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Section 240.14a-101 Schedule 14A.
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 [ ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 Section 240.14a-11(c) or Section
240.14a-12
Empire Resources, Inc.
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] 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.
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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 28, 2006
Dear Stockholder:
The Annual Meeting of Stockholders of EMPIRE RESOURCES, INC. will be held
on Monday, June 26, 2006 at 11:00 a.m., local time, at the Clinton Inn Hotel,
145 Dean Drive, Tenafly, New Jersey 07670.
The Board of Directors has fixed the close of business on April 24, 2006
as the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting. The Annual Meeting will be
held for the following purposes:
o To elect a Board of Directors;
o To ratify the appointment of our independent auditors for the year
ending December 31, 2006;
o To approve the Company's 2006 Stock Option Plan; and
o To consider and act upon any other matters which may properly be
brought before the annual meeting or any adjournments or
postponements thereof.
Your vote is important. Please complete and return the enclosed proxy in
the envelope provided whether or not you intend to be present at the meeting in
person. If you attend the meeting, you may continue to have your shares voted as
instructed in the proxy or you may withdraw your proxy and vote your shares in
person.
By Order of the Board of Directors,
/s/ Sandra Kahn
SANDRA KAHN
Vice President, Chief Financial Officer
and Secretary and Treasurer
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EMPIRE RESOURCES, INC.
One Parker Plaza
Fort Lee, New Jersey 07024
-----------------------------
P R O X Y S T A T E M E N T
-----------------------------
Questions and Answers
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card from us because you owned
shares of common stock of Empire Resources, Inc. at the close of business on the
April 24, 2006 record date for the annual meeting. This proxy statement
describes matters on which we would like you, as a stockholder, to vote. It also
gives you information on these matters so that you can make an informed
decision.
What is being voted on?
At the annual meeting, stockholders entitled to vote will act upon the following
matters as set forth in the accompanying notice of meeting:
o election of the Board of Directors;
o ratification of the appointment of the Company's independent
auditors for the year ending December 31, 2006;
o approval of the 2006 Stock Option Plan; and
o any other matters that may properly come before the meeting.
How does the board recommend I vote on the proposals?
The Board recommends a vote FOR each of the nominees and FOR each other
proposal.
Who is entitled to vote?
Stockholders as of the close of business on April 24, 2006, 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 can
also vote in person by attending the annual meeting.
Can I revoke my proxy?
You have the right to revoke your proxy at any time before the meeting by:
o notifying the Corporate Secretary, Sandra Kahn, at the address shown
above;
o voting in person at the annual meeting; or
o 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.
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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 24, 2006, the record date, there were 9,763,184 shares of common
stock outstanding and entitled to vote. Every stockholder of common stock is
entitled to one vote for each share held.
What is a "quorum"?
A "quorum" is a majority of the shares entitled to vote at the meeting. 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. "Broker non-votes" are
proxies received from brokerage firms or other nominees holding shares on behalf
of their clients who have not been given specific voting instructions from their
clients and the brokerage firm or other nominee does not have or exercise voting
discretion. In tabulating the voting result for any particular proposal, shares
that constitute broker non-votes are not considered entitled to vote or votes
cast on that proposal. Thus, broker non-votes will not affect the outcome of any
matter being voted on at the meeting, assuming that a quorum is obtained.
What vote is required?
Each share of our common stock outstanding on the record date will be entitled
to one vote on each of the nine director nominees and one vote on each other
matter. The nine nominees for election as directors who receive the most votes
"for" election will be elected (Proposal 1). Approval of each other proposal
will require an affirmative vote of the majority of the shares of common stock
present or represented at the annual meeting.
Who can attend the annual meeting?
All stockholders as of the close of business on the record date may attend.
Tickets are not required, but photo identification must be presented.
Stockholders who hold ownership "in street name" through a broker will be
required to present evidence of ownership for admission to the meeting.
How will voting on any other business be conducted?
We do not know of any business to be considered at the 2006 annual meeting other
than the proposals described in this proxy statement. If any other business is
properly 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 24, 2006, the record date, Nathan Kahn and Sandra Kahn together
beneficially owned 4,777,523 shares of common stock which represented 48.8% of
the then outstanding common stock.
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When are stockholder proposals for the 2007 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, New Jersey 07024 prior to December
29, 2006. Such proposals must also comply with Securities and Exchange
Commission regulations under Rule 14a-8 regarding the inclusion of stockholder
proposals in company-sponsored proxy materials.
All other stockholder proposals submitted for consideration at the 2007 annual
meeting, but not intended to be included, under Rule 14a-8, in Empire's proxy
statement must provide the information as required by our bylaws and give timely
notice to the Company's Secretary in accordance with our bylaws, which, in
general, require that the notice be received by the Company's Secretary:
o not earlier than the close of business 90 days before our 2007
annual meeting, and
o not later than the close of business 60 days before our 2007 annual
meeting.
Can a stockholder nominate, or recommend for nomination, someone to be a
director of the company?
As a stockholder, you may nominate any person for election as director by
writing to Sandra Kahn, Secretary, c/o Empire Resources, Inc., One Parker Plaza,
Fort Lee, New Jersey 07024. All nominations must be received by the Company's
Secretary 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 together with
all supporting documentation required by the Company's bylaws. Each nomination
must be accompanied by the name, age, residence and business address of the
person being nominated. The nomination must also include a representation that
the stockholder is a record holder of the Company's stock or holds the stock
through a broker, a statement of the number and class of shares held by the
stockholder and by each person being nominated by the stockholder, information
regarding each nominee that would be required to be included in a proxy
statement and a description of any arrangement or understanding between and
among the stockholder and each and every nominee. You may recommend someone for
nomination as a director by our Board of Directors by following the same
procedures described above. For further information, please see our bylaws. If a
stockholder should recommend a candidate, the Nominating Committee would
evaluate that candidate on the basis of the criteria set forth in its charter
and by such other criteria that it deems appropriate. Finally, the nominations
must include the written consent of each nominee to serve as a director, if
elected.
Who is soliciting and paying for the solicitation of 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 28,
2006.
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PROPOSALS YOU MAY VOTE ON
Proposal 1--Election of directors
Our board of directors currently consists of nine directors, and there are nine
nominees for election this year. Eight of the nine nominees currently serve as
directors. A majority of the nominees for election meet the standards of
independence adopted by the American Stock Exchange. All of our 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 nine nominees for election as directors who receive
the most votes "for" election will be elected. A biographical description of
each nominee appears below.
The 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 selection of Eisner LLP as our independent auditors for the year
ending December 31, 2006. Stockholder ratification of the selection of Eisner
LLP as the Company's independent auditors is not required by the Company's
bylaws or otherwise. However, the board of directors is submitting the selection
of Eisner LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders 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 its discretion may direct the appointment of
different independent auditors at any time during the year if it determines that
such a change would be in the best interests of the Company and its
stockholders.
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.
The 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, 2006.
Proposal 3--Approval of the 2006 Stock Option Plan.
The board is proposing for stockholder approval of the Empire Resources,
Inc. 2006 Stock Option Plan. The 2006 Stock Option Plan is intended to provide
to the employees, officers, directors, consultants or advisors of, and other
persons providing goods or services to, the Company, any of its subsidiaries or
any parent of the Company with a more direct stake in the future welfare of the
Company, encourage them to remain employed by or associated with the Company and
encourage other qualified persons to seek and accept employment or association
with the Company.
A copy of the Empire Resources, Inc. 2006 Stock Option Plan is attached to
this Proxy Statement as Annex A.
The board of directors unanimously recommends a vote FOR the approval of
the 2006 Stock Option Plan.
NOMINEES FOR THE BOARD OF DIRECTORS
The following biographical descriptions set forth certain information with
respect to the nominees for election at the annual meeting, based on information
furnished to Empire Resources by each director. The following information is
correct as of April 24, 2006.
WILLIAM SPIER Director since 1996
Age 71
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 is the 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. Mr. Spier
retired as Vice Chairman of Phibro-Salomon, Inc. in 1981.
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NATHAN KAHN Director since 1999
Age 51
Mr. Kahn has been the Chief Executive Officer, President and a director of
the Company since September 1999. Prior to that time, Mr. Kahn was the President
and a director of the Company from the time of its formation in 1984 until its
merger with Integrated Technology USA, Inc. in September 1999. Mr. Kahn has also
been the President and a director of Empire Resources Pacific Ltd.
("Empire-Pacific"), the sales agent in Australia and New Zealand for Empire
Resources, since its formation in 1996.
SANDRA KAHN Director since 1999
Age 48
Ms. Kahn has been a Vice President, the Chief Financial Officer and a
director of the Company since September 1999. Prior to that time, Ms. Kahn was
the Secretary and Treasurer and a director of the Company from the time of its
formation in 1984 until its merger with Integrated Technology USA, Inc. in
September 1999. Ms. Kahn has also been the Secretary and Treasurer and a
director of Empire-Pacific since its formation in 1996.
HARVEY WRUBEL Director since 2000
Age 52
Mr. Wrubel has been the Vice President of Sales/Director of Marketing of
the Company since September 1999. Prior to that time, Mr. Wrubel was the Vice
President of Sales/Director of Marketing of the Company for more than five
years.
