________________________________________________________________________________
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EMPIRE RESOURCES, INC.
------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------------------------------------------
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(3) Per unit price or other underlying value of transaction computed
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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__________________________________________________________________________
(4) Date Filed:
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________________________________________________________________________________
EMPIRE RESOURCES, INC.
ONE PARKER PLAZA
FORT LEE, NEW JERSEY 07024
-------------------
NOTICE OF ANNUAL MEETING
-------------------
April 29, 2004
Dear Stockholder:
On Thursday, June 14, 2004, Empire Resources, Inc. will hold its Annual
Meeting of Stockholders at the offices of Madison Partners LLC, 477 Madison
Avenue, 14th floor, New York, NY.
The meeting will begin at 11:00 a.m. Only stockholders that own stock at the
close of business on April 16, 2004 can vote at this meeting. At the meeting we
will:
Elect a board of directors;
Ratify the appointment of our independent auditors for the year ending
December 31, 2004.
Attend to any other business properly brought before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE TWO
PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
By Order of the Board of Directors,
SANDRA KAHN
SANDRA KAHN
Vice President, Chief Financial Officer
and Secretary and Treasurer
EMPIRE RESOURCES, INC.
ONE PARKER PLAZA
FORT LEE, NEW JERSEY 07024
--------------------------
PROXY STATEMENT
--------------------------
QUESTIONS AND ANSWERS
WHO IS SOLICITING MY VOTE?
This proxy solicitation is being made and paid for by Empire Resources, Inc.
WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
This proxy statement was first mailed to stockholders on or about April 29,
2004.
WHAT MAY I VOTE ON?
The election of nominees to serve on our board of directors, and the
ratification of the appointment of our independent auditors for the year ending
December 31, 2004.
HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
The Board recommends a vote FOR each of the nominees and FOR the other proposal.
WHO IS ENTITLED TO VOTE?
Stockholders as of the close of business on April 16, 2004 (the Record Date) are
entitled to vote at the annual meeting.
HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the prepaid envelope.
If you return your signed proxy card but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR each of the two proposals. You have
the right to revoke your proxy at any time before the meeting by:
notifying the Corporate Secretary, Sandra Kahn, at the address shown above;
voting in person; or
returning a later-dated proxy card.
WHO WILL COUNT THE VOTE?
Representatives of our transfer agent, American Stock Transfer & Trust Co., will
count the votes.
IS MY VOTE CONFIDENTIAL?
Proxy cards, ballots and voting tabulations that identify individual
stockholders are mailed or returned directly to American Stock Transfer & Trust
Co., and handled in a manner that protects your voting privacy. Your vote will
not be disclosed except: (1) as needed to permit American Stock Transfer & Trust
Co. to tabulate and certify the vote; and (2) as required by law. Additionally,
all comments written on the proxy card or elsewhere will be forwarded to
management. Your identity will be kept confidential unless you ask that your
name be disclosed.
HOW MANY SHARES CAN VOTE?
As of April 16, 2004, 9,549,251 shares of Common Stock were issued and
outstanding. Every stockholder of Common Stock is entitled to one (1) vote for
each share held.
1
WHAT IS A 'QUORUM'?
A 'quorum' is a majority of the shares entitled to vote at the meeting (i.e.
4,774,626 shares). These shares must be present at the meeting either in person
or represented by proxy. If you submit a properly executed proxy card, even if
you abstain from voting, you will be considered part of the quorum. All 'broker
non-votes' will be counted in determining whether a quorum is present.
WHAT VOTE IS REQUIRED?
The affirmative vote of a majority of the shares represented and entitled to
vote at the meeting is required to elect each director (Proposal 1) and to
ratify Eisner LLP, as our independent accountants (Proposal 2).
WHO CAN ATTEND THE ANNUAL MEETING?
All stockholders as of the close of business on April 16, 2004 can attend.
Tickets are not required.
HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
We do not know of any business to be considered at the 2004 annual meeting other
than the proposals described in this proxy statement. If any other business is
presented at the annual meeting, your signed proxy card gives authority to
William Spier, our Chairman of the Board, and Nathan Kahn, our President and
Chief Executive Officer, to vote on such matters in their discretion.
WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS?
As of April 29, 2004, Nathan Kahn and Sandra Kahn beneficially owned 5,221,923
shares of Common Stock which represented 54.6% of the then outstanding Common
Stock.
WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING DUE?
All stockholder proposals to be considered for inclusion in next year's proxy
statement must be submitted in writing to Sandra Kahn, Secretary, Empire
Resources, Inc., One Parker Plaza, Fort Lee, NJ 07024 prior to February 14,
2005. All other stockholder proposals for consideration at the 2005 annual
meeting must be received by Ms. Kahn within the time period specified in our
bylaws, which generally is not less than 60 days and not more than 90 days prior
to the meeting. Because our bylaws are complex, any stockholder that wishes to
make a proposal should review our bylaws to determine when the proposal must be
received.
CAN A STOCKHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF THE COMPANY?
As a stockholder, you may recommend any person as a nominee for director by
writing to Sandra Kahn, Secretary, c/o Empire Resources, Inc., One Parker Plaza,
Fort Lee, NJ 07024. All recommendations must be received by Ms. Kahn within the
time period specified in our bylaws, which generally is not less than 60 days
and not more than 90 days prior to the meeting. Because our bylaws are complex,
any stockholder that wishes to make a recommendation should review our bylaws to
determine when the recommendation must be received. Each recommendation must be
accompanied by the name, age, residence and business address of the person being
nominated. They must include a representation that the stockholder is a record
holder of the stock or holds the stock through a broker. They must state the
number and class of shares held by the stockholder and by each person being
nominated by the stockholder. They must include information regarding each
nominee that would be required to be included in a proxy statement. They must
also include a description of any arrangement or understanding between and among
the stockholder and each and every nominee. If a stockholder should propose a
candidate, we anticipate that the Nominating Committee would evaluate that
candidate on the basis of the criteria set forth in the charter for the
Nominating Committee. Finally, the recommendations must include the written
consent of each nominee to serve as a director, if elected. For further
information, please see our bylaws.
2
PROPOSALS YOU MAY VOTE ON
PROPOSAL 1 -- ELECTION OF DIRECTORS
There are nine nominees for election this year. All of the nominees are
currently directors, and their biographical information appears below. A
majority of the nominees for election meet the standards of independence adopted
by the American Stock Exchange. All directors are elected annually, and serve a
one-year term until the next annual meeting. If any director is unable to stand
for re-election, the board of directors may reduce its size or designate a
substitute. If a substitute is designated, proxies voting on the original
director candidate will be cast for the substituted candidate. The affirmative
vote of the holders of a majority of our common stock represented and entitled
to vote at the meeting is required for the election of each director.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE
DIRECTORS.
PROPOSAL 2 -- RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS INDEPENDENT
AUDITORS.
