the SEC and of theIndependence Standards Board and shall approve in advance any non-auditservices to be provided by the independent accountant.

 

3.                                       Review on an annual basis the experience andqualifications of the senior members of the audit team.  Discuss the knowledge and experience of theindependent accountant and the senior members of the audit team with respect tothe Company’s industry.  The Committeeshall ensure the regular rotation of the lead audit partner and audit reviewpartner as required by law and consider whether there should be a periodicrotation of the Company’s independent accountant.

 

4.                                       Review the performance of the independentaccountant and terminate the independent accountant when circumstances warrant.

 

5.                                       Establish and periodically review hiringpolicies for employees or former employees of the independent accountant.

 

6.                                       Review with the independent accountant anyproblems or difficulties the auditor may have encountered and any “management”or “internal control” letter provided by the independent accountant and theCompany’s response to that letter.  Suchreview should include:

 

(a)  any difficulties encountered in the course ofthe audit work, including any restrictions on the scope of activities or accessto required information and any disagreements with management;

 

(b)  any accounting adjustments that were proposedby the independent accountant that were not agreed to by the Company;

 

(c)communications between the independent accountant and its national officeregarding any issues on which it was consulted by the audit team and matters ofaudit quality and consistency;

 

(d)  any changes required in the planned scope ofthe internal audit; and

 

(e)  the responsibilities, budget and staffing ofthe Company’s internal audit function.

 

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7.                                       Communicate with the independent accountantregarding (a) alternative treatments of financial information within theparameters of GAAP, (b) critical accounting policies and practices to be usedin preparing the audit report and (c) such other matters as the SEC and theNasdaq may direct by rule or regulation.

 

8.                                       Periodically consult with the independentaccountant out of the presence of management about internal controls and thefullness and accuracy of the organization’s financial statements.

 

9.                                       Oversee the independent accountantrelationship by discussing with the independent accountant the nature and rigorof the audit process, receiving and reviewing audit reports and ensuring thatthe independent accountant has full access to the Committee (and the Board) toreport on any and all appropriate matters.

 

10.                                 Discuss with the independent accountant priorto the audit the general planning and staffing of the audit.

 

11.                                 Obtain a representation from the independentaccountant that Section 10A of the Securities Exchange Act of 1934 hasbeen followed.

 

12.                                 TheCompany’s independent accountant shall report directly to the Committee andshall be ultimately accountable to the Committee.

 

13.                                 Periodically inquireof management and the independent accountant as to any disagreements that mayhave occurred between them relating to the Company’s financial statements ordisclosures.  The Committee shall havesole responsibility for the resolution of any disagreements between managementand the independent accountant regarding financial reporting.

 

D.            Internal Audit Control Matters

 

1.                                       Discuss with management policies with respectto risk assessment and risk management. Although it is management’s duty to assess and manage the Company’sexposure to risk, the Committee should discuss guidelines and policies togovern the process by which risk assessment and management is handled andreview the steps management has taken to monitor and control the Company’s riskexposure.

 

2.                                       Establish regular and separate systems ofreporting to the Committee by each of management, the independent accountantand the internal auditors regarding any significant judgments made in management’spreparation of the financial statements and the view of each as toappropriateness of such judgments.

 

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3.                                       Following completion of the annual audit,review separately with each of management, the independent accountant and theinternal auditors any significant difficulties encountered during the course ofthe audit, including any restrictions on the scope of work or access torequired information.

 

4.                                       Review with the independent accountant, the internalauditors and management the extent to which changes or improvements infinancial or accounting practices have been implemented.  This review should be conducted at anappropriate time subsequent to implementation of changes or improvements, asdecided by the Committee.

 

5.                                       Advise the Board about the Company’s policiesand procedures for compliance with applicable laws and regulations and theCompany’s code(s) of conduct.

 

6.                                       Establishprocedures for (a) the receipt, retention, investigation and resolution ofcomplaints received by the Company regarding accounting, internal accountingcontrols or auditing matters; and (b) the confidential anonymous submission bythe Company’s employees of concerns regarding questionable accounting orauditing matters.

 

7.                                       Periodically discuss with the chief executiveofficer and chief financial officer (a) significant deficiencies in the designor operation of the internal controls that could adversely affect the Company’sability to record, process, summarize and report financial data and (b) anyfraud that involves management or other employees who have a significant rolein the Company’s internal controls.

 

8.                                       Ensure that no officer, director or anyperson acting under their direction fraudulently influences, coerces,manipulates or misleads the independent accountant for purposes of renderingthe Company’s financial statements materially misleading.

 

9.                                       Obtainannually from the Company’s independent accountant a written report in whichthe independent accountant attests to and reports on the assessment of theCompany’s internal controls made by the Company’s management.

 

E.              Evaluation of Internal Auditors

 

1.                                       Review activities, organizational structureand qualifications of the internal auditors.

 

2.                                       Review and concur in the appointment,replacement, reassignment or dismissal of the manager of internal auditing.

 

3.                                       Consider and review with management and themanager of internal auditing:

 

(a)  significant findings during the year andmanagement’s responses thereto;

 

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(b)  any difficulties encountered in the course ofinternal audits, including any restrictions on the scope of the internalauditors’ work or access to required information;

 

(c)  any changes required in the planned scope ofthe internal auditors’ audit plan;

 

(d)  the internal auditors’ budget and staffing;and

 

(e)  The internal auditors’ compliance with TheInstitute of Internal Auditors’ Standards for the Professional Practice ofInternal Auditing.

 

Whilethe Committee has the responsibilities and powers set forth in this Charter, itis not the duty of the Committee to plan or conduct audits or to determine thatthe Company’s financial statements are complete and accurate and are inaccordance with generally accepted accounting principles.  This is the responsibility of management andthe independent accountant.

 

**V.**                                    ANNUAL EVALUATION PROCEDURES

 

TheCommittee shall annually assess its performance to confirm that it is meetingits responsibilities under this Charter. In this review, the Committee shall consider, among other things, (a)the appropriateness of the scope and content of this Charter, (b) theappropriateness of matters presented for information and approval, (c) thesufficiency of time for consideration of agenda items, (d) frequency and lengthof meetings and (e) the quality of written materials and presentations.  The Committee may recommend to the Board suchchanges to this Charter as the Committee deems appropriate.

 

**VI.**                                INVESTIGATIONS AND STUDIES

 

TheCommittee shall have the authority and sufficient funding to retain speciallegal, accounting or other consultants (without seeking Board approval) toadvise the Committee.  The Committee mayconduct or authorize investigations into or studies of matters within the Committee’sscope of responsibilities as described herein, and may retain, at the expenseof the Company, independent counsel or other consultants necessary to assistthe Committee in any such investigations or studies.  The Committee shall have soleauthority to negotiate and approve the fees and retention terms of suchindependent counsel or other consultants.

 

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**VII.**                            MISCELLANEOUS

 

Nothing contained in this Charter is intended to expandapplicable standards of liability under statutory or regulatory requirementsfor the directors of the Company or members of the Committee.  The purposes and responsibilities outlined inthis Charter are meant to serve as guidelines rather than as inflexible rulesand the Committee is encouraged to adopt such additional procedures andstandards 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 shallbe made available to any shareholder of the Company who requests it.

 

Adoptedby the Audit Committee on November 12, 2002

andapproved by the Board of Directors on November 26, 2002.

 

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