JACK BENDHEIM Director since 1999
Age 59
Mr. Bendheim has been a director of the Company since September 1999. He
is the Chairman and President of Phibro Animal Health Corporation for more than
the prior five years. Mr. Bendheim is also a director of The Berkshire Bank.
PETER G. HOWARD Director since 1999
Age 70
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 1999
Age 43
Mr. Mazurek has been the President of Provident Industries, a diversified
manufacturer of electrical systems and components, for more than the past five
years.
MORRIS J. SMITH Director since 1994
Age 48
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.
L.R. MILNER Director since 2005
Age 60
Mr. Milner is retired. He joined Alcoa in 1968 and enjoyed a thirty-six
year career with Alcoa before retiring in 2004. During his tenure with Alcoa, he
held positions in sales and marketing both in the domestic and international
markets. In 1987, he was named Director of Corporate Development and was elected
a Vice President in 1991. He served as Vice President of Corporate Development
until his retirement.
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Family Relationships
Nathan Kahn and Sandra Kahn are husband and wife.
EXECUTIVE OFFICERS
Our executive officers and their ages as of April 24, 2006 are as follows:
Nathan Kahn.... 51 Chief Executive Officer, President and Director
Sandra Kahn.... 48 Chief Financial Officer, Vice President and Director
Harvey Wrubel.. 52 Vice President of Sales and Director
Biographical information with respect to Ms. Kahn and Messrs. Kahn and
Wrubel is set forth above in "Nominees for the Board of Directors."
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 four times a year in regularly scheduled meetings or as
deemed necessary. The directors held four meetings during 2005. The Chairman of
our board of directors in consultation with our Chief Executive Officer 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 chief executive officer,
chief financial officer 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. All
of our board members except one attended the annual meeting of stockholders held
in 2005. We generally hold a meeting of the board of directors on the same date
as the annual stockholder meeting.
Our directors have 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. The audit committee assures the credibility of our
financial reporting by providing oversight of our financial reporting process
and our internal controls. The audit committee reports on its activities to the
board of directors. During 2005, the audit committee held four meetings. The
audit committee is comprised of William Spier, Jack Bendheim and Nathan Mazurek.
Each of the members of the audit committee was considered independent for the
year ended December 31, 2005, as such term is defined under the listing
standards of the American Stock Exchange. The board of directors has determined
that Mr. Bendheim meets the criteria for an "audit committee financial expert"
as that term has been defined by the Securities and Exchange Commission. 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.
Compensation Committee. The compensation 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 2005, the compensation committee held one
meeting. The compensation committee is 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. The stock option 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
stock option committee did not meet in 2005 and no stock options were granted
during the year. The stock options committee is comprised of William Spier, Jack
Bendheim and Nathan Mazurek.
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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 listing standards adopted by the American Stock Exchange. The
nominating committee held one meeting during 2005.
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 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. The nominating committee will determine from time to time
whether the board has special needs or requirements, including the need for
additional independent directors, financial expertise, industry expertise or
other specific knowledge or skills. The nominating committee will compile a
complete list of candidates recommended from any valid source and evaluate each
candidate. Each candidate will be evaluated in comparison to the board's minimum
director qualifications, which include, but are not limited to, those
individuals with the highest standards of morality, ethics and integrity, a
successful career in a related field or expertise requested by the board, and
the ability to commit the appropriate time to the board and committee meetings.
Each candidate will be further evaluated in the context of the current
composition of 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, 2005, as
such term is defined under the listing standards of the American Stock Exchange.
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.
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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, 2005 and 2004 and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-Q for the same fiscal
years were $120,795 for 2005 and were $113,500 for 2004.
Audit-Related Fees
Eisner LLP has not rendered any audit-related services during the years
2005 and 2004.
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, 2005 and 2004 were approximately $46,800 and $40,300,
respectively.
All Other Fees
During 2005, Eisner LLP has not rendered any other services.
Audit Fees and Tax Fees encompass all of the fees for our two most recent
fiscal years ended December 31, 2005 and 2004 billed by Eisner LLP for services
rendered to us.
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 2006 fiscal year. The audit committee, or a member of the
committee, must pre-approve any non-audit service provided to us by our
independent auditor. The audit committee also approved the engagement of Eisner
LLP for the audit performed for our fiscal years ended December 31, 2005 and
2004. All audit and non-audit services were delivered in accordance with the
Company's Pre-Approval Policy.
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 fiscal year ended December 31, 2005
for filing with the Securities and Exchange Commission. The audit committee also
appointed Eisner LLP to serve as independent auditors for the year ended
December 31, 2006, subject to ratification of such appointment by the
stockholders of the Company.
AUDIT COMMITTEE:
Jack Bendheim
Nathan Mazurek
William Spier
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DIRECTORS' COMPENSATION
During 2005, the non-executive Chairman of the Board was paid $30,000 as
consideration for his services. During 2005, each director was paid $1,000 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.
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 earning in
excess of $100,000 in salary and bonus in 2005.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
--------------------- ------------
Securities
Underlying
Options All Other
Year Salary Bonus (#) Compensation
---- --------- --------- ------------ ------------
Nathan Kahn................................. 2005 $ 475,000 $ 300,000 0 $ 3,500(1)
Chief Executive Officer and President 2004 $ 459,450 $ 150,000 2,000 $ 2,500(1)
2003 $ 450,000 $ 100,000 2,000 $ 2,000(1)
Sandra Kahn................................. 2005 $ 200,000 $ 50,000 0 $ 3,500(1)
Vice President, Chief Financial Officer, 2004 $ 175,000 $ 25,000 2,000 $ 2,500(1)
Treasurer and Secretary 2003 $ 175,000 $ 25,000 2,000 $ 2,000(1)
Harvey Wrubel............................... 2005 $ 300,000 $ 999,310 0 $ 3,500(1)
Vice President of Sales 2004 $ 280,768 $ 749,060 2,000 $ 2,500(1)
2003 $ 275,000 $ 512,980 2,000 $ 2,000(1)
- ----------
(1) Represents directors' fees.
Employment Agreements
Employment Agreements with Nathan Kahn and Sandra Kahn
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.
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).
Base Salary. The Company has agreed to pay Nathan Kahn a current base
salary of $500,000 per annum and Sandra Kahn a current base salary of $225,000
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
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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. "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 or her 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.
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 scheduled
end of the term. Mr. Wrubel's contract extended automatically pursuant to the
terms of his agreement.
Base Salary. Mr. Wrubel's current base salary is $300,000. 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.
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, 2005.
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.
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Compensation of the Chief Executive Officer. The Chief Executive Officer,
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" above. 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
2005 and was increased by the Committee, based upon an assessment of the
competitiveness of his total compensation package and the existing economic
environment.
For the 2005 fiscal year, the Compensation Committee awarded Mr. Kahn a
bonus of $475,000. In making the award, the Compensation Committee took into
account Mr. Kahn's role in furthering the strategic goals of Empire Resources,
Inc., his specific contribution to outstanding 2005 results, and the levels of
bonus compensation paid to senior management in comparable companies.
Specifically, the Compensation Committee noted the results of Mr. Kahn's
leadership in almost doubling Empire Resources' net income and his role in
orchestrating and providing the strategic direction for the establishment of the
European branch.
162(m) Tax Deductibility. Section 162(m) of the Code prohibits the
deduction by a publicly held corporation of compensation paid to a "covered
employee" in excess of $1 million per year, subject to exceptions for certain
performance-based compensation. Generally, Empire's covered employees are those
executive officers listed in the Summary Compensation Table above. While the tax
impact of any compensation arrangement is one factor to be considered, such
impact is evaluated by the Compensation Committee in light of Empire's overall
compensation philosophy and objectives. The Compensation Committee believes that
long-term stockholder value is enhanced by appropriately rewarding desirable
corporate and individual performance achievements and that under existing
circumstances such value may outweigh the advantages of qualifying compensation
as deductible under Section 162(m).
COMPENSATION COMMITTEE:
Mr. Jack Bendheim
Mr. William Spier
Compensation Committee Interlocks and Insider Participation
During fiscal year 2005, William Spier and Jack Bendheim served on the
Compensation Committee of the Company's board of directors for the entire year.
No member of the Compensation Committee was an officer or employee of the
Company or any of its subsidiaries during fiscal year 2005 or had any business
relationship or affiliation with the Company or any of its subsidiaries (other
than service as a director and in the case of Mr. Spier, service as the
non-executive chairman). During 2005 none of our executive officers served on
the compensation committee (or the equivalent), or board of directors, of
another entity whose executive officer(s) served on our Compensation Committee
or Board of Directors.
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 stockholder 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, 2000, and that all dividends were
reinvested.
11
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Comparison of Five--Year Cumulative Total Returns
Performance Graph for
Empire Resources, Inc.
[PERFORMANCE GRAPH]
Legend
Symbol CRSP Total Returns Index for: 12/2000 12/2001 12/2002 12/2003 12/2004 12/2005
- ---------- ---------------------------------------- ------- ------- ------- ------- ------- -------
[GRAPHICS] Empire Resources, Inc. 100.0 102.9 160.0 478.1 526.8 1449.5
[GRAPHICS] AMEX Stock Market (US Companies) 100.0 93.1 76.1 103.0 119.0 128.8
[GRAPHICS] AMEX Stocks (SIC 5050-5059 US Companies) 100.0 87.3 54.1 132.9 230.2 457.3
Metals and Minerals, Except Petroleum
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 12/29/2000.