Our audit committee has recommended, and our board of directors has
approved, the appointment of Eisner LLP as our independent auditors for the year
ending December 31, 2004, subject to your approval. Shareholder ratification of
the selection of Eisner LLP as the Company's independent auditors is not
required by the Company's by-laws or otherwise. However, the Board of Directors
is submitting the selection of Eisner LLP to the shareholders for ratification
as a matter of good corporate practice. If the shareholders fail to ratify the
selection, the Audit Committee will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee in their discretion
may direct the appointment of different independent auditors at any time during
the year if they determine that such a change would be in the best interests of
the Company and its shareholders.
A representative of Eisner LLP is expected to attend the annual meeting. He
will have the opportunity to speak at the meeting if he wishes. He will also
respond to appropriate questions.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF EISNER LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 2004.
NOMINEES FOR THE BOARD OF DIRECTORS
WILLIAM SPIER Director since October 1996
Age 69
Mr. Spier has been a director of the Company since October 1996 and was
Acting Chief Executive Officer from November 1997 until September 1999. Mr.
Spier presently serves as non-executive Chairman of the Board of the Company.
Mr. Spier has been a private investor since 1982. He also served as Chairman of
DeSoto, Inc., a manufacturer and distributor of cleaning products, from May 1991
through September 1996, and as Chief Executive Officer of DeSoto, Inc., from May
1991 to January 1994 and from September 1995 through September 1996. From 1980
to 1981, Mr. Spier was Vice Chairman of Phibro-Salomon Inc. Mr. Spier also
serves as a Director of Keystone Consolidated Industries, Inc.
NATHAN KAHN Director since September 1999
Age 49
Mr. Kahn has been the Chief Executive Officer, President and a director of
the Company since September 1999. Prior to the merger, Mr. Kahn was the
President and a director of Empire from the time of its formation in 1984. Mr.
Kahn has also been the President and a director of Empire-Pacific since its
formation in 1996.
SANDRA KAHN Director since September 1999
Age 46
Ms. Kahn has been a Vice President, the Chief Financial Officer and a
director of the Company since September 1999. Prior to the merger, Ms. Kahn was
the Secretary and Treasurer and a director of
3
Empire from the time of its formation in 1984. Ms. Kahn has also been the
Secretary and Treasurer and a director of Empire-Pacific since its formation in
1996.
HARVEY WRUBEL Director since September 2000
Age 50
Mr. Wrubel has been the Vice President of Sales/Director of Marketing of the
Company since September 1999. Prior to the merger, Mr. Wrubel was the Vice
President of Sales/Director of Marketing of Empire for more than the prior five
years. Mr. Wrubel has been a director of the Company since September 2000.
JACK BENDHEIM Director since September 1999
Age 57
Mr. Bendheim has been a director of the Company since September 1999. He has
also been the President, Chief Executive Officer, Chairman of the Board and a
director of Phillip Brothers Chemicals, Inc. for more than the prior five years.
Mr. Bendheim is also a director of The Berkshire Bank, CDG Technologies, and
Penick Corporation.
BARRY L. EISENBERG Director since September 1990
Age 57
Mr. Eisenberg has been a director of the Company since 1990 and was
Secretary and Treasurer of the Company from 1993 until September 1999. Since
1995, Mr. Eisenberg has been an active investor and director of private
companies in Israel. Prior thereto, Mr. Eisenberg was, for a period of more than
five years, a partner in the Roseland, New Jersey law firm of Lasser, Hochman,
Marcus, Guryan & Kuskin.
PETER G. HOWARD Director since September 1999
Age 68
Mr. Howard has been a director of the Company since September 1999. He has
also been the Managing Director of Empire-Pacific since 1996. From 1961 to 1995,
Mr. Howard held various positions within the aluminum industry, the most recent
of which was Divisional General Manager of Comalco Rolled Products, a unit of
Comalco Aluminum Ltd., an aluminum producer.
NATHAN MAZUREK Director since September 1999
Age 41
Mr. Mazurek has been the President of Provident Industries, a diversified
manufacturer of electrical systems and components for more than the prior five
years. Mr. Mazurek has been a director of the Company since September 1999.
MORRIS J. SMITH Director since January 1994
Age 46
Mr. Smith has been a director of the Company since January 1994. Since 1993,
Mr. Smith has been a private investor and investment consultant. Prior thereto,
Mr. Smith was employed for a period of more than five years by Fidelity
Investments as a portfolio manager.
FAMILY RELATIONSHIPS
Nathan Kahn and Sandra Kahn are husband and wife. Barry L. Eisenberg and
Jack Bendheim are brothers-in-law.
EXECUTIVE OFFICERS
Our executive officers and their ages as of April 16, 2004 are as follows:
<Table>
Nathan Kahn.................. 49 Chief Executive Officer, President and Director
Sandra Kahn.................. 46 Vice President, CFO and Director
Harvey Wrubel................ 50 Vice President of Sales and Director
</Table>
Biographical information with respect to Ms. Kahn and Messrs. Kahn and
Wrubel is set forth above in 'Nominees for the Board of Directors.'
4
STATEMENT OF CORPORATE GOVERNANCE
Our business is managed under the direction of the board of directors. The
directors delegate the conduct of business to our senior management team.
Our directors meet three or four times a year in regularly scheduled meeting
as is deemed necessary. The directors held four meetings during 2003. The
Chairman of our board of directors in consultation with the CEO usually
determines the agenda for the meetings. Each of our directors receives the
agenda and supporting information in advance of the meetings. Any of our
directors may raise other matters at the meetings. The CEO, CFO and other
members of senior management make presentations to our directors at the meetings
and a substantial portion of the meeting time is devoted to directors'
discussion of these presentations. Significant matters that require directors'
approval are voted on at the meetings.
It is our policy that all members of the Board of Directors attend the
Annual Meeting of Stockholders in person, although we recognize that directors
occasionally may be unable to attend for personal or professional reasons. We
generally hold a meeting of the Board of Directors on the same date as the
annual stockholder meeting.
Our directors have complete access to senior management. They may also seek
independent, outside advice.
Committee Structure. The board of directors considers all major decisions.
The board of directors has established four standing committees so that certain
areas can be addressed in more depth than may be possible at a full meeting of
the board of directors. Each committee is chaired by an independent, outside
director.
Audit Committee. This committee assures the credibility of our financial
reporting by providing oversight of our financial reporting process and our
internal controls. The audit committee has adopted a charter pursuant to which
it conducts its activities, a copy of which is available on the Company's
website at www.empireresources.com and attached to this proxy statement as
Appendix A. The audit committee reports on its activities to the board of
directors. During 2003 the audit committee held three meetings. The audit
committee is comprised of William Spier, Jack Bendheim and Nathan Mazurek.
Compensation Committee. This committee advises and guides the board of
directors in determining the compensation of executive officers and senior
management, and reviews our general employee compensation and benefits policies
and practices. During 2003, the compensation committee held one meeting. The
compensation committee was comprised of William Spier, Nathan Kahn and Jack
Bendheim. The compensation committee is presently comprised of William Spier and
Jack Bendheim. The Compensation Committee operates under a written charter, a
copy of which is available on the Company's website at www.empireresources.com.