12
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 17, 2006 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.
Percent of
Number of Shares Common Stock
Name and Address(1) Beneficially Owned(2) Owned
--------------------------------- --------------------- ------------
Directors and Executive Officers:
William Spier ................... 146,619(3) 1.5%
Nathan Kahn ..................... 4,777,523(4) 48.8%
Sandra Kahn ..................... 4,777,523(4) 48.8%
Harvey Wrubel ................... 573,327(5) 5.7%
Jack Bendheim ................... 12,000(6) *
Peter G. Howard ................. 12,000(7) *
Nathan Mazurek .................. 12,000(8) *
Morris J. Smith ................. 0 *
L. R. Milner .................... 0 *
All officers and directors
as a group (9 persons) ....... 5,533,469(9) 55.1%
- ----------
* 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, New Jersey 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.
(3) Includes 2,000 shares underlying options held by Mr. Spier that are
currently exercisable or that will become exercisable within 60 days.
(4) Includes 24,000 shares underlying options held by Nathan and Sandra Kahn
that are currently exercisable or that will become exercisable within 60
days. Nathan Kahn and Sandra Kahn share voting power and investment power
with respect to all shares reported.
(5) Includes 210,000 shares underlying options held by Mr. Wrubel that are
currently exercisable or that will become exercisable within 60 days.
(6) Consists of 12,000 shares underlying options held by Mr. Bendheim that are
currently exercisable or that will become exercisable within 60 days..
(7) Consists of 12,000 shares underlying options held by Mr. Howard that are
currently exercisable or that will become exercisable within 60 days..
(8) Consists of 12,000 shares underlying options held by Mr. Mazurek that are
currently exercisable or that will become exercisable within 60 days..
(9) Includes 272,000 shares underlying options that are currently exercisable
or that will become exercisable within 60 days.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2005, the Company has not engaged in any transaction, or
series of similar transactions, in which the amount involved exceeded $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.
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, 2005 through December 31, 2005, all Section 16 filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with on a timely basis.
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APPROVAL OF THE EMPIRE RESOURCES, INC. 2006 STOCK OPTION PLAN
Introduction
At the Annual Meeting, the Company will request stockholders to consider
and act upon a proposal to approve the Empire Resources, Inc. 2006 Stock Option
Plan (the "Plan"). The Plan is substantially similar to and will replace the
Integrated Technology USA, Inc. 1996 Stock Option Plan, which is in effect and
due to expire on July 29, 2006 (the "Prior Plan"). Shares remaining available
for award under the Prior Plan will be available for award under the Plan.
Summary
The following summary describes the material features of the but is not
intended to be complete and is qualified in its entirety by reference to Annex A
to this Proxy Statement.
Purpose and Eligibility for Participation
The Plan is being established to permit the Company to grant options with
respect to common stock of the Company ("Stock") to employees (presently
approximately 50 persons), officers (presently 3 persons), directors (presently
9 persons), consultants or advisors of, and other persons providing goods or
services to, the Company, any of its subsidiaries or any parent of the Company
(collectively, unless the context otherwise requires, the "Company"). Such
persons selected by the Plan Administrator (as defined below) will participate
in the Plan.
The stock options granted under the Plan may qualify as incentive stock
options, as defined in Section 422 of the Internal Revenue Code of 1986 (as from
time to time amended, the "Code").
Effective Date and Term of Plan
The Plan became effective upon being approved by the Board of Directors of
the Company (the "Board") on June 26, 2006, subject to shareholder approval of
the Plan. No option may be granted under the Plan after June 26, 2016, but
options previously granted may extend beyond that date.
Administration
The Plan will be administered by the Board of Directors of the Company or,
at the discretion of the Board, one or more committees of two or more directors
appointed from time to time by the Board (collectively, the "Plan
Administrator"); provided, however, that any grants of options to any "covered
employee" (as defined in Section 162(m) of the Code) and the terms and
conditions of such options shall be determined by a compensation committee
comprised solely of two or more members of the Board who each qualifies as an
"outside director" (as defined in Section 162(m) of the Code). Such compensation
committee shall certify that the performance goals and any other material terms
are satisfied with respect to any option and dividend equivalent rights intended
to qualify as "performance-based compensation" for purposes of Section 162(m) of
the Code.
The Plan Administrator shall have authority, not inconsistent with the
express provisions of the Plan to: (i) grant options to such eligible persons;
(ii) determine the time or times for granting the options and the number of
shares of Stock subject to each option; (iii) determine which options are
incentive options; (iv) determine the terms and conditions of each option; (v)
prescribe the form or forms of instruments evidencing options and any other
instruments required under the Plan and to change such forms from time to time;
(vi) accelerate the vesting of options; (vii) adopt, amend and rescind rules and
regulations for the administration of the Plan, and (viii) interpret the Plan
and decide any questions and settle all controversies and disputes that may
arise in connection with the Plan. Any determination, decision or action of the
Plan Administrator in connection with the construction, interpretation,
administration or application of the Plan is final and conclusive on all persons
participating in the Plan.
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Number of Shares Subject to the Plan
Subject to adjustment as provided in Section 8 of the Plan, the aggregate
number of shares of Stock that may be delivered upon the exercise of options
granted under the Plan shall be approximately 559,000, consisting of shares of
Stock available for award as of the Effective Date under the Prior Plan) that
are not subject to outstanding awards or that are not actually issued under
outstanding awards for any reason, including without limitation any shares of
Stock received as payment of the exercise price under such outstanding awards or
withheld as payment of any requisite tax withholdings. If any option granted
under the Plan terminates without having been exercised in full, the number of
shares of Stock as to which such option was not exercised shall be available for
future grants within the limits set forth in the Plan. In addition, if any
option granted under the Plan is exercised by the option holder delivering
previously owned shares of Stock or by having shares of Stock otherwise
deliverable under such option withheld as payment of the exercise price or any
required tax withholdings, only the number of shares of Stock exceeding the
number of shares so delivered or withheld shall be taken into account in
determining the number of shares available for future grant within the limits
set forth in the Plan. Shares delivered under the Plan may be authorized but
unissued Stock or previously issued Stock acquired by the Company and held in
treasury.
Terms and Conditions of Options
Annual Award Limits. Unless the Plan Administrator determines that an
option is not intended to qualify as performance-based compensation for purposes
of Section 162(m) of the Code, the maximum number of shares of Stock with
respect to which any options may be granted or measured under the Plan to any
individual in any calendar year shall be 25,000 shares ("Annual Award Limit").
Exercise Price. The exercise price of each option shall be determined by
the Plan Administrator, provided that it may not be less than 100% (110% for an
incentive option granted to a greater than ten-percent shareholder) of the fair
market value per share of Stock at the time the option is granted. For purposes
of the Plan, the fair market value of a share of Stock as of any date equals the
mean between the high and low sales prices on the American Stock Exchange or
other national securities exchange or the NASDAQ NMS on which the Stock is
listed on such date, if not so listed or quoted, but quoted through NASDAQ (but
not on its NMS), fair market value shall mean the mean between the closing
reported bid and asked prices on such date, provided, however, that if fair
market value is to be determined as described above and the Plan Administrator
determines that such mean does not properly reflect fair market value, or if the
Stock is not quoted on a securities exchange or through NASDAQ, then fair market
value shall be determined by such other method as the Plan Administrator
determines to be reasonable and consistent with applicable requirements of the
Code.
Duration of Options. The options granted will be exercisable during such
period or periods as the Plan Administrator may specify, but in no event for a
period of more than ten years (five years, in the case of an incentive option
granted to a "greater than ten-percent shareholder") from the date the option
was granted or such earlier date as may be specified by the Plan Administrator
at the time the option is granted.
Exercise of Options. At the time of the grant of an option, the Plan
Administrator will specify whether the option is exercisable in full at any time
prior to the expiration of its term or in installments (which may be cumulative
or noncumulative). In the case of an option not immediately exercisable in full,
the Plan Administrator may at any time accelerate the time at which all or any
part of the option may be exercised. Payment in connection with the exercise of
an option may be made in cash or by certified check, money order or bank draft.
The Plan Administrator may also permit payment of any portion of the exercise
price and any required tax withholdings by an option holder delivering
previously owned shares, having shares withheld that were otherwise deliverable
upon exercise, providing a full recourse, interest-bearing promissory note
secured by the stock delivered upon exercise, delivering irrevocable
instructions to a broker to sell shares acquired upon exercise and delivering
proceeds to the Company.
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The Plan Administrator may require an individual exercising an option to
remit to the Company an amount sufficient to satisfy any federal, state, or
local withholding tax requirements (or make other arrangements satisfactory to
the Company with regard to such taxes) prior to the delivery of any Stock
pursuant to the exercise of the option. In the case of an incentive option, if
at the time the option is exercised the Plan Administrator determines that under
applicable law and regulations the Company could be liable for the withholding
of any federal, state or local tax with respect to a disposition of the Stock
received upon exercise, the Plan Administrator will require as a condition of
exercise that the individual exercising the option agree to inform the Company
promptly of any disposition (within the meaning of Section 424(c) of the Code
and the regulations thereunder) of Stock received upon exercise, and may require
as a condition of exercise that the individual exercising the option give such
security as the Plan Administrator deems adequate to meet the potential
liability of the Company for the withholding of tax, and to augment such
security from time to time in any amount reasonably deemed necessary by the Plan
Administrator to preserve the adequacy of such security.