Stock Options Committee. This committee consults with management regarding
the administration of our stock option plan and approves grants of options to
directors, executive officers and other employees. The committee did not meet in
2003. The stock options committee is comprised of William Spier, Jack Bendheim
and Nathan Mazurek.
Nominating Committee. The Nominating Committee is responsible for making
recommendations to the Board of Directors of persons to serve as directors of
the Company and as chairmen and members of committees of the Board of Directors.
The Nominating Committee is also responsible for certain corporate governance
practices, including the development of ethical conduct standards for our
directors, officers and employees and an annual evaluation to determine whether
the Board of Directors and its committees are functioning effectively. The
Nominating Committee operates under a written charter, a copy of which is
available on the Company's website at www.empireresources.com.
The members of the Nominating Committee are William Spier and Nathan
Mazurek, each of whom the Board of Directors has determined to be independent
under the new listing standards adopted by the American Stock Exchange. The
Nominating Committee was recently formed, and held no meetings in 2003.
The Nominating Committee expects to identify nominees to serve as directors
of the Company primarily by accepting and considering the suggestions and
nominee recommendations made by
5
directors, management and stockholders. To date, our Nominating Committee has
not engaged any third parties to assist it in identifying candidates for the
Board of Directors. The Nominating Committee has not established specific
minimum qualifications for recommended nominees. However, as a matter of
practice, the Nominating Committee evaluates recommended nominees for directors
based on their integrity, judgment, independence, financial and business acumen,
relevant experience, and their ability to represent and act on behalf of all
stockholders, as well as the needs of the Board of Directors. In general, the
Nominating Committee would expect to re-nominate incumbent directors who express
an interest in continuing to serve on the Board.
Audit Committee Report
The following report is not deemed to be part of a document filed with the
SEC pursuant to the Securities Act of 1933, as amended (the 'Securities Act'),
or the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and is
not to be deemed incorporated by reference in any documents filed under the
Securities Act or Exchange Act, without the express consent of the persons named
below.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and expressing an opinion on the conformity of those audited
financial statements in accordance with accounting principles generally accepted
in the United States. The Audit Committee's responsibility is to monitor and
oversee these processes. The Audit Committee is also directly responsible for
the appointment, compensation and oversight of the Company's independent
auditors. The responsibilities of the Audit Committee are set forth in its
written charter, as adopted by the board of directors.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and rely, without independent verification,
on the information provided to them and on the representations made to them by
management and the independent accountants. Each of the members of the Audit
Committee was considered independent for the year ended December 31, 2003, as
such term is defined under the listing standards of the American Stock Exchange.
In addition, at the direction of the Board of Directors, the Audit Committee has
determined that Mr. Bendheim meets the criteria for an 'audit committee
financial expert' as that term has been defined by the SEC.
Review with Management
The Audit Committee has reviewed the audited financial statements and met
and held discussions with management regarding the audited financial statements.
Management has represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States.
Review and Discussion with Independent Auditors
The Audit Committee has discussed with Eisner LLP, the Company's independent
auditors, matters required to be discussed by Statement of Auditing Standards
No. 61 (Communication with Audit Committees). The Audit Committee received and
reviewed the written disclosures and the letter from the independent auditors
required by Independence Standard No. 1, Independence Discussions with Audit
Committees, as amended by the Independence Standards Board, and has discussed
with the auditors the auditors' independence. The Audit Committee has also
considered the compatibility of non-audit services with the auditors'
independence.
Audit Fees
The aggregate fees billed by Eisner LLP for professional services rendered
for the audit of our annual financial statements for the two most recent fiscal
years ended December 31, 2003 and 2002 and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for the same fiscal
years were $108,500 for 2003 and $103,500 for 2002.
6
Audit-Related Fees
Eisner LLP has not rendered any audit related services during the years 2003
and 2002.
Tax Fees
The aggregate fees billed by Eisner LLP for services rendered to us for tax
compliance, tax advice and tax planning for our two most recent fiscal years
ended December 31, 2003 and 2002 were approximately $41,500 for 2003 and $31,350
for 2002. In 2003 and 2002, the fees related to preparation of income tax
returns and services related to audits.
All Other Fees
During 2003, the Company with the approval of the Audit Committee engaged
Eisner LLP in a non audit related matter. The Company engaged Eisner LLP for
compliance work related to U.S. Customs documentation. The aggregate fess billed
by Eisner LLP for these services totaled $54,975.
The above categories (Audit Fees, Tax Fees, All Other Fees) encompass all of
the fees for our two most recent fiscal years ended December 31, 2003 and 2002
billed by Eisner LLP for services rendered to us.
The Audit Committee has determined that the provision of non-audit services
by Eisner LLP is compatible with maintaining the independent auditor's
independence.
Fee Pre-Approval Policy
The Audit Committee has approved the engagement of Eisner LLP and has
approved a budget for audit, audit related and tax related fees for services to
be rendered for our 2004 fiscal year. The Audit Committee, or a member of the
committee, must pre-approve any non-audit service provided to us by the
company's independent auditor. The Audit Committee also approved the engagement
of Eisner LLP for the audit performed for our fiscal years ended December 31,
2003 and 2002.
Conclusion
Based on the Audit Committee's discussion with management and the
independent auditors, the Audit Committee's review of the audited financial
statements, the representations of management and the report of the independent
auditors to the Audit Committee, the Audit Committee recommends that the Board
of Directors include the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003 for
filing with the Securities and Exchange Commission. The Audit Committee also
appoints Eisner LLP to serve as independent auditors for the year ended
December 31, 2004, subject to ratification of such appointment by the
shareholders of the Company.
AUDIT COMMITTEE:
Jack Bendheim
Nathan Mazurek
William Spier
7
DIRECTORS' COMPENSATION
The non-executive Chairman of the Board is paid $25,000 per annum as
consideration for his services. Each other director is paid $500 for attendance
(in person or by telephone) at meetings of the board of directors, and all
directors are reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings. In addition, pursuant to the Company's 1996 stock option
plan, the Company granted the following options to its directors.
<Table>
<Caption>
NUMBER OF
SHARES EXERCISE
UNDERLYING PRICE PER
NAME OPTION SHARE
---- ------ -----
Jack Bendheim............................................... 2,000 $1.87
Barry Eisenberg............................................. 2,000 $1.87
Peter Howard................................................ 2,000 $1.87
Nathan Kahn................................................. 2,000 $1.87
Sandra Kahn................................................. 2,000 $1.87
Nathan Mazurek.............................................. 2,000 $1.87
Morris Smith................................................ 2,000 $1.87
William Spier............................................... 2,000 $1.87
Harvey Wrubel............................................... 2,000 $1.87
</Table>
8
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth for the periods indicated information
concerning the compensation earned by the Company's Chief Executive Officer and
each of the Company's most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<Table>
<Caption>
LONG-TERM
COMPENSATION AWARDS
-------------------------
SECURITIES
UNDERLYING ALL OTHER
OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (#) ($)
--------------------------- ---- --------- -------- --- ---
Nathan Kahn................................ 2003 $450,000 $100,000 2,000 $ 2,000(1)
Chief Executive Officer and President 2002 $450,000 -- 2,000 $ 1,000(1)
2001 $350,000 $ 75,000 2,000 $ 2,000(1)
Sandra Kahn................................ 2003 $175,000 $ 25,000 2,000 $ 2,000(1)
Vice President, Chief Financial 2002 $175,000 -- 2,000 $ 1,000(1)
Officer,
Treasurer and Secretary 2001 $150,000 $ 25,000 2,000 $ 2,000(1)
Harvey Wrubel.............................. 2003 $275,000 $512,980 2,000 $ 2,000(1)
Vice President of Sales 2002 $219,890 $298,000 2,000 $125,173(2)
2001 $214,316 $300,000 2,000 $117,218(3)
</Table>
- ---------
(1) Represents directors' fees.
(2) Of this amount $1,000 represents director fees and $124,173 represents
non-cash taxable compensation charged to Mr. Wrubel upon the vesting of
non-contingent restricted shares as discussed in Item 7, Management
Discussion and Analysis of Financial Condition and Results of
Operations -- Accounting Treatment of Restricted Stock Agreement.
(3) Of this amount, $2,000 represents director fees and $115,218 represents
non-cash taxable compensation charged to Mr. Wrubel upon the vesting of
non-contingent restricted shares, as discussed in Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Accounting Treatment of Restricted Stock Agreement.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the officers and employees named in the Summary Compensation
Table during 2003. No stock options or stock appreciation rights were granted to
these individuals during such year in their capacities as executive officers.
(INDIVIDUAL GRANTS) (1)
<Table>
<Caption>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE
GRANTED IN FISCAL ($/SH) EXPIRATION
NAME (#) YEAR (2) DATE
---- --- ---- --- ----
Nathan Kahn................ 2,000 11.1% $1.87 06/13/13
Sandra Kahn................ 2,000 11.1% $1.87 06/13/13
Harvey Wrubel.............. 2,000 11.1% $1.87 06/13/13
<Caption>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERM
-------------------------------------------------------
5% 10%
NAME ($) ($)
---- --- ---
Nathan Kahn................ 2,352 5,961
Sandra Kahn................ 2,352 5,961
Harvey Wrubel.............. 2,352 5,961
</Table>
- ---------
(1) All options granted to the named officers and employees are non-statutory
under federal tax laws and were granted on June 13, 2003. Pursuant to the
option agreement underlying these options, the options became exercisable
immediately upon grant.
(2) The exercise price may be paid in cash or, under certain circumstances, in
shares of the Company's common stock.
9
YEAR-END OPTION VALUES
The following table provides certain information concerning the options held
by the officers and employees named in the Summary Compensation Table, above, as
of December 31, 2003.
OPTIONS AS OF DECEMBER 31, 2003
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Nathan Kahn................................... 10,000 -- $ 25,914 --
Sandra Kahn................................... 10,000 -- $ 25,914 --
Harvey Wrubel................................. 208,000 -- $490,914 --
</Table>
- ---------
* The closing price of the Company's common stock on December 31, 2003, the last
day of trading in 2003, was $3.95.
EMPLOYMENT AGREEMENTS
On September 17, 1999, the Company entered into employment agreements with
each of Nathan Kahn and Sandra Kahn. Certain information regarding these
agreements is set forth below. The forms of these agreements are incorporated by
reference to this report as exhibits.
Term. The initial term of each agreement was three years. Each agreement
provided that the term will be extended automatically for successive two-year
periods unless either party gives written notice of termination at least 180
days prior to the end of the initial term or the then additional term, as the
case may be. Each agreement provides that the Company may terminate the
agreement upon the Disability of the executive or for Cause (as such terms are
defined the agreement). Nathan Kahn's contract was extended for an additional
two years by an amendment in July 2002. Sandra Kahn's contract was extended
automatically for an additional two year period pursuant to the terms of her
agreement.
Base Salary. The Company has agreed to pay Nathan Kahn a base salary of
$450,000 per annum and Sandra Kahn a base salary of $175,000 per annum. These
amounts may be increased, but not decreased, by the Board of Directors. The base
salary provided for by each agreement is subject to possible upward annual
adjustments based upon changes in a designated cost of living index.
Non-Compete. Each agreement provides that during the Specified Period (as
defined below) the employee will not, among other things, directly or
indirectly, be engaged as a principal in any other business activity or conduct
which competes with the business of the Company or be an employee, consultant,
director, principal, stockholder, advisor of, or otherwise be affiliated with,
any such business, activity or conduct. The 'Specified Period' means the
employee's period of employment and the four year period thereafter, provided
that if the employee's employment is terminated for Disability or without Cause
(or the employee voluntarily terminates his employment following a breach by the
Company), the Specified Period will terminate two years after the employee's
employment terminates.
EMPLOYMENT AGREEMENT WITH HARVEY WRUBEL
On September 17, 1999, the Company entered into an employment agreement with
Harvey Wrubel. Certain information regarding this agreement is set forth below.
The form of this agreement is incorporated by reference as an exhibit to this
report.
Term. The initial term of this agreement was until December 31, 2002. The
agreement provides that the term will be extended automatically for successive
two-year periods unless either party gives written notice of termination at
least 90 days prior to the end of the original term or the then additional term,
as the case may be. The agreement provides that the Company may terminate the
agreement any time with or without Cause (as such term is defined in the
agreement). However, if the Company terminates the agreement without Cause, the
employee is entitled to continue receiving his base salary until the
10
scheduled end of the term. Mr. Wrubel's contract extended automatically for an
additional two year period pursuant to the terms of his agreement.
Base Salary. The agreement provided for an initial base salary to be paid at
a rate of $203,000 per annum. This amount may be increased, but not decreased,
by the Board of Directors. The base salary is subject to possible upward annual
adjustments based upon changes in a designated cost of living index. Mr.
Wrubel's current base salary is $275,000.
Performance-Based Compensation. In addition to base salary, the agreement
provides that the Company shall pay the employee performance-based compensation
in accordance with a formula provided for in the agreement.
Non-Compete. The agreement provides that, during the employment term and for
12 months thereafter, the employee will not, among other things, be engaged in,
or be, an employee, director, partner, principal, stockholder or advisor of any
business, activity or conduct which competes with the business of the Company.
During any period following termination of the employee's employment the
foregoing will only apply to competition with regard to aluminum and such other
commodities as were being sold by the Company within six months prior to such
termination.
COMPENSATION COMMITTEE REPORT
The following report is not deemed to be part of a document filed with the
SEC pursuant to Securities Act or the Exchange Act, and is not to be deemed
incorporated by reference in any documents filed under the Securities Act or
Exchange Act, without the express consent of the persons named below.