Termination of Employment. An employee's options terminate immediately
upon the termination of his employment with the Company, subject to the
following exceptions: (i) if the termination is by reason of the death or
disability of the employee, the unexercised portion of such options will
continue to be exercisable for 12 months after such termination (but only to the
extent that such options were exercisable immediately prior to the date of such
termination and in no event beyond the original term of such options) and (ii)
if the termination is for any other reason, excluding termination for cause, the
unexercised portion of such options will continue to be exercisable for three
months after such termination (but only to the extent, if any, that such options
were exercisable immediately prior to the date of such termination and in no
event beyond the original term of such options); provided, however, that the
foregoing right of an option holder to exercise options following termination of
employment is subject to the condition that the option holder did not conduct
himself during the term of his employment or thereafter in a manner which
adversely affects the Company. Notwithstanding the foregoing, the Plan
Administrator in its discretion in any particular case may provide that upon
termination of an employee's employment with the Company, the unexercised
portion of his options will continue to be exercisable for a longer or shorter
period than the period provided for in the preceding sentence; provided,
however, that (i) in the case of an incentive option, the Plan Administrator may
not provide for a shorter or longer period after the option is granted and, in
any event, may not provide for a longer period except in the case where the
employee's employment is terminated by reason of death and (ii) in the case of
an option that is not an incentive option, the Plan Administrator may not
provide for a shorter period after the option is granted. For purposes of this
paragraph, employment shall not be considered terminated (i) in the case of sick
leave or other bona fide leave of absence approved for purposes of the Plan by
the Plan Administrator, so long as the employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) in the case of a transfer
of employment between the Company and a subsidiary or between subsidiaries, or
to the employment of a corporation (or a parent or subsidiary corporation of
such corporation) issuing or assuming an option in a transaction to which
Section 424(a) of the Code applies.
Delivery of Stock. The Company shall not be obligated to deliver any
shares of Stock (a) until, in the opinion of the Company's counsel, all
applicable federal and state laws and regulations have been complied with, and
(b) if the outstanding Stock is at the time listed on any stock exchange, until
the shares to be delivered have been listed or authorized to be listed on such
exchange upon official notice of issuance, and (c) until all other legal matters
in connection with the issuance and delivery of such shares have been approved
by the Company's counsel. If the sale of Stock has not been registered under the
Securities Act, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
Nontransferability of Options. No option may be transferred other than by
will or by the laws of descent and distribution, and during the lifetime of the
person to whom granted may be exercised only by such person; provided, however,
that an option that is not an incentive option may be otherwise transferred to
the extent, if any, permitted by the Plan Administrator.
Restrictions on Stock. The Plan Administrator may provide that shares of
Stock purchased through the exercise of options under the Plan be subject to
such restrictions on resale, including restrictions requiring resale to the
Company at or below fair market value, or such other restrictions, as the Plan
Administrator determines in its sole discretion, and shall take such steps as it
deems necessary or appropriate to carry out the purposes of any such
restriction; provided, however, that any such restrictions relating to the
shares of Stock that may be purchased upon exercise of an option may not be
provided for after the option has been granted.
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Dividend Equivalents. The Plan Administrator may grant dividend
equivalents to option holders based on the dividends declared on Stock that is
subject to any option. The grant of dividend equivalents will be treated as a
separate award. Dividend equivalents will be credited to a notional account
maintained by the Company, as of dividend payment dates during the period
between the date the option is granted and the date the option is exercised,
vested, expired, credited or paid. Such dividend equivalents will be converted
to cash or shares by such formula and at such time and subject to such
limitations as may be determined by the Plan Administrator. As determined by the
Plan Administrator, dividend equivalents granted with respect to any option may
be payable regardless of whether such option is subsequently exercised.
Mergers, Recapitalizations, Etc.
In the event of a consolidation or merger in which the Company is not the
surviving corporation or in the event of any transaction that results in the
acquisition of 50% or more of the Company's outstanding Stock by a single person
or entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or other transfer of all or substantially all of the Company's
assets (all the foregoing being referred to as "Acquisition Events"), then the
Plan Administrator may in its discretion terminate all outstanding options by
delivering notice of termination to each option holder; provided, however, that,
during the 20-day period following the date on which such notice of termination
is delivered, each option holder shall have the right to exercise in full all of
his options that are then outstanding (without regard to any condition with
respect to the exercise of any installment that relates to the passage of time).
If an Acquisition Event occurs and the Plan Administrator does not
terminate the outstanding options pursuant to the preceding paragraph, then the
following provisions will apply. In the event that the outstanding shares of
Stock are changed into or exchanged for a different number or kind of shares or
other securities or property (including cash) of the Company or of another
corporation by reason of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capital stock, reorganization,
merger, sale or other transfer of substantially all the Company's assets to
another corporation, consolidation, or other transaction described in Section
424(a) of the Code, the Plan Administrator shall make appropriate adjustments
(in such manner as it deems equitable in its sole discretion) in (i) the number
and kind of shares of Stock, other securities or property for the purchase of
which options maybe granted under the Plan, (ii) the number and kind of shares
of Stock, other securities or property as to which outstanding options, or
portions there of then unexercised, shall be exercisable, (iii) the exercise
price and other terms of outstanding options and (iv) any other relevant
provisions of the Plan. Any adjustment of the Plan or in outstanding options
shall be effective on the effective date of the event giving rise to such
adjustment. The Plan Administrator may also adjust the number of shares subject
to outstanding options, the exercise price of outstanding options and the terms
of outstanding options to take into consideration any other event (including,
without limitation, accounting changes) if the Plan Administrator determines
that such adjustment is appropriate to avoid enlargement or diminishment of the
rights of any option holder. All determinations and adjustments made by the Plan
Administrator as described in this paragraph are binding on all persons.
The Plan Administrator may grant options under the Plan in substitution
for options held by employees of another corporation who concurrently become
employees of the Company or a subsidiary of the Company as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as the result of the acquisition by the Company of
property or stock of the employing corporation. The Company may direct that
substitute awards be granted on such terms and conditions as the Plan
Administrator considers appropriate in the circumstances.
Compliance with Code Section 409A.
To the extent that the Plan and/or options or other awards thereunder are
subject to Code Section 409A, the Plan Administrator may, in its sole discretion
and without the prior consent of any participant in the Plan, amend the Plan
and/or options or awards thereunder, adopt policies and procedures, or take any
other actions (including amendments, policies, procedures and actions with
retroactive effect) as are necessary or appropriate to (a) exempt the Plan
and/or any award from the application of Code Section 409A, (b) preserve the
intended tax treatment of any such award, or (c) comply with the requirements of
Code Section 409A, including any regulations that may be issued after the grant
of any award. Notwithstanding the foregoing, neither the Plan Administrator nor
the Company is obligated to ensure that awards comply with Code Section 409A or
to take any actions to ensure such compliance.
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Timing of Payment
All options or other awards under the Plan shall be paid or otherwise
settled on or as soon as practicable after the applicable payment date and not
later than the 15th day of the third month from the end of (i) the individual's
tax year that includes the applicable payment date, or (ii) the Company's tax
year that includes the applicable payment date, whichever is later. Such payment
or payments are intended to comply with the "short-term deferral" exemption from
the application of Code Section 409A. For purposes of this paragraph, "payment
date" means the date such award is no longer subject to a "substantial risk of
forfeiture" for purposes of Code Section 409A.
Rules Applicable to Awards Subject to Code Section 409A
Delay of Payment Permitted Under Certain Circumstances. The Plan
Administrator reserves the right to delay payment with respect to any option or
other award under the following circumstances:
o The Company reasonably anticipates that the deduction with
respect to such payment otherwise would be limited or
eliminated by application of Code Section 162(m). Any such
delayed payment shall be made either at the earliest date at
which the Company reasonably anticipates that the deduction of
such payment will not be limited or eliminated by the
application of Code Section 162(m) of the calendar year in
which the holder ends his association with the Company.
o The Company reasonably anticipates that the making of the
payment will violate a term of a loan agreement to which the
Company is a party, or other similar contract to which the
Company is a party, and such violation will cause material
harm to the Company. Any such delayed payment shall be made at
the earliest date at which the Company reasonably anticipates
that the making of the payment will not cause material harm to
the Company.
o The Company reasonably anticipates that the making of the
payment will violate federal securities laws or other
applicable law. Any such delayed payment shall be made at the
earliest date at which the Company reasonably anticipates that
the making of the payment will not cause such violation. For
this purpose, the making of a payment under the Plan that
would cause inclusion in gross income or the application of
any penalty provision or other provision of the Code shall not
be treated as a violation of applicable law.
o The Company may delay a payment upon such other events and
conditions as the Commissioner of the Internal Revenue Service
may prescribe in generally applicable guidance published in
the Internal Revenue Bulletin.
Delay of Payment to a Specified Employee Pursuant to a Separation From
Service. Notwithstanding any contrary provision in the Plan or any option or
other award, any payment(s) that are otherwise required to be made under the
Plan to a "specified employee" (as defined under Code Section 409A) as a result
of his or her separation from service shall be delayed for the first six months
following such separation from service (or, if earlier, the date of death of the
specified employee) and shall instead be paid on the payment date that
immediately follows the end of such six-month period or as soon as
administratively practicable thereafter.
No Assurances Regarding Tax Treatment. Participants (or their
beneficiaries) shall be responsible for all taxes with respect to any options or
other awards under the Plan. The Plan Administrator and the Company make no
assurances to any person regarding the tax treatment of awards or payments made
under the Plan. Neither the Plan Administrator or the Company has any obligation
to take any action to prevent the assessment of any excise tax on any person
with respect to any award under Code Section 409A.
Effect, Discontinuance, Cancellation, Amendment and Termination
Neither adoption of the Plan nor the grant of options to an employee may
affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
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The Plan Administrator may at any time discontinue granting options under
the plan. With the consent of the option holder, the Plan Administrator may at
any time cancel an existing option in whole or in part and grant the option
holder another option for such number of shares as the Plan Administrator
specifies. The Plan Administrator may at any time or times amend the Plan,
provided that (i) no such amendment shall affect the rights of any option holder
(without his consent) under any option previously granted, and (ii) without the
approval of the stockholders of the Company, no such amendment shall (a)
increase the maximum number of shares available under the Plan for delivery
pursuant to the exercise of incentive options, (b) change the group of employees
eligible to receive incentive options, (c) reduce the price at which incentive
options may be granted, (d) extend the time within which incentive options may
be granted, (e) alter the Plan in such a way that incentive options already
granted hereunder would not be considered incentive stock options under Section
422 of the Code, or (f) amend the provisions of this paragraph. The Plan
Administrator may at any time terminate the Plan as to any further grants of
options.
Certain Federal Income Tax Consequences
The statements in the following paragraphs of the principal U.S. federal
income tax consequences of the options and dividend equivalent rights under the
Plan are based on statutory authority and judicial and administrative
interpretations, as of the date of this Proxy Statement, which are subject to
change at any time (possibly with retroactive effect). This discussion is
limited to the U.S. federal income tax consequences to individuals who are
citizens or residents of the United States. The law is technical and complex,
and the factual circumstances to which the law applies are subject could vary
considerably. Accordingly, the discussion below represents only a general
summary and is not intended to address every situation. The following is not be
considered as tax advice to any persons who may be participants in the Plan, and
any such persons are advised to consult their own tax counsel.
Incentive Stock Options
Incentive options ("ISOs") granted under the Plan are intended to meet the
definitional requirements of Section 422(b) of the Internal Revenue Code of
1986, as amended ("Code") for "incentive stock options." An employee who
receives an ISO does not recognize any taxable income upon the grant of such
ISO. Similarly, the exercise of an ISO generally does not give rise to federal
income tax to the employee, provided that (1) the federal "alternative minimum
tax," which depends on the employee's particular tax situation, does not apply
and (2) the employee is employed by the Company from the date of grant of the
option until three months prior to the exercise thereof, except where such
employment terminates by reason of disability (where the three month period is
extended to one year) or death (where this requirement does not apply). If an
employee exercises an ISO after the requisite periods referred to in clause (2)
above, the ISO will be treated as an NSO (defined below) and will be subject to
the rules set forth below under the caption "Non-Qualified Stock Options."
Further, if after exercising an ISO, an employee disposes of the Stock so
acquired more than two years from the date of grant and more than one year from
the date of transfer of the Stock pursuant to the exercise of such ISO (the
"applicable holding period"), the employee will generally recognize capital gain
or loss equal to the difference, if any, between the amount received for the
shares and the exercise price. If, however, an employee does not hold the shares
so acquired for the applicable holding period--thereby making a "disqualifying
disposition"--the employee would recognize ordinary income equal to the excess
of the fair market value of the shares at the time the ISO was exercised over
the exercise price and the balance, if any, would generally be treated as
capital gain. If the disqualifying disposition is a sale or exchange that would
permit a loss to be recognized under the Code (were a loss in fact to be
realized), and the sales proceeds are less than the fair market value of the
shares on the date of exercise, the employee's ordinary income therefrom would
be limited to the gain (if any) realized on the sale. An employee who exercises
an ISO by delivering shares of Stock previously acquired pursuant to the
exercise of another ISO is treated as making a "disqualifying disposition" of
such Stock if such shares are delivered before the expiration of their
applicable holding period. Upon the exercise of an ISO with previously acquired
shares as to which no disqualifying disposition occurs, it appears that the
employee would not recognize gain or loss with respect to such previously
acquired shares. The Company will not be allowed a federal income tax deduction
upon the grant or exercise of an ISO or the disposition, after the applicable
holding period, of the Stock acquired upon exercise of an ISO. In the event of a
disqualifying disposition, the Company generally will be entitled to a deduction
in an amount equal to the ordinary income included by the employee, provided
that such amount constitutes an ordinary and necessary business expense to the
Company and is reasonable and the limitations of Sections 280G and 162(m) of the
Code (discussed below) do not apply.
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Non-Qualified Stock Options
Non-qualified stock options ("NSOs") granted under the Plan are options
that do not qualify as ISOs. An employee who receives an NSO will not recognize
any taxable income upon the grant of such NSO. However, the employee generally
will recognize ordinary income upon exercise of an NSO in an amount equal to the
excess of the fair market value of the shares of Stock at the time of exercise
over the exercise price. As a result of Section 16(b) of the Exchange Act, under
certain circumstances, the timing of income recognition may be deferred
following the exercise of an NSO (the "Deferral Period") for any individual who
is an executive officer or director of the Company or a beneficial owner of more
than ten percent (10%) of any class of equity securities of the Company. Absent
a Section 83(b) election, recognition of income by the individual will be
deferred until the expiration of the Deferral Period, if any. The ordinary
income recognized with respect to the receipt of shares or cash upon exercise of
an NSO will be subject in the case of any employee to both wage withholding and
other employment taxes. A federal income tax deduction generally will be allowed
to the Company in an amount equal to the ordinary income included by any
employee with respect to his or her NSO, provided that such amount constitutes
an ordinary and necessary business expense to the Company and is reasonable and
the limitations of Sections 280G and 162(m) of the Code do not apply. If an
individual exercises an NSO by delivering shares of Stock, other than shares
previously acquired pursuant to the exercise of an ISO which is treated as a
"disqualifying disposition" as described above, the individual will not
recognize gain or loss with respect to the exchange of such shares, even if
their then fair market value is different from the individual's tax basis. The
individual, however, will be taxed as described above with respect to the
exercise of the NSO as if he or she had paid the exercise price in cash, and the
Company likewise generally will be entitled to an equivalent tax deduction.
Dividends and Dividend Equivalents
An option holder may be granted, at the discretion of the Plan
Administrator, dividend equivalent rights with respect to shares of Stock
subject to an option granted under the Plan. In the event dividend equivalent
rights are granted as to any share of Stock subject to an option, as of the same
date and on the same terms as dividends are actually paid with respect to an
outstanding share of stock, an amount equal to the amount of such dividend shall
either be paid currently to such holder or credited to a notional account
established by the Company in the name of such holder, as determined by the Plan
Administrator in its discretion. The Plan Administrator also has considerable
flexibility regarding the terms and conditions upon which such amounts credited
to such notional account shall be paid to the option holder, including, without
limitation, payment of such amounts before, on or after the option to which such
dividend equivalent rights relate is exercisable. An option holder generally
will recognize ordinary income with respect to the amount in cash or the fair
market value of property paid in respect of dividend equivalents on the date
such amounts are not transferable or subject to a substantial risk of forfeiture
(as determined for purposes of Code, including Section 409A thereof). The
ordinary income recognized by any option holder who is an employee with respect
to the receipt of cash or other property under the Plan will be subject to both
wage withholding and other employment taxes. The Company generally will be
allowed a deduction for federal income tax purposes in an amount equal to the
ordinary income recognized by the employee, provided that such amount
constitutes an ordinary and necessary business expense and is reasonable and the
limitations of Sections 280G and 162(m) of the Code do not apply.
Change in Control
In general, if the total amount of payments to certain individuals that
are contingent upon a "change in control" of the Company (as defined in Section
280G of the Code), including payments under the Plan that vest upon a "change in
control," equals or exceeds three times the individual's "base amount"
(generally, such individual's average annual compensation for the five calendar
years preceding the change in control), then, subject to certain exceptions, the
payments may be treated as "parachute payments" under the Code, in which case a
portion of such payments would be non-deductible to the Company and the
individual would be subject to a 20% excise tax on such portion of the payments.
Certain Limitations on Deductibility of Executive Compensation
Section 162(m) of the Code prohibits the deduction by a publicly held
corporation of compensation paid to a "covered employee" in excess of $1 million
per year, subject to exceptions for certain performance-based compensation.
Generally, the Company's covered employees are those executive officers listed
in the Summary Compensation Table above. All options to be granted under the
Plan are required to have an exercise price per share of Stock that is equal to
the fair market value of such share as of the date of grant and therefore could
qualify as
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performance-based compensation if the other requirements of Section 162(m) are
satisfied, including, among other requisites, the involvement of a compensation
committee comprised solely of outside directors in making grants to and
certifying the satisfaction of the performance goals and other material terms of
the options. The Plan is being submitted for approval by the shareholders of the
Company because such approval is one of the requirements in order for options
under the Plan to qualify for the performance-based compensation exception. If
approved by its stockholders and the other requirements are met, the Company
believes that options granted under the Plan should qualify for the
performance-based compensation exception to Section 162(m) of the Code. While
the tax impact of any compensation arrangement is one factor to be considered,
such impact is evaluated by the Plan Administrator in light of the Company's
overall compensation philosophy and objectives.