General. The Compensation Committee (the 'Committee') reviews and approves
compensation levels for the Company's executive officers. In evaluating the
performance of members of senior management, the Committee has access to, and in
its discretion may meet with, any officer or other employee of Empire or its
subsidiaries. The Committee held one meeting during the fiscal year ended
December 31, 2003.
Compensation Philosophy. Empire must offer competitive salaries and other
benefits to be able to attract, retain and motivate highly-qualified and
experienced executives; cash compensation for executives in excess of base
salaries should be tied to Empire's performance, individual performance or both;
and the financial interests of Empire's executives should be aligned with the
financial interests of the stockholders, primarily through equity incentive
plans. Empire benchmarks its total compensation levels by comparing itself to
other comparable companies, in order to make Empire's compensation opportunities
competitive with what other leading organizations are providing.
Base Salary. The Committee establishes the base salaries of executive
officers at levels it determines are appropriate in light of the duties and
scope of responsibilities of each officer's position. The Committee reviews
executive officer salaries regularly, usually at least once every 12 months, and
makes adjustments as warranted to reflect continued individual contributions,
sustained performance and competitive market factors. The Committee measures
individual contributions and performance against total annual compensation,
including incentive awards, rather than against base salary alone.
Compensation of the Chief Executive Officer. The CEO, Nathan Kahn, is
compensated based on an employment agreement entered into in September 1999,
which established the terms and conditions of his employment with Empire,
including a minimum base salary, minimum levels of participation in incentive
plans, the minimum benefits to which he was entitled under the compensation
plans available to Empire's executive officers and payments or benefits to which
he would be entitled upon termination of his employment. See 'Employment
Agreements' below. The Committee typically reviews the base salary of the Chief
Executive Officer at least every 12 months pursuant to the same policies the
Committee uses to evaluate the base salaries of the other executive officers.
Mr. Kahn's compensation was reviewed by the Committee during the year 2003 and
was not changed by the Committee, based
11
upon an assessment of the competitiveness of his total compensation package and
the existing economic environment.
COMPENSATION COMMITTEE:
Mr. Jack Bendheim
Mr. William Spier
Mr. Nathan Kahn
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, the Compensation Committee consisted of William Spier, Nathan
Kahn and Jack Bendheim. In addition to being a member of the Compensation
Committee, Mr. Kahn is also our Chief Executive Officer and President. None of
the other members of the Compensation Committee serve, or previously served as
officers or employees of the Company. Mr. Kahn recused himself from discussions
on his own compensation.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 16, 2004 certain information with
respect to beneficial ownership (as defined in Rule 13d-3 of the Securities and
Exchange Act of 1934) of our common stock by (i) each person that is a director,
(ii) each person named in the Summary Compensation Table, above, (iii) all such
persons as a group and (iv) each person known to us to be the owner of more than
5% of our common stock.
<Table>
<Caption>
PERCENT OF
NUMBER OF SHARES COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) OWNED
------------------- --------------------- -----
DIRECTORS AND OFFICERS:
William Spier....................................... 204,669(3) 2.1%
Nathan Kahn and Sandra Kahn......................... 5,221,923(4) 54.6%
Harvey Wrubel....................................... 586,327(5) 6.0%
Jack Bendheim....................................... 30,000(6) *
Barry L. Eisenberg.................................. 244,839(7) 2.6%
Peter G. Howard..................................... 10,000(8) *
Nathan Mazurek...................................... 10,000(9) *
Morris J. Smith..................................... 57,220(10) *
All officers and directors as a group
(9 persons)....................................... 6,364,978(11) 64.3%
</Table>
- ---------
* Less than 1%
(1) Unless otherwise indicated, the address of each person listed above is c/o
Empire Resources, Inc., One Parker Plaza, Fort Lee, NJ 07024.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have 'beneficial ownership' of any
shares as of a given date which such person has the right to acquire within
60 days after such date. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above on a
given date, any security which such person or persons has the right to
acquire within 60 days after such date is deemed to be outstanding for the
purpose of computing the percentage ownership of such person or persons,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
The information in this table was prepared by the Company in reliance on
filings made with the Securities and Exchange Commission on Schedule 13D
and Forms 4 or 5.
(3) Consists of (i) 154,669 currently outstanding shares held by Mr. Spier and
(ii) 50,000 shares underlying currently exercisable options held by
Mr. Spier.
(4) Consists (i) of 5,201,923 currently outstanding and (ii) 20,000 shares
underlying currently exercisable options held by Nathan and Sandra Kahn.
(5) Consists of (i) 358,327 shares transferred from Nathan and Sandra Kahn to
Mr. Wrubel, (ii) 20,000 currently outstanding shares held by Mr. Wrubel,
and (iii) 208,000 shares underlying currently exercisable options held by
Mr. Wrubel.
(6) Consists of (i) 20,000 outstanding shares held by the Bendheim Foundation,
an affiliate of Mr. Bendheim, and (ii) 10,000 shares underlying currently
exercisable options held by Mr. Bendheim.
(7) Consists of (i) 10,000 shares underlying currently exercisable options held
by Mr. Eisenberg, and (ii) 234,839 currently outstanding shares held by 241
Associates LLC, a limited liability company. Miriam Mark is the sole
manager of 241 Associates LLC and as such has voting and investment power
with respect to the shares held by 241 Associates LLC. Miriam Mark is the
daughter of Barry L. Eisenberg. A majority of the ownership interest of 241
Associates LLC is owned by
(footnotes continued on next page)
13
(footnotes continued from previous page)
Mr. Eisenberg and his wife and, as a result of such ownership interests,
Mr. Eisenberg may influence the voting and disposition of the shares of
common stock held by 241 Associates LLC.
(8) Consists of 10,000 shares underlying currently exercisable options held by
Mr. Howard.
(9) Consists of 10,000 shares underlying currently exercisable options held by
Mr. Mazurek.
(10) Consists of (i) 31,220 currently outstanding shares held by Mr. Smith or
Mr. Smith's wife and (ii) 26,000 shares underlying currently exercisable
options held by Mr. Smith.
(11) Consists of 6,020,978 currently outstanding shares and 344,000 shares
underlying currently exercisable options and warrants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2004, the Company has not engaged in any transaction, or
series of similar transactions, in which the amount involved exceed $60,000 and
in which any of its directors, executive officers or security holders who
beneficially own in excess of 5% of the Company's outstanding common stock (or
any of their immediate family members) had a direct or indirect material
interest. In addition, none of the Company's directors have any, direct or
indirect, business relationships with the Company.
STOCK PERFORMANCE GRAPH
The stock price performance graph depicted below is not deemed to be part of
a document filed with the SEC pursuant to the Securities Act or the Exchange Act
and is not to be deemed incorporated by reference in any documents filed under
the Securities Act or the Exchange Act without the express consent of the
Company.