Other Information
The closing price of a share of Empire Resources, Inc. common stock on
April 24, 2006 was $45.20.
No awards have been made under the Plan.
Board Recommendation
The Board of Directors believes that the Empire Resources, Inc. 2006 Stock
Option Plan is in the best interests of the Company and its stockholders and
therefore recommends that the stockholders vote FOR the approval of the Empire
Resources, Inc. 2006 Stock Option Plan. It is intended that the proxies will be
voted in such manner unless otherwise directed.
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EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2005 regarding
our only compensation plan, our 1996 Stock Option Plan, under which our common
stock is authorized for issuance.
----------------------------------------------------------
Equity Compensation Plan Information
----------------------------------------------------------
Number of
securities
remaining
available for
future
issuance under
equity
compensation
Number of securities Weighted average plans (excluding
to be issued upon exercise price of securities
exercise of outstanding reflected
Plan category outstanding options options in column (a))
- -------------------------------------------------- -------------------- ----------------- ----------------
(a) (b) (c)
Equity compensation plans approved by security
holders 359,000 1.65 559,000
Equity compensation plans not approved by security
holders - - -
Total 359,000 1.65 559,000
THE 2006 STOCK OPTION PLAN
Name and Position Dollar Value ($)(1) Number of Units(1)
- ------------------------------------------ ------------------- ---------------------
Nathan Kahn ................................. - -
Chief Executive Officer and President
Sandra Kahn ................................. - -
Vice President, Chief Financial Officer,
Treasurer and Secretary
Harvey Wrubel ............................... - -
Vice President of Sales
Executive Officer Group ..................... - -
Non-Executive Director Group ................ - -
Non-Executive Officer Employee Group ........ - -
(1) The benefits under the 2006 Stock Option Plan are not determinable because
no options have been awarded under the 2006 Stock Option Plan, nor can
such determination be made for the prior fiscal year.
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 the Board of Directors or any individual Board
members, c/o Empire Resources, Inc., at the following address: One Parker Plaza,
Fort Lee, New
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Jersey 07024. Our policy is to forward without screening any mail received at
our corporate office that is sent to the Board of Directors or any individual
Board member.
Code of Ethics
Our Board of Directors has adopted a Code of Business Conduct and 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 Business Conduct and 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 stockholders, including consolidated financial
statements of the Company and its subsidiaries prepared in conformity with
generally accepted accounting principles, is being distributed to all
stockholders 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, New Jersey 07024.
By Order of the Board of Directors,
/s/ Sandra Kahn
SANDRA KAHN
Vice President, Chief Financial Officer,
Treasurer and Secretary
Fort Lee, New Jersey
April 28, 2006
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ANNEX A
EMPIRE RESOURCES, INC.
2006 STOCK OPTION PLAN
1. Purpose.
The purpose of the Empire Resources, Inc. 2006 Stock Option Plan
(the "Plan") is to encourage and enable employees, officers and directors of
Empire Resources Inc., or a parent (if any) or subsidiaries thereof
(collectively, unless the context otherwise requires, the "Company"),
consultants, and advisors to the Company, and other persons or entities
providing goods or services to the Company to acquire a proprietary interest in
the Company through the ownership of common stock of the Company ("Stock").
(Such directors, consultants, advisors, and other persons or entities providing
goods or services to the Company and entitled to receive options hereunder being
collectively referred to as the "Associates," and the relationship of the
Associates to the Company being referred to as "association with" the Company.)
Such ownership will provide such employees and Associates with a more direct
stake in the future welfare of the Company and encourage them to remain employed
by or associated with the Company. The Plan will also encourage qualified
persons to seek and accept employment or association with the Company.
2. Type of Options.
Options granted pursuant to the Plan may (subject to the following
two sentences) be incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986 (as from time to time amended, the "Code") (any
option that is intended so to qualify as an incentive stock option being
referred to herein as an "incentive option"), or options that are not incentive
options, or both. Incentive options may only be granted to "employees" as
defined in the provisions of the Code or regulations thereunder applicable to
incentive stock options.
3. Effective Date and Term of Plan.
The Plan became effective upon being approved by the Board of
Directors of the Company (the "Board") on June 26, 2006, subject to shareholder
approval of the Plan. No option may be granted under the Plan after June 26,
2016, but options previously granted may extend beyond that date.
4. Administration.
(a) Subject to the following sentence, the Plan shall be administered by
the Board. The Board may delegate any and all of its authority and
administrative powers and functions under the Plan to one or more committees of
two or more directors appointed from time to time by the Board; provided that
any grants of options to any "covered employee" (as defined in Section 162(m) of
the Code) and any related matters shall be administered by a compensation
committee comprised solely of "outside directors" (as defined in Section 162(m)
of the Code). Each such committee to which any duties or authority is delegated
as aforesaid is referred to herein as a "Committee". If there are multiple
Committees, the authority, powers and functions delegated to each Committee may
be different or the same. Unless otherwise provided by the Board resolution
establishing a Committee, (i) a majority of the members of a Committee shall
constitute a quorum, (ii) all determinations of the Committee shall be made by a
majority of its members and (iii) any determination of the Committee may be
made, without notice or meeting of the Committee, by a writing signed by a
majority of the Committee members. Each reference herein to the "Plan
Administrator" with respect to any authority, power or function shall mean the
Board and/or any Committee to which the Board has delegated the power to
exercise such authority or power or to perform such function, as the case may
be.
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(b) The Plan Administrator shall have authority, not inconsistent with
the express provisions of the Plan, (i) to grant options to such eligible
employees and Associates of the Company as the Plan Administrator may select;
(ii) to determine the time or times when options shall be granted and the number
of shares of Stock subject to each option; (iii) to determine which options are,
and which options are not, incentive options; (iv) to determine the terms and
conditions of each option; (v) to prescribe the form or forms of instruments
evidencing options and any other instruments required under the Plan and to
change such forms from time to time; (vi) to accelerate the vesting of options;
(vii) to adopt, amend and rescind rules and regulations for the administration
of the Plan, and (viii) to interpret the Plan and to decide any questions and
settle all controversies and disputes that may arise in connection with the
Plan. Any determination, decision or action of the Plan Administrator in
connection with the construction, interpretation, administration or application
of the Plan shall be final and conclusive on all persons participating in the
Plan.
5. Shares Subject to the Plan.
(a) Number of Shares.
Subject to adjustment as provided in Section 8, the aggregate number
of shares of Stock that may be delivered upon the exercise of options granted
under the Plan shall be any shares of Stock available as of the Effective Date
under the Integrated Technology USA, Inc. 1996 Stock Option Plan ("Prior Plan")
that are not subject to outstanding awards or that are not actually issued under
outstanding awards for any reason, including without limitation any shares of
Stock received as payment of the exercise price under such outstanding awards or
withheld as payment of any requisite tax withholdings. If any option granted
under the Plan terminates without having been exercised in full, the number of
shares of Stock as to which such option was not exercised shall be available for
future grants within the limits set forth in this Section 5(a). In addition, if
any option granted under the Plan is exercised by the option holder delivering
previously owned shares of Stock or by having shares of Stock otherwise
deliverable under such option withheld as payment of the exercise price or any
required tax withholdings, only the number of shares of Stock exceeding the
number of shares so delivered or withheld shall be taken into account in
determining the number of shares available for future grant within the limits
set forth in this Section 5(a).
(b) Shares to be Delivered.
Shares delivered under the Plan shall be authorized but unissued
Stock or if the Plan Administrator so decides in its sole discretion, previously
issued Stock acquired by the Company and held in treasury. No fractional shares
of Stock shall be delivered under the Plan.
6. Eligibility for Options.
Options may be granted to such Employees and Associates of the
Company as the Plan Administrator shall from time to time select (subject to the
second sentence of Section 2 hereof). Receipt of options under the Plan or of
awards under any other employee benefit plan of the Company shall not preclude
an employee from receiving options or additional options under the Plan.
7. Terms and Conditions of Options.
(a) Annual Award Limits. Unless the Plan Administrator determines that
an option is not intended to qualify as performance-based compensation for
purposes of Section 162(m) of the Code, the following limit ("Annual Award
Limit") shall apply to options granted under the Plan: the maximum number of
shares of Stock with respect to which any options may be granted or measured to
any individual in any calendar year shall be 25,000 shares, subject to
adjustment as provided in Section 8.
(b) Special Rule for Incentive Options. Consistent with Section 422 of
the Code and any regulations, notices or other official pronouncements of
general applicability, to the extent the aggregate
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fair market value (determined in accordance with Section 7(b) as of the time the
option is granted) of the shares of Stock with respect to which incentive
options are exercisable for the first time by the optionee during any calendar
year (under all plans of his employer corporation and its parent and subsidiary
corporations) exceeds $100,000, such options shall not be treated as incentive
options. Nothing in this special rule shall be construed as limiting the
exercisability of any option, unless the Plan Administrator expressly provides
for such a limitation at time of grant.
(c) Exercise Price. The exercise price of each option shall be
determined by the Plan Administrator, subject to the following: the exercise
price per share of stock shall not be less than 100% (110% for an incentive
option granted to a greater than ten-percent shareholder) of the fair market
value per share of Stock on the date the option is granted. A "greater than
ten-percent shareholder" shall mean for purposes of the Plan any employee who at
the time of grant owns directly, or is deemed to own by reason of the
attribution rules set forth in Section 424(d) of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company. The fair market value of a share of Stock as of any date shall be
determined for purposes of the Plan as follows: (i) if the Stock is listed on a
securities exchange or quoted through the Automated Quotation National Market
System of the National Association of Securities Dealers, Inc. ("NASDAQ"), the
fair market value shall equal the mean between the high and low sales prices on
such exchange or through such market system, as the case may be, on such day or
in the absence of reported sales on such day, the mean between the closing
reported bid and asked prices on such exchange or through such market system, as
the case may be, on such day, (ii) if the Stock is not listed or quoted as
described in the preceding clause but is quoted through NASDAQ (but not through
the National Market System), the fair market value shall equal the mean between
the closing bid and asked prices as quoted by the National Association of
Securities Dealers, Inc., through NASDAQ for such day and (iii) if the Stock is
not listed or quoted on a securities exchange or through NASDAQ, then the fair
market value shall be determined by such other method as the Plan Administrator
determines to be reasonable and consistent with applicable requirements of the
Code and the regulations issued thereunder applicable to incentive options;
provided, however, that if pursuant to clause (i) or (ii) fair market value is
to be determined based upon the mean of bid and asked prices and the Plan
Administrator determines that such mean does not properly reflect fair market
value, then fair market value shall be determined by the Plan Administrator as
provided in clause (iii).
(d) Duration of Options. An option shall be exercisable during such
period or periods as the Plan Administrator may specify. The latest date on
which an option may be exercised (the "Final Exercise Date") shall be the date
which is ten years (five years, in the case of an incentive option granted to a
"greater than ten-percent shareholder" as defined in Section 7(c)) from the date
the option was granted or such earlier date as may be specified by the Plan
Administrator at the time the option is granted.
(e) Exercise of Options.
(1) At the time of the grant of an option, the Plan Administrator
shall specify whether the option shall be exercisable in full at any time prior
to the Final Exercise Date or in installments (which may be cumulative or
noncumulative). In the case of an option not immediately exercisable in full,
the Plan Administrator may at any time accelerate the time at which all or any
part of the option may be exercised.
(2) The award forms or other instruments evidencing incentive
options shall contain such provisions relating to exercise and other matters as
are required of incentive options under the applicable provisions of the Code
and the regulations thereunder, as from time to time in effect.
(3) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by (a) the
option certificate and any other documents required by the Plan Administrator
and (b) payment in full for the number of shares for which the option is
exercised.
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(4) In the case of an option that is not an incentive option, the
Plan Administrator shall have the right to require that the individual
exercising the option remit to the Company an amount sufficient to satisfy any
federal, state, or local withholding tax requirements (or make other
arrangements satisfactory to the Company with regard to such taxes) prior to the
delivery of any Stock pursuant to the exercise of the option. In the case of an
incentive option, if at the time the option is exercised the Plan Administrator
determines that under applicable law and regulations the Company could be liable
for the withholding of any federal, state or local tax with respect to a
disposition of the Stock received upon exercise, the Plan Administrator (i)
shall require as a condition of exercise that the individual exercising the
option agree to inform the Company promptly of any disposition (within the
meaning of Section 424(c) of the Code and the regulations thereunder) of Stock
received upon exercise, and (ii) may require as a condition of exercise that the
individual exercising the option give such security as the Plan Administrator
deems adequate to meet the potential liability of the Company for the
withholding of tax, and to augment such security from time to time in any amount
reasonably deemed necessary by the Plan Administrator to preserve the adequacy
of such security.
(5) If an option is exercised by the executor or administrator of
a deceased employee or Associate, or by the person or persons to whom the option
has been transferred by the employee's or Associate's will or the applicable
laws of descent and distribution or otherwise, the Company shall be under no
obligation to deliver Stock pursuant to such exercise until the Company is
satisfied as to the authority of the person or persons exercising the option.
(f) Termination of Employment.
An employee's options shall terminate immediately upon the
termination of his employment with the Company, subject to the following
exceptions: (i) if the termination is by reason of the death or disability of
the employee, the unexercised portion of such options shall continue to be
exercisable for 12 months after such termination (but only to the extent that
such options were exercisable immediately prior to the date of such termination
and in no event beyond the original term of such options) and (ii) if the
termination is for any other reason, excluding termination for cause, the
unexercised portion of such options shall continue to be exercisable for three
months after such termination (but only to the extent, if any, that such options
were exercisable immediately prior to the date of such termination and in no
event beyond the original term of such options); provided, however, that the
foregoing right of an option holder to exercise options following termination of
employment is subject to the condition that the option holder shall not have
conducted himself during the term of his employment or thereafter in a manner
which adversely affects the Company. Notwithstanding the foregoing, the Plan
Administrator in its discretion in any particular case may provide that upon
termination of an employee's employment with the Company, the unexercised
portion of his options shall continue to be exercisable for a longer or shorter
period than the period provided for in the preceding sentence; provided,
however, that (i) in the case of an incentive option, the Plan Administrator may
not provide for a shorter or longer period after the option is granted and, in
any event, may not provide for a longer period except in the case where the
employee's employment is terminated by reason of death and (ii) in the case of
an option that is not an incentive option, the Plan Administrator may not
provide for a shorter period after the option is granted. For purposes of this
Section 7(f), employment shall not be considered terminated (i) in the case of
sick leave or other bona fide leave of absence approved for purposes of the Plan
by the Plan Administrator, so long as the employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) in the case of a transfer
of employment between the Company and a subsidiary or between subsidiaries, or
to the employment of a corporation (or a parent or subsidiary corporation of
such corporation) issuing or assuming an option in a transaction to which
Section 424(a) of the Code applies.
(g) Payment for Stock.
Stock purchased under the Plan upon exercise of an option shall be
paid for as follows:
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(i) in cash or by certified check or bank draft or money
order payable to the order of the Company; or
(ii) with the consent of the Plan Administrator and to the
extent permitted by it (not later than the time of grant, in the case of an
incentive option) as follows:
(A) through the delivery of shares of Stock having a
fair market value (determined as provided in Section 7(c)) on the
date of exercise equal to the purchase price (but only if such
shares have been held by the option holder for a period of time
sufficient to prevent a pyramid exercise that would create a charge
to the Company's earnings); or
(B) by delivery of a full recourse interest bearing
promissory note of the option holder to the Company, secured by a
pledge of the Stock being purchased, such note to be payable in the
case of an incentive option, on such terms as are specified in the
option (except that, in lieu of a stated rate of interest, an
incentive option may provide that the rate of interest on the note
will be such rate as is sufficient, at the time the note is given,
to avoid the imputation of interest under the applicable provisions
of the Code); provided, that if the Stock delivered upon exercise of
the option is an original issue of authorized Stock, at least so
much of the exercise price as represents the par value of such Stock
shall be paid in cash or by a combination of cash and Stock; or
(C) by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to sell shares
acquired upon exercise of the option and promptly to deliver to the
Company a portion of the proceeds thereof equal to the exercise
price, or
(D) by delivering a properly executed exercise notice
together with instructions to withhold shares of Stock having a fair
market value equal to the amount of the applicable exercise price
and, at the option holder's election, any additional amount to
satisfy any federal, state or local withholding tax requirements;
and
(E) any combination of any of the foregoing payment
methods provided for in this Section 7(g) or other form of payment
reasonable acceptable to the Plan Administrator.
(h) Delivery of Stock.
An option holder shall not have the rights of a stockholder with
regard to awards under the Plan except as to Stock actually received by him
under the Plan and any dividend equivalent rights awarded under the Plan. The
Company shall not be obligated to deliver any shares of Stock (a) until, in the
opinion of the Company's counsel, all applicable federal and state laws and
regulations have been complied with, and (b) if the outstanding Stock is at the
time listed on any stock exchange, until the shares to be delivered have been
listed or authorized to be listed on such exchange upon official notice of
issuance, and (c) until all other legal matters in connection with the issuance
and delivery of such shares have been approved by the Company's counsel. If the
sale of Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting transfer.
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(i) Nontransferability of Options.
No option may be transferred other than by will or by the laws of
descent and distribution, and during the lifetime of the employee or Associate
to whom granted may be exercised only by such employee or Associate; provided,
however, that an option that is not an incentive option may be otherwise
transferred to the extent, if any, permitted by the Plan Administrator.
(j) Restrictions on Stock.
The Plan Administrator may provide that shares of Stock purchased
through the exercise of options under the Plan be subject to such restrictions
on resale, including restrictions requiring resale to the Company at or below
fair market value, or such other restrictions, as the Plan Administrator in its
sole discretion shall determine, and shall take such steps as it deems necessary
or appropriate to carry out the purposes of any such restriction; provided,
however, that any such restrictions relating to the shares of Stock that may be
purchased upon exercise of an option may not be provided for after the option
has been granted.