The following graph compares the yearly percentage change in the cumulative
total shareholder return (i.e. stock price growth plus dividends) on our common
stock, based on the market price of our common stock, with the total return of
U.S. companies listed on the AMEX Stock Market and the AMEX companies included
within our industry grouping (SIC 5050 -- 5059 U.S. Companies, Metals and
Minerals, Except Petroleum). This graph was prepared by the Center for Research
in Security Prices at the University of Chicago Graduate School of Business. The
calculation of total cumulative return assumes a $100 investment in our common
stock, the U.S. companies listed AMEX Stock Market and in the AMEX companies
included within our industry grouping (SIC 5050 -- 5059 U.S. Companies, Metals
and Minerals, Except Petroleum) on December 31, 1998, and that all dividends
were reinvested.
14
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Empire Resources, Inc.
[PERFORMANCE GRAPH]
Legend
<Table>
<Caption>
CRSP Total Returns Index for: 12/1998 12/1999 12/2000 12/2001 12/2002 12/2003
---------------------------- ------- ------- ------- ------- ------- -------
Empire Resources, Inc. 100.0 104.0 56.0 57.6 89.6 267.7
AMEX Stock Market (US Companies) 100.0 131.9 122.4 113.9 93.1 126.0
AMEX Stocks (SIC 5050-5059 US Companies) 100.0 82.0 60.5 52.8 32.8 80.4
Metals and Minerals, Except Petroleum
</Table>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/1998.
15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten-percent stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports that they file.
Based solely upon review of the copies of such reports furnished to us and
written representations from certain of our executive officers and directors
that no other such reports were required, we believe that during the period
January 1, 2003 through December 31, 2003, except as described below, all
Section 16 filing requirements applicable to its officers, directors and greater
than ten-percent beneficial owners were complied with on a timely basis.
During the period January 1, 2003 through December 31, 2003, Morris Smith
failed to timely report the distribution of certain shares to him from a trust
of which he was a beneficiary and the subsequent sale by him of certain of those
shares. These transactions have since been reported.
OTHER MATTERS
STOCKHOLDER COMMUNICATIONS
Our stockholders may communicate directly with the members of the Board of
Directors or the individual Chairperson of standing committees of the Board of
Directors by writing directly to those individuals c/o Empire Resources, Inc. at
the following address: One Parker Plaza, Fort Lee, New Jersey 07024. Our policy
is to forward, and not to intentionally screen, any mail received at our
corporate office that is sent directly to an individual.
CODE OF ETHICS
Our Board of Directors has adopted a Code of Ethics that applies to all of
our employees, officers and directors. The Code covers compliance with law; fair
and honest dealings with the Company, with competitors and with others; fair and
honest disclosure to the public; and procedures for compliance with the Code.
You can review our Code of Ethics on our website located at
www.empireresources.com.
OTHER MATTERS OF BUSINESS
The board of directors does not know of any matters other than those
described above to be presented to the meeting. If any other matters do come
before the meeting, the persons named in the proxy will exercise their
discretion in voting thereon.
ANNUAL REPORT
An annual report to shareholders, including consolidated financial
statements of the Company and its subsidiaries prepared in conformity with
generally accepted accounting principles, is being distributed to all
shareholders of record with this proxy statement. ADDITIONAL COPIES OF OUR
ANNUAL REPORT MAY BE OBTAINED WITHOUT CHARGE UPON REQUEST TO SANDRA KAHN,
SECRETARY, EMPIRE RESOURCES, INC., ONE PARKER PLAZA, FORT LEE, NJ, 07024.
<Table>
By Order of the Board of Directors,
SANDRA KAHN
SANDRA KAHN
Vice President, Chief Financial Officer,
Treasurer and Secretary
</Table>
Fort Lee, New Jersey
April 29, 2004
16
APPENDIX A
EMPIRE RESOURCES, INC.
AUDIT COMMITTEE CHARTER
(Adopted by the Board of Directors by written consent)
I. GENERAL STATEMENT OF PURPOSE
The purposes of the Audit Committee of the Board of Directors (the 'Audit
Committee') of Empire Resources, Inc. (the 'COMPANY') are to:
assist the Board of Directors (the 'BOARD') in its oversight of (1) the
integrity of the Company's financial statements, (2) the Company's
compliance with legal and regulatory requirements, and (3) the
qualifications, independence and performance of the Company's independent
auditors; and
prepare the report required by the rules of the Securities and Exchange
Commission (the 'SEC') to be included in the Company's annual proxy
statement.
II. COMPOSITION
The Audit Committee shall consist of at least three (3) members of the
Board, each of whom shall satisfy the independence requirements established by
the American Stock Exchange Company Guide for listing on the exchange. Each
member of the Audit Committee shall be financially literate (or shall become
financially literate within a reasonable period of time after his or her
appointment to the Audit Committee), as such qualification is interpreted by the
Board in its business judgment. One or more members of the Audit Committee must
either be 'financially sophisticated' (determined in accordance with the
guidelines published by the American Stock Exchange) or an 'audit committee
financial expert' (as such term is defined under the rules promulgated by the
SEC).
The members of the Audit Committee shall be appointed annually by the Board
and may be replaced or removed by the Board with or without cause. Resignation
or removal of a Director from the Board, for whatever reason, shall
automatically and without any further action constitute resignation or removal,
as applicable, from the Audit Committee. Any vacancy on the Audit Committee,
occurring for whatever reason, may be filled only by the Board. The Board shall
designate one member of the Audit Committee to be Chairman of the committee.
No member of the Audit Committee may simultaneously serve on the audit
committee of more than three (3) issuers having securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the 'EXCHANGE
ACT'), unless the Board determines that such simultaneous service would not
impair the ability of such member to effectively serve on the Audit Committee.
III. COMPENSATION
A member of the Audit Committee may not, other than in his or her capacity
as a member of the Audit Committee, the Board or any other committee established
by the Board, receive directly or indirectly any consulting, advisory or other
compensatory fee from the Company. A member of the Audit Committee may receive
additional directors' fees to compensate such member for the significant time
and effort expended by such member to fulfill his or her duties as an Audit
Committee member.
IV. MEETINGS
The Audit Committee shall meet as often as it determines is appropriate to
carry out its responsibilities under this charter, but not less frequently than
quarterly. A majority of the members of the Audit Committee shall constitute a
quorum for purposes of holding a meeting and the Audit Committee may act by a
vote of a majority of the members present at such meeting. In lieu of a meeting,
the Audit Committee may act by unanimous written consent. The Chairman of the
Audit
17
Committee, in consultation with the other committee members, may determine the
frequency and length of the committee meetings and may set meeting agendas
consistent with this Charter.
Periodically, the Audit Committee shall also meet separately with management
and with the independent auditors.
V. RESPONSIBILITIES AND AUTHORITY
A. REVIEW OF CHARTER
The Audit Committee shall review and reassess the adequacy of this Charter
annually and recommend to the Board any amendments or modifications to the
Charter that the Audit Committee deems appropriate.
B. ANNUAL PERFORMANCE EVALUATION OF THE AUDIT COMMITTEE
At least annually, the Audit Committee shall evaluate its own performance
and report the results of such evaluation to the Nominating and Corporate
Governance Committee.
C. MATTERS RELATING TO SELECTION, PERFORMANCE AND INDEPENDENCE OF
INDEPENDENT AUDITOR
The Audit Committee shall be directly responsible for the appointment,
retention and termination of the Company's independent auditor, and
determining compensation for the independent auditor, engaged for the
purpose of preparing or issuing an audit report or related work or
performing other audit, review or attest services for the Company. The
Audit Committee may consult with management in fulfilling these duties, but
may not delegate these responsibilities to management.
The Audit Committee shall be directly responsible for oversight of the work
of the independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial reporting)
engaged for the purpose of preparing or issuing an audit report or related
work or performing other audit, review or attest services for the Company.
The Audit Committee shall instruct the independent auditor that the
independent auditor shall report directly to the Audit Committee.
The Audit Committee shall pre-approve all auditing services and the terms
thereof (which may include providing comfort letters in connection with
securities underwritings) and non-audit services (other than non-audit
services prohibited under Section 10A(g) of the Exchange Act or the
applicable rules of the SEC or the Public Company Accounting Oversight
Board) to be provided to the Company by the independent auditor; provided,
however, the pre-approval requirement is waived with respect to the
provision of non-audit services for the Company if the 'de minimus'
provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. This
authority to pre-approve non-audit services may be delegated to one or more
members of the Audit Committee, who shall present all decisions to
pre-approve an activity to the full Audit Committee at its first meeting
following such decision.
The Audit Committee may review and approve the scope and staffing of the
independent auditors' annual audit plan(s).
The Audit Committee shall request that the independent auditor provide the
Audit Committee with the written disclosures and the letter required by
Independence Standards Board Standard No. 1, as modified or supplemented,
require that the independent auditor submit to the Audit Committee on a
periodic basis a formal written statement delineating all relationships
between the independent auditor and the Company, discuss with the
independent auditor any disclosed relationships or services that may impact
the objectivity and independence of the independent auditor, and based on
such disclosures, statement and discussion take or recommend that the Board
take appropriate action in response to the independent auditor's report to
satisfy itself of the independent auditor's independence.
18
The Audit Committee shall evaluate the independent auditors'
qualifications, performance and independence, and shall present its
conclusions with respect to the independent auditors to the full Board. As
part of such evaluation, at least annually, the Audit Committee shall:ciix
obtain and review a report or reports from the independent auditor
describing (1) the auditor's internal quality-control procedures,
(2) any material issues raised by the most recent internal
quality-control review or peer review of the auditors or by any inquiry
or investigation by government or professional authorities, within the
preceding five years, regarding one or more independent audits carried
out by the auditors, and any steps taken to address any such issues,
and (3) to assess the auditor's independence, all relationships between
the independent auditor and the Company;
review and evaluate the performance of the independent auditor and the
lead partner (and the Audit Committee may review and evaluate the
performance of other members of the independent auditor's audit staff);
and
assure the regular rotation of the audit partners (including, without
limitation, the lead and concurring partners) as required under the
Exchange Act and Regulation S-X.
In this regard, the Audit Committee shall also (1) seek the opinion of
management of the independent auditors' performance and (2) consider
whether, in order to assure continuing auditor independence, there should
be regular rotation of the audit firm.
The Audit Committee shall set clear policies with respect to the potential
hiring of current or former employees of the independent auditor.
D. AUDITED FINANCIAL STATEMENTS AND ANNUAL AUDIT
The Audit Committee shall review the overall audit plan with the
independent auditor and the members of management who are responsible for
preparing the Company's financial statements, including the Company's Chief
Financial Officer and/or principal accounting officer or principal
financial officer (the Chief Financial Officer and such other officer or
officers are referred to herein collectively as the 'SENIOR ACCOUNTING
EXECUTIVE').
The Audit Committee shall review and discuss with management (including the
Company's Senior Accounting Executive) and with the independent auditor the
Company's annual audited financial statements, including (a) all critical
accounting policies and practices used or to be used by the Company,
(b) the Company's disclosures under 'Management's Discussion and Analysis
of Financial Conditions and Results of Operations,' prior to the filing of
the Company's Annual Report on Form 10-K, and (c) any significant financial
reporting issues that have arisen in connection with the preparation of
such audited financial statements.
The Audit Committee must review:
(i) any analyses prepared by management and/or the independent auditors
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP
methods on the financial statements. The Audit Committee may
consider the ramifications of the use of such alternative
disclosures and treatments on the financial statements, and the
treatment preferred by the independent auditor. The Audit Committee
may also consider other material written communications between the
registered public accounting firm and management, such as any
management letter or schedule of unadjusted differences;
(ii) major issues as to the adequacy of the Company's internal controls
and any special audit steps adopted in light of material control
deficiencies;
(iii) major issues regarding accounting principles and procedures and
financial statement presentations, including any significant
changes in the Company's selection or application of accounting
principles; and
19
(iv) the effect of regulatory and accounting initiatives, as well as
off-balance sheet transactions and structures, on the financial
statements of the Company.
The Audit Committee shall review and discuss with the independent auditor
(outside of the presence of management) how the independent auditor plans
to handle its responsibilities under the Private Securities Litigation
Reform Act of 1995, and request assurance from the auditor that
Section 10A of the Private Securities Litigation Reform Act of 1995 has not
been implicated.
The Audit Committee shall review and discuss with the independent auditor
any audit problems or difficulties and management's response thereto. This
review shall include (1) any difficulties encountered by the auditor in the
course of performing its audit work, including any restrictions on the
scope of its activities or its access to information, and (2) any
significant disagreements with management. This review may also include:
(i) any accounting adjustments that were noted or proposed by the
auditors but were 'passed' (as immaterial or otherwise);
(ii) any communications between the audit team and the audit firm's
national office regarding auditing or accounting issues presented
by the engagement; and
(iii) any management or internal control letter issued, or proposed to
be issued, by the auditors.
The Audit Committee shall discuss with the independent auditors those
matters brought to the attention of the Audit Committee by the auditors
pursuant to Statement on Auditing Standards No. 61 ('SAS 61').
The Audit Committee shall also review and discuss with the independent
auditors the report required to be delivered by such auditors pursuant to
Section 10A(k) of the Exchange Act.
If brought to the attention of the Audit Committee, the Audit Committee
shall discuss with the CEO and CFO of the Company (1) all significant
deficiencies and material weaknesses in the design or operation of internal
controls and procedures for financial reporting which could adversely
affect the Company's ability to record, process, summarize and report
financial information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act, within the time
periods specified in the SEC's rules and forms, and (2) any fraud involving
management or other employees who have a significant role in the Company's
internal controls and procedures for financial reporting.