(k) Dividend Equivalents. The Plan Administrator is hereby authorized to
grant dividend equivalents to option holders based on the dividends declared on
Stock that is subject to any option. The grant of dividend equivalents shall be
treated as a separate award. Dividend equivalents shall be credited to a
notional account maintained by the Company, as of dividend payment dates during
the period between the date the option is granted and the date the option is
exercised, vested, expired, credited or paid. Such dividend equivalents shall be
converted to cash or shares by such formula and at such time and subject to such
limitations as may be determined by the Plan Administrator. As determined by the
Plan Administrator, dividend equivalents granted with respect to any option may
be payable regardless of whether such option is subsequently exercised.
8. Mergers, Recapitalizations. Etc.
(a) In the event of a consolidation or merger in which the Company is
not the surviving corporation or in the event of any transaction that results in
the acquisition of substantially all or substantially all of the Company's
outstanding Stock by a single person or entity or by a group of persons and/or
entities acting in concert, or in the event of the sale or other transfer of
substantially all of the Company's assets (all the foregoing being referred to
as "Acquisition Events"), then the Plan Administrator may in its discretion
terminate all outstanding options by delivering notice of termination to each
option holder; provided, however, that, during the 20-day period following the
date on which such notice of termination is delivered, each option holder shall
have the right to exercise in full all of his options that are then outstanding
(without regard to any condition with respect to the exercise of any installment
that relates to the passage of time). If an Acquisition Event occurs and the
Plan Administrator does not terminate the outstanding options pursuant to the
preceding sentence, then the provisions of Section 8(b) shall apply.
(b) In the event that the outstanding shares of Stock are changed into
or exchanged for a different number or kind of shares or other securities or
property (including cash) of the Company or of another corporation by reason of
a stock dividend, stock split or combination of shares (excluding the stock
split effected by the Company on September 10, 1996), recapitalization or other
change in the Company's capital stock, reorganization, merger, sale or other
transfer of all or substantially all the Company's assets to another
corporation, consolidation, or other transaction described in Section 424(a) of
the Code, the Plan Administrator shall make appropriate adjustments (in such
manner as it deems equitable in its sole discretion) in (i) the number and kind
of shares of Stock, other securities or property for the purchase of which
options maybe granted under the Plan, (ii) the number and kind of shares of
Stock, other securities or property as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, (iii) the exercise price and
other terms of outstanding options and (iv) any other relevant provisions of the
Plan. Any adjustment of the Plan or in outstanding options shall be effective on
the effective date of the event giving rise to such adjustment. The Plan
Administrator may also adjust the number of Shares subject to
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outstanding options, the exercise price of outstanding options and the terms of
outstanding options to take into consideration any other event (including,
without limitation, accounting changes) if the Plan Administrator determines
that such adjustment is appropriate to avoid enlargement or diminishment of the
rights of any option holder. All determinations and adjustments made by the Plan
Administrator pursuant to this Section 8(b) shall be binding on all persons.
(c) The Plan Administrator may grant options under the Plan in
substitution for options held by employees of another corporation who
concurrently become employees of the Company or a subsidiary of the Company as
the result of a merger or consolidation of the employing corporation with the
Company or a subsidiary of the Company, or as the result of the acquisition by
the Company of property or stock of the employing corporation. The Company may
direct that substitute awards be granted on such terms and conditions as the
Plan Administrator considers appropriate in the circumstances.
(d) Compliance with Code Section 409A. To the extent that the Plan
and/or options or other awards thereunder are subject to Code Section 409A, the
Plan Administrator may, in its sole discretion and without any Employee's or
Associate's prior consent, amend the Plan and/or options or awards thereunder,
adopt policies and procedures, or take any other actions (including amendments,
policies, procedures and actions with retroactive effect) as are necessary or
appropriate to (a) exempt the Plan and/or any award from the application of Code
Section 409A, (b) preserve the intended tax treatment of any such award, or (c)
comply with the requirements of Code Section 409A, including any regulations
that may be issued after the grant of any award. Notwithstanding the foregoing,
neither the Plan Administrator nor the Company is obligated to ensure that
awards comply with Code Section 409A or to take any actions to ensure such
compliance.
(1) Timing of Payment. All options or other awards under the Plan
shall be paid or otherwise settled on or as soon as practicable after the
applicable payment date and, except as permitted under this Article, not later
than the 15th day of the third month from the end of (i) the individual's tax
year that includes the applicable payment date, or (ii) the Company's tax year
that includes the applicable payment date, whichever is later. Such payment or
payments are intended to comply with the "short-term deferral" exemption from
the application of Code Section 409A. For purposes of this subparagraph,
"payment date" means the date such award is no longer subject to a "substantial
risk of forfeiture" for purposes of Code Section 409A.
(2) Delay of Payment Permitted Under Certain Circumstances. The
Plan Administrator reserves the right to delay payment with respect to any
option or other award under the following circumstances:
(i) The Company reasonably anticipates that the deduction
with respect to such payment otherwise would be limited or eliminated by
application of Code Section 162(m). Any such delayed payment shall be made
either at the earliest date at which the Company reasonably anticipates that the
deduction of such payment will not be limited or eliminated by the application
of Code Section 162(m) of the calendar year in which the Employee or Associate
ends his association with the Company.
(ii) The Company reasonably anticipates that the making of
the payment will violate a term of a loan agreement to which the Company is a
party, or other similar contract to which the Company is a party, and such
violation will cause material harm to the Company. Any such delayed payment
shall be made at the earliest date at which the Company reasonably anticipates
that the making of the payment will not cause material harm to the Company.
(iii) The Company reasonably anticipates that the making of
the payment will violate federal securities laws or other applicable law. Any
such delayed payment shall be made at the earliest date at which the Company
reasonably anticipates that the making of the payment will not cause such
violation. For this purpose, the making of a payment under the Plan that would
cause inclusion in
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gross income or the application of any penalty provision or other provision of
the Code shall not be treated as a violation of applicable law.
(iv) The Company may delay a payment upon such other events
and conditions as the Commissioner of the Internal Revenue Service may prescribe
in generally applicable guidance published in the Internal Revenue Bulletin.
(3) Delay of Payment to a Specified Employee Pursuant to a
Separation From Service. Notwithstanding any contrary provision in the Plan or
any option or other award, any payment(s) that are otherwise required to be made
under the Plan to a "specified employee" (as defined under Code Section 409A) as
a result of his or her separation from service shall be delayed for the first
six (6) months following such separation from service (or, if earlier, the date
of death of the specified employee) and shall instead be paid (in a manner set
forth in the Agreement) on the payment date that immediately follows the end of
such six-month period or as soon as administratively practicable thereafter.
(4) No Guarantees Regarding Tax Treatment. Participants (or their
beneficiaries) shall be responsible for all taxes with respect to any options or
other awards under the Plan. The Plan Administrator and the Company make no
representations or assumptions to any person regarding the tax treatment of
awards or payments made under the Plan. Neither the Plan Administrator or the
Company has any obligation to take any action to prevent the assessment of any
excise tax on any person with respect to any award under Code Section 409A.
9. Limitation on Rights.
Neither the adoption of the Plan nor the grant of options shall
confer upon any employee any right to continued employment with the Company or
affect in any way the right of the Company to terminate the employment of an
employee at any time. Except as specifically provided by the Plan Administrator
in any particular case, the loss of existing or potential profit in options
granted under this Plan shall not constitute an element of damages in the event
of termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.
10. Effect, Discontinuance, Cancellation, Amendment and Termination.
(a) Neither adoption of the Plan nor the grant of options to an employee
shall affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
(b) The Plan Administrator may at any time discontinue granting options
under the plan. With the consent of the option holder, the Plan Administrator
may at any time cancel an existing option in whole or in part and grant the
option holder another option for such number of shares as the Plan Administrator
specifies. The Plan Administrator may at any time or times amend the Plan,
provided that (i) no such amendment shall affect the rights of any option holder
(without his consent) under any option previously granted, and (ii) without the
approval of the stockholders of the Company, no such amendment shall (a)
increase the maximum number of shares available under the Plan for delivery
pursuant to the exercise of incentive options, (b) change the group of employees
eligible to receive incentive options, (c) reduce the price at which incentive
options may be granted, (d) extend the time within which incentive options may
be granted, (e) alter the Plan in such a way that incentive options already
granted hereunder would not be considered incentive stock options under Section
422 of the Code, or (f) amend the provisions of this Section 10(b). The Plan
Administrator may at any time terminate the Plan as to any further grants of
options.
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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 26, 2006 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)
[ ] 14475 [ ]
<Page>
ANNUAL MEETING OF STOCKHOLDERS OF
EMPIRE RESOURCES, INC.
June 26, 2006
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. |
[ ]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors:
FOR AGAINST ABSTAIN
NOMINEES: 2. Ratification of appointment of EISNER LLP, independent
[ ] FOR ALL NOMINEES [ ] William Spier auditors. [ ] [ ] [ ]
[ ] Nathan Kahn
[ ] WITHHOLD AUTHORITY [ ] Sandra Kahn 3. Approval of the Empire Resources, Inc. 2006 Stock Option [ ] [ ] [ ]
FOR ALL NOMINEES [ ] Harvey Wrubel Plan.
[ ] Jack Bendheim
[ ] FOR ALL EXCEPT [ ] L.R. Milner The undersigned hereby authorizes the proxies, in their discretion, to vote on
(See instructions below) [ ] Peter G. Howard any other business as may properly be brought before the meeting or any
[ ] Nathan Mazurek adjournment thereof.
[ ] 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. [ ]