Based on the Audit Committee's review and discussions (1) with management
of the audited financial statements, (2) with the independent auditor of
the matters required to be discussed by SAS 61, and (3) with the
independent auditor concerning the independent auditor's independence, the
Audit Committee shall make a recommendation to the Board as to whether the
Company's audited financial statements should be included in the Company's
Annual Report on Form 10-K for the last fiscal year.
The Audit Committee shall prepare the Audit Committee report required by
Item 306 of Regulation S-K of the Exchange Act (or any successor provision)
to be included in the Company's annual proxy statement.
E. UNAUDITED QUARTERLY FINANCIAL STATEMENTS
The Audit Committee shall discuss with management and the independent
auditor, prior to the filing of the Company's Quarterly Reports on
Form 10-Q, (1) the Company's quarterly financial statements and the
Company's related disclosures under 'Management's Discussion and Analysis
of Financial Condition and Results of Operations' and (2) such issues as
may be brought to the Audit Committee's attention by the independent
auditor pursuant to Statement on Auditing Standards No. 71, and (3) any
significant financial reporting issues that have arisen in connection with
the preparation of such financial statements.
20
F. EARNINGS PRESS RELEASES
The Audit Committee shall discuss the Company's earnings press releases, as
well as financial information and earnings guidance provided to analysts
and rating agencies, including, in general, the types of information to be
disclosed and the types of presentation to be made (paying particular
attention to the use of 'pro forma' or 'adjusted' non-GAAP information).
G. RELATED PARTY TRANSACTIONS
The Audit Committee shall review all related party transactions involving
the Company's directors and officers and their immediate family members.
H. RISK ASSESSMENT AND MANAGEMENT
The Audit Committee shall discuss the guidelines and policies that govern
the process by which the Company's exposure to risk is assessed and managed
by management.
In connection with the Audit Committee's discussion of the Company's risk
assessment and management guidelines, the Audit Committee may discuss or
consider the Company's major financial risk exposures and the steps that
the Company's management has taken to monitor and control such exposures.
I. PROCEDURES FOR ADDRESSING COMPLAINTS AND CONCERNS
The Audit Committee shall establish procedures for (1) the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing matters and (2) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
The Audit Committee may review and reassess the adequacy of theseprocedures
periodically and adopt any changes to such procedures that the Audit
Committee deems necessary or appropriate.
J. REGULAR REPORTS TO THE BOARD
The Audit Committee shall regularly report to and review with the Board any
issues that arise with respect to the quality or integrity of the Company's
financial statements, the Company's compliance with legal or regulatory
requirements, the performance and independence of the independent auditors
and any other matters that the Audit Committee deems appropriate or is
requested to review for the benefit of the Board.
K. LEGAL AND REGULATORY COMPLIANCE
The Audit Committee shall discuss with management and the independent
auditor and review with the Board1 the legal and regulatory requirements
applicable to the Company and its subsidiaries and the Company's compliance
with such requirements. After these discussions, the Audit Committee may,
if it determines it to be appropriate, make recommendations to the Board
with respect to the Company's policies and procedures regarding compliance
with applicable laws and regulations.
The Audit Committee shall discuss with management legal matters (including
pending or threatened litigation) that may have a material effect on the
Company's financial statements or its compliance policies and procedures.
21
VI. ADDITIONAL AUTHORITY
The Audit Committee is authorized, on behalf of the Board, to do any of the
following:
A. ENGAGEMENT OF ADVISORS
The Audit Committee may engage independent counsel and such other advisors
it deems necessary to carry out its responsibilities and powers, and, if
such counsel or other advisors are engaged, shall determine the
compensation or fees payable to such counsel or other advisors.
B. GENERAL
The Audit Committee may form and delegate authority to subcommittees
consisting of one or more of its members as the Audit Committee deems
appropriate to carry out its responsibilities and exercise its powers.
The Audit Committee may perform such other oversight functions outside of
its stated purpose as may be requested by the Board from time to time.
In performing its oversight function, the Audit Committee shall be entitled
to rely upon advice and information that it receives in its discussions and
communications with management, the independent auditor and such experts,
advisors and professionals as may be consulted with by the Audit Committee.
The Audit Committee is authorized to request that any officer or employee
of the Company, the Company's outside legal counsel, the Company's
independent auditor or any other professional retained by the Company to
render advice to the Company attend a meeting of the Audit Committee or
meet with any members of or advisors to the Audit Committee.
Notwithstanding the responsibilities and powers of the Audit Committee set
forth in this Charter, the Audit Committee does not have the responsibility of
planning or conducting audits of the Company's financial statements or
determining whether the Company's financial statements are complete, accurate
and in accordance with GAAP. Such responsibilities are the duty of management
and, to the extent of the independent auditor's audit responsibilities, the
independent auditor. In addition, it is not the duty of the Audit Committee to
conduct investigations or to assure compliance with laws and regulations or the
Company's Code of Business Conduct and Ethics.
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ANNUAL MEETING OF STOCKHOLDERS OF
EMPIRE RESOURCES, INC.
June 14, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
[ ]
- -------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE [x]
- -------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors: 2. Ratification of appointment of EISNER LLP, [_] [_] [_]
NOMINEES: independent auditors.
[_] FOR ALL NOMINEES [_] William Spier
[_] Nathan Kahn
[_] WITHHOLD AUTHORITY [_] Sandra Kahn The undersigned hereby authorizes the proxies, in their discretion, to
FOR ALL NOMINEES [_] Harvey Wrubel vote on any other business as may properly be brought before the
[_] Jack Bendheim meeting or any adjournment thereof.
[_] FOR ALL EXCEPT [_] Barry L. Eisenberg
(See instructions below) [_] Peter G. Howard
[_] Nathan Mazurek
[_] Morris J. Smith
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL
EXCEPT" and fill in the circle next to
each nominee you wish to withhold, as
shown here: ( )
- -----------------------------------------------------
- -----------------------------------------------------
To change the address on your account, please
check the box at right and indicate your new
address in the address space above. Please note [_]
that changes to the registered name(s) on the
account may not be submitted via this method.
- -----------------------------------------------------
Signature of Stockholder [__________________] Date: [_________] Signature of Stockholder [__________________] Date: [_________]
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If
[ ] signer is a partnership, please sign in partnership name by authorized person. [ ]
Appendix 1
EMPIRE RESOURCES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William Spier and Nathan Kahn or any of
them with full power of substitution, proxies to represent the undersigned
stockholder and to vote at the annual meeting of Stockholders of Empire
Resources, Inc. (the "Company") to be held on June 14, 2004 at 11:00 a.m.
E.S.T., and at any adjournment or adjournments thereof, hereby revoking any
proxies heretofore given, all shares of Common Stock of the Company that the
undersigned would be entitled to vote as directed on the reverse side, and in
their discretion upon such other matters as may come before the meeting.
(Continued and to be signed on the reverse